The turnover rate formula is one of the key elements when it comes to understanding the inner workings of a company. Keeping the number of people leaving low is key to creating a well-structured company that understands the inner workings of a corporate system.

In this article, we will learn how to calculate the turnover rate, a reasonable employee turnover rate, and the difference between a voluntary turnover rate and employees leaving for non-voluntary reasons.

The central concept is to show that you can efficiently measure turnover over a long time period and see some key elements that you should consider when thinking about keeping the employee retention rate low.

If the employee turnover rate is common during a given period, it can influence both the effectiveness of the company and the employer brand as a whole. This kind of significant business setback can even affect other employees and their effectiveness.

The company’s employee turnover rate is a very important factor to consider when thinking about the company's culture and health overall. So, without further ado, let’s get into calculating turnover!

Employee Turnover is the rate at which employees leave a company and are replaced by new ones. It’s typically expressed as a percentage of a company's total number of employees.

Voluntary and Involuntary Turnover

Employee turnover can be voluntary or involuntary. The first one appears when an employee leaves the company to pursue other job opportunities, retire, or for personal reasons. Involuntary, on the other hand, is when the company terminates an employee for poor performance, misconduct, or something completely different.

Employee Turnover Effects

High employee turnover can have significant implications for the company. It can increase the costs of recruiting, hiring, and training new employees. It can also result in a loss of institutional knowledge and decreased productivity as new employees acclimate to their roles. To minimize employee turnover, you need to implement strategies to retain employees. This would mean offering them competitive salaries, benefits, gym membership, cinema tickets, career opportunities, and a positive work culture fostering employee engagement and satisfaction. Reducing employee turnover can increase retention and maintain a stable and productive workforce.

If you want to calculate employee turnover rate, there is a pretty easy formula that you can use.

• Employee Turnover Rate = (Number of employees who left / Average number of employees) x 100%

Whether it’s a monthly employee turnover rate or annual turnover rate, it will show you all the voluntary turnover, active employees, the rate of departing employees, and the number of employees who left, including both voluntary and involuntary turnover over a specific period. The average number of employees is calculated by adding the number of employees at the beginning and end of the period and dividing it by two.

For example, if a company has a hundred employees at the beginning of the year and hundred twenty of them at the end of the year, the average number of employees would be:

• (100 + 120) / 2 = 110.

If 20 employees left during the year, the turnover rate would be:

• (20 / 110) x 100% = 18.2%

This means 18.2% of the company's workforce turned over during the year. It is essential to calculate employee turnover as it can help the company to evaluate its hiring and retention practices and identify areas for improvement. High turnover rates may indicate employee satisfaction, compensation, or work environment issues, while low turnover rates may indicate a positive work culture and effective retention strategies.

Let’s talk briefly about the software we will use for this cause. Of course, there are many ways to see how many employees are leaving the company and what is the average turnover rate. You can do it in almost every spreadsheet with the right formula.

But, if you want to be as precise as possible, and believe us, in a case such important as the employee departure, you will need some good staff turnover software to keep everything in check.

In this case, we recommend using Microsoft Office and the Turnover Calculation free template for this particular cause. With this, you will see the new hire turnover rate in detail with some additional stats added to it as well. If you don’t have Microsoft Office yet, you can get MS Office activation key at an affordable price on RoyalCDKeys.

Microsoft Office gives you the unique ability to calculate voluntary and involuntary firing and – to see some of the most common turnover issues clearly. With this software, you can collect feedback from employees and HR leaders without file opening or editing issues.

A comprehensive assessment of the company's overall health can get you far, and with this program, you will be able to see it clear as a day! So, let’s get into the template and see what benefits it can bring you.

Download ExcelDataPro Template

In this example, it is visible that you can calculate the high turnover rate by just entering the lowest and top performers when it comes to new hires in different departments over the same period.

It will give you great insight into the number of employees who left the company at the end of the year and how many have joined the company. It will show you if you are experiencing turnover that should be the concern or if it is happening naturally. A low turnover rate does not mean the company functions well, and a reasonable turnover rate is not simply more hires than turnover. It is essential to keep that in mind.

There is no clear answer to a healthy employee turnover rate, as what may be considered healthy can vary depending on factors such as industry, job type, and company size.

In general, low employee turnover rates are generally seen as positive, as they indicate that employees are satisfied with their jobs and the work environment and the company is retaining valuable people. But, in some cases, high levels of turnover can be expected and may even be desirable.

For example, industries such as retail or hospitality may have higher turnover rates because of the nature of the work or the prevalence of seasonal or part-time employment. In these cases, turnover rates may be higher but still considered healthy within the industry.

Companies must monitor employee turnover rates and compare them to industry benchmarks and previous years' rates. You can also conduct exit interviews and surveys to gather feedback from departing employees and see the areas for improvement. Analyzing turnover rates and taking steps to improve employee satisfaction and retention can help you to maintain a stable and productive workforce.

So, now that we know what turnover is and how we should go about it, let’s see some of the ways to analyze it and determine if it’s within the limits of industry standards.

• Create the time frame  – choose a specific period to analyze. It can be a year, month, or whatever you feel is best.

• Calculate the turnover rate using the formula we have provided you before. Remember to put all the correct numbers into the spreadsheet.

• Segment the data – segment the turnover data by department, location, job title, or other relevant categories to identify any patterns or trends in the turnover rate. As shown in the seasonal work example, it is of utmost importance to see all the factors that should be included in the analysis.

• Analyze reasons for turnover –  exit interviews or surveys can be vital in gathering information and identifying causes for employees leaving. Look for common themes or issues that may be contributing to turnover.

• Compare to benchmarks – compare your turnover rate to industry benchmarks and previous years' rates to determine whether your company's turnover rate is higher or lower than average.

• Identify areas for improvement – see what you can do better; based on the data gathered, identify areas for improvement in employee retention. You can start by improving compensation and benefits, addressing workplace culture issues, or providing more opportunities for career and personal development. Remember – an annual salary is essential, but if the working environment is poor and the overall management does not do its job, the employees will not want to stay in the company.

Employee turnover is essential for tracking and analyzing the organization's health, including recruitment and retention practices, work culture, and employee satisfaction. Here are some of the ways that you can benefit from some insightful employee turnover tracking.

Cost of Turnover

Employee turnover can be costly, as recruiting, onboarding, and training new employees require time and resources. High turnover rates can result in increased costs and reduced productivity and morale. A departing employee will probably still be in contact with some of the remaining ones, so consider that before letting someone go for a poor reason.

Recruitment and Retention Practices

Knowing how to calculate turnover rate can help you evaluate your recruitment and retention practices. For example, if turnover rates are high for a particular department or job type, it may be necessary to re-evaluate recruitment strategies or adjust compensation and benefits packages. It may also mean you need to restructure your department as it has some employee retention issues.

Work Culture Improvement

High turnover rates may indicate a poor work culture or management practices. Companies can improve employee satisfaction and retention by analyzing the reasons for turnover and addressing any underlying issues. Additionally, you will be able to find out if there are some problems with the company’s hierarchical structure.

Employee Satisfaction

It may also indicate employees' dissatisfaction with their jobs, work environment, or compensation and benefits packages. There is a reason why they are leaving, after all. Analyzing turnover can give you insight into company structure and employee satisfaction. Happy employees always provide better results.

Business Performance

Additionally, employee turnover can impact business performance, affecting the quality of work, productivity, and employee morale. High turnover rates can lead to decreased productivity and lower-quality work. Low turnover rates indicate a positive work culture and a more productive workforce. But – it’s not set in stone. A low turnover can also mean that people are not leaving, but the work is not done correctly, and some changes should have been made.

How to lower the employee turnover rate? Well, there are a couple of ways to do that.

Competitive Compensation and Benefits

Happy employees will not want to go! So, to keep them, ensure your compensation and benefits packages are competitive with other companies in your industry. This includes offering fair salaries, health insurance, retirement plans, and other benefits.

Positive Work Culture

If you want to keep your employees, you should avoid all the negative stereotypes about work. A positive work environment where employees feel valued and supported is a much greater system with many additional benefits. It’s important to encourage open communication, recognize and reward good performance, and provide professional development and growth opportunities.

Opportunities for Career Advancement

Sitting in a dead-end job will never result in some great opportunities in the company. Give employees opportunities to advance their careers within the company. This may mean some training and development programs, mentoring, and leadership opportunities. Don’t make them feel stuck there with no chance for advancement.

Work-life Balance

Calling your employees at 2 AM may not be the smartest thing to do if you want to keep them. Consider offering flexible work arrangements, such as remote work options or flexible schedules, to help employees balance their work and personal lives. Give them some space to breathe, and their productivity will rise!

Provide Clear Expectations and Feedback

One of the key elements in running a successful company is to set clear expectations for employees and provide regular feedback on their performance. This helps them to understand their role in the company and how their work contributes to the overall success of the company.

Thank you so much for checking out our article on the turnover rate. Calculating employee turnover is a critical metric for companies to track and analyze. It can provide valuable insights into the organization's health, including recruitment and retention practices, work culture, and employee satisfaction.

 If you regularly calculate the turnover rate, you can identify areas for improvement and take steps to improve employee retention, like offering competitive compensation and benefits, creating a positive work culture, and providing opportunities for career advancement. By addressing these issues, you can improve employee satisfaction and retention, reduce the costs associated with turnover, and create a more productive and stable workforce where your employees are happy, and the company is also growing!