Employee Turnover
Employee turnover is a measure of the percentage of employees who leave an organization during a specific period, usually one year. This metric is a key indicator of an organization’s health: excessively high turnover is costly and often signals problems with culture, leadership, or working conditions, while excessively low turnover may indicate stagnation.
How do you calculate employee turnover?
Employee turnover is typically calculated as the number of departures during a given period divided by the average number of employees. When interpreting this metric, it is important to:
- Distinguish between voluntary and involuntary turnover: Voluntary resignations and terminations due to lack of work say different things about the organization.
- Look at key individuals separately: Losing critical expertise is more serious than a generally high turnover rate.
- Putting the level into context: What constitutes a healthy level varies widely across industries.
- Track the trend over time: A single number tells us less than the trends and patterns behind it.
Common Causes of High Employee Turnover
- Weak leadership: The most common reason employees leave is their relationship with their immediate supervisor.
- Lack of organizational culture: An insecure or unclear workplace culture drives employees away.
- Unclear trend: A lack of opportunities for growth causes younger employees in particular to look for other opportunities.
- Non-competitive terms: Wages and benefits that are falling behind, including low incentive program, the dropout rate is rising.
How an Interim HR Manager Can Reduce Turnover
Turning around high employee turnover is a classic HR challenge that may require temporary additional staff.
- Root Cause Analysis: One interim HR manager identifies the real reasons behind employee turnover through exit interviews and data.
- Targeted measures: They focus their efforts where they make the biggest difference—leadership, culture, development, or working conditions.
- Retaining key personnel: Experience in developing retention strategies for critical talent.
- Quick Start: Interim Search's process ensures that you have the right talent in place within 48 hours.
Frequently Asked Questions About Employee Turnover
What is a normal employee turnover rate?
There is no one-size-fits-all figure—a healthy level varies widely across industries, roles, and economic conditions. The key is to compare your figures with relevant benchmarks for your own industry and to track trends over time, rather than focusing on a single percentage.
Is high employee turnover always a bad thing?
Not necessarily. A certain level of turnover is healthy and brings new skills and perspectives. The problem arises when turnover is high among key personnel or when it is driven by dissatisfaction, poor management, or cultural issues. In those cases, it becomes both costly and a warning sign.
What is the cost of high employee turnover?
The cost is often significantly higher than one might think. It includes recruitment, training, lost productivity during the vacancy and the onboarding period, as well as indirect effects such as lost knowledge and the impact on the motivation of other employees. For key roles, the cost can amount to several years’ worth of salary.
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