# What Is Employee Turnover Rate? Canonical URL: https://skillsociety.com.au/blog/glossary/what-is-employee-turnover-rate Markdown URL: https://skillsociety.com.au/blog/glossary/what-is-employee-turnover-rate/markdown Published: 2026-06-18 Author: Alberto Cubeddu Excerpt: Employee turnover rate measures the percentage of employees who leave an organization during a defined period, helping HR and hiring teams understand replacement demand, retention risk, and workforce stability. ## What Is Employee Turnover Rate? **Employee turnover rate is the percentage of employees who leave an organization during a specific period.** It is usually calculated by dividing the number of employee separations by the average number of employees in that period, then multiplying by 100. In simple terms: employee turnover rate shows how much of your workforce has to be replaced over time. The basic formula is: Employee turnover rate = (number of employee separations / average number of employees) * 100 For example, if 18 employees leave during a year and the company has an average headcount of 300 during that same year, the employee turnover rate is 6%. Most teams calculate turnover monthly, quarterly, or annually. The key is consistency: use the same population, same time period, and same definition of a separation each time. ## Why Employee Turnover Rate Matters Turnover is not automatically a problem. People retire, relocate, change careers, leave for personal reasons, or move into roles that better fit their goals. Some involuntary turnover is also part of normal workforce management. The risk is avoidable or poorly understood turnover. When strong performers, recent hires, specialists, managers, or people from one location or team leave at unusual rates, the business can lose knowledge, momentum, customer context, and hiring capacity. Gallup has estimated that replacement costs vary meaningfully by role type and seniority, and direct hiring spend is only part of the impact. For hiring teams, turnover rate is also a demand signal. A department with 10 open roles may need different support if five of those roles are growth hires versus five replacements caused by early-tenure resignations. Without that context, recruiting plans can look like a volume problem when the real issue is role fit, manager expectations, onboarding, compensation, workload, or employee experience. ## How to Calculate Employee Turnover Rate Accurately ### Define Separations Before calculating turnover, decide which exits count. The U.S. Bureau of Labor Statistics separates employee departures into quits, layoffs and discharges, and other separations such as retirements, deaths, disability-related exits, or transfers to other locations. Your internal reporting does not need to mirror BLS exactly, but it should be clear enough that people interpret the number the same way. Many HR teams track overall turnover, voluntary turnover, involuntary turnover, regrettable turnover, and early-tenure turnover separately. These views answer different questions. Voluntary turnover often points to retention and employee experience. Early-tenure turnover is especially useful for hiring teams because it can reveal mismatched expectations before or during selection. ### Use Average Headcount Average headcount is commonly calculated as: Average headcount = (employees at start of period + employees at end of period) / 2 If your workforce changes quickly, a monthly average or payroll-period average can be more accurate than a simple start-and-end average. Also decide whether contractors, temporary workers, interns, seasonal employees, part-time employees, and employees on leave are included. ## Turnover Rate vs. Retention Rate Turnover looks at employees who leave. Retention looks at employees who stay. A company can keep headcount flat by replacing people quickly while still losing too many experienced employees. Looking at both metrics gives a clearer picture of workforce stability. ## Practical Guidance for Hiring Teams Hiring teams should treat turnover rate as feedback on the hiring system, not just as an HR dashboard metric. Start with segments: role, department, manager, location, source, recruiter, tenure, compensation band, and hiring stage where the data is reliable. A company-wide rate can hide a team that is losing new hires after 60 days. Then connect the data to the hiring process. If early turnover is high, review whether job ads, recruiter screens, interviews, and assessments are setting realistic expectations. Candidates should understand the role, workload, schedule, compensation range, success criteria, and constraints before they accept. Use structured interviews and scorecards to separate role-critical evidence from opinion. If new hires fail because of a skill, behavior, or work environment mismatch that could have been assessed earlier, update the selection criteria. Finally, close the loop with managers. Share patterns from exit feedback, new-hire check-ins, interview notes, and performance outcomes. Turnover prevention is also about making sure the role being sold is the role being delivered. ## How SkillSociety helps SkillSociety helps hiring teams reduce avoidable turnover by improving role-fit evidence before live interview time is spent. Teams can use structured AI screening, consistent questions, transcripts, summaries, and candidate insights to understand whether applicants match the requirements and realities of the role. That gives recruiters and hiring managers a stronger basis for shortlisting, interviewing, and onboarding. Better early evidence helps teams move faster without relying on guesswork. ## FAQ ### What is a good employee turnover rate? There is no universal good rate. It depends on industry, role type, labor market conditions, company stage, seasonality, and whether exits are voluntary, involuntary, regrettable, or planned. Compare against your own historical trend first, then use external benchmarks carefully. ### Should layoffs count in employee turnover rate? They can, but they should usually be segmented. Overall turnover may include layoffs and discharges, while voluntary turnover excludes employer-initiated exits. Keeping these views separate prevents a restructuring event from being confused with an employee retention problem. ### How can hiring teams reduce employee turnover? Hiring teams can reduce avoidable turnover by setting realistic role expectations, screening consistently, using structured interviews, validating must-have skills early, and handing clear candidate context to onboarding teams. They should also review early-tenure exits to learn which hiring signals were missed. ## Further Reading - [Greenhouse: What is employee turnover rate?](https://www.greenhouse.com/resources/glossary/what-is-employee-turnover-rate) - [U.S. Bureau of Labor Statistics: JOLTS data definitions](https://www.bls.gov/jlt/jltdef.htm) - [CIPD: Employee turnover and retention](https://www.cipd.org/en/knowledge/factsheets/turnover-retention-factsheet/) - [Gallup: 42% of employee turnover is preventable but often ignored](https://www.gallup.com/workplace/646538/employee-turnover-preventable-often-ignored.aspx)