Employee Turnover Rate

Employee turnover rate is the percentage of employees who leave an organization during a set period, usually a month, quarter or year. It counts resignations, dismissals, layoffs and retirements, and is calculated by dividing the number of leavers by the average headcount for the period. If 10 of 100 employees leave in a year, the annual rate is 10%.

HR teams track the rate for the whole company and for smaller groups, such as a department, a manager's team, hourly staff or new hires. The overall number tells you whether turnover is rising or falling. The breakdowns tell you where it comes from and what to fix.

Why does employee turnover rate matter for enterprise HR?

Employee turnover rate matters because every departure has a cost that rarely shows up in one budget line. Recruiting, interviewing, onboarding and the months a new hire needs to reach full productivity all add up, and colleagues absorb the extra work while the seat is empty. Gallup estimates that replacing an employee costs about 40% of annual salary for frontline roles, 80% for technical professionals and up to 200% for leaders and managers.

Gallup also found that 42% of employees who quit in the past year said their manager or organization could have prevented it. That makes turnover one of the few HR metrics where a large share of the cost is avoidable.

High turnover hurts in less visible ways too:

• Lost knowledge: Experienced people take client relationships, process know-how and context with them.
• Lower productivity and morale: Remaining staff cover gaps, which raises workload and burnout risk.
• Weaker customer experience: Constant handovers break continuity, which customers notice in service and sales roles.
• Harder hiring: A reputation for churn makes it harder to attract strong candidates, which can start a cycle of more turnover.

To put a number on your own losses, the Testlify cost of employee turnover calculator and the glossary entry on turnover costs break the cost into its parts.

What are the types of employee turnover?

Employee turnover splits into types by who decides the exit and whether the business wanted to keep the person. The US Bureau of Labor Statistics, for example, separates quits, layoffs and discharges, and other separations such as retirements in its labor turnover data. Tracking each type separately shows which exits you can influence.

Voluntary turnover is usually the most useful signal for HR, because it reflects things the business can change. Read more about the other side in this guide to involuntary turnover.

How do you calculate employee turnover rate?

Employee turnover rate is calculated with one formula:

Employee turnover rate = (number of employees who left during the period / average headcount during the period) x 100

Follow these steps:

1. Pick the period: Choose a month, quarter or year, and use the same period every time you compare.
2. Count the leavers: Include everyone who left the payroll, whether by resignation, dismissal, layoff or retirement. Leave out internal transfers and promotions.
3. Find the average headcount: Add the headcount at the start and at the end of the period, then divide by 2.
4. Divide and multiply by 100: Divide leavers by average headcount and multiply by 100 to get a percentage.

Worked example: A company starts the year with 480 employees and ends it with 520. The average headcount is (480 + 520) / 2 = 500. If 60 people left during the year, the annual employee turnover rate is (60 / 500) x 100 = 12%.

The same formula gives useful variations:

• Monthly rate: Leavers in the month divided by that month's average headcount. Track it to spot seasonal spikes.
• Rolling 12-month rate: Sum the last 12 months of leavers and divide by the average headcount across those months. It smooths out seasonal swings and is the most common board-level view.
• Voluntary rate: Count only resignations. This is the rate most benchmarks report.
• First-year rate: Leavers who had been in the job less than 12 months, divided by hires in the period. A high first-year rate usually points to hiring or onboarding problems, not pay.

Some teams divide by the headcount at the start of the period instead of the average. In a fast-growing company this avoids new hires inflating the denominator and making turnover look lower than it is. Either method works if you use it consistently.

Pro tip: Never annualize a single month by multiplying it by 12 if your business is seasonal. A rolling 12-month rate gives a far more honest picture.

What counts as a good employee turnover rate?

A good employee turnover rate is one at or below the average for your industry and role mix, and falling over time. There is no single target, because a retail store and an insurance company live with very different norms. The Mercer 2025 US Turnover Survey of 2,617 organizations reported average voluntary turnover of 13.0%, down from 13.5% in 2024 and 17.3% in 2023. Retail and wholesale had the highest voluntary rate at 26.7% and insurance the lowest at 8.2%.

Be careful with government data. The BLS JOLTS release for 2025 counted 62.8 million separations in the US, 60.6% of them quits, and an annual average total separations rate of 3.3%. That 3.3% is a monthly rate, so compare it with your monthly number, not with an annual figure like 12%.

Key takeaway: Benchmark the voluntary rate against your own industry, track the trend, and look for hot spots by manager, team and tenure band rather than chasing one company-wide number.

Employee turnover rate vs attrition rate: what is the difference?

Employee turnover rate counts every departure where the role is normally refilled, while attrition rate usually refers to people who leave and are not replaced, such as retirements or roles closed through a hiring freeze. Many teams use the two terms loosely, so state your definition before you compare numbers. See the full entry on attrition rate for its formula.

What are the best practices for reducing employee turnover rate?

The best practices for reducing employee turnover rate start with knowing why people leave, then fixing the causes one group at a time. The most common drivers are weak management, below-market pay, no visible career path, poor work-life balance, a toxic culture and a mismatch between the job and the person hired for it.

• Find the hot spots first: Break turnover down by manager, team, role and tenure. A cluster of exits under one manager or in the first 90 days tells you exactly where to act.
• Train and hold managers accountable: Gallup found that in 45% of voluntary exits no manager or leader talked with the employee about their satisfaction, performance or future in the three months before they left. Regular one-to-ones close that gap.
• Keep pay competitive: Benchmark salaries every year. In Gallup's study, compensation and benefits were the most cited change that could have kept a leaver.
• Show a career path: Clear promotion criteria, internal mobility and skill-building programs give strong performers a reason to grow inside the company.
• Listen before people leave: Run stay interviews with key people and use exit interviews to confirm patterns, then act on what you hear.
• Separate regrettable from non-regrettable exits: Losing a low performer is not a problem to solve. Put retention effort where losses hurt most.

A high first-year turnover rate is often a hiring problem in disguise: the role was oversold, or the new hire lacked the skills it needed. Assessing job-relevant skills before the offer, as in skills-based hiring, helps teams hire people who can do the work and stay. Teams that track early turnover alongside quality of hire can see whether better screening is paying off.

Frequently asked questions