How to Calculate Employee Turnover Rate With Formula and Examples

Employee turnover sounds like a fancy HR term. But it is really just a way to answer one simple question: “How many people left our company compared with how many people we had?” That number can tell you if your team is stable, shaky, or waving goodbye too often.

What Is Employee Turnover Rate?

Employee turnover rate is the percentage of workers who leave your company during a certain time.

That time can be:

• One month
• One quarter
• One year
• Any custom period you want to review

Turnover includes people who quit. It can also include people who were fired, laid off, retired, or transferred out of the company. It depends on how you choose to track it.

Think of your company like a bus. Employees get on. Employees get off. Turnover rate tells you how many people got off during the ride.

The Employee Turnover Rate Formula

Here is the classic formula:

Employee Turnover Rate = Number of Employees Who Left ÷ Average Number of Employees × 100

Looks a bit mathy. But do not panic. It is friendly math.

You only need two numbers:

1. How many employees left during the period.
2. The average number of employees during that same period.

How to Find the Average Number of Employees

To get the average number of employees, use this simple formula:

Average Number of Employees = Beginning Employee Count + Ending Employee Count ÷ 2

But be careful. The correct order is:

(Beginning Employee Count + Ending Employee Count) ÷ 2

Example:

• You had 80 employees on January 1.
• You had 100 employees on December 31.

Now calculate:

(80 + 100) ÷ 2 = 90

Your average number of employees is 90.

Basic Example: Annual Turnover Rate

Let’s say your company had 12 employees leave during the year.

Your average number of employees was 90.

Use the formula:

12 ÷ 90 × 100 = 13.3%

Your annual employee turnover rate is 13.3%.

That means about 13 out of every 100 employees left during the year.

Monthly Turnover Rate Example

Now let’s make it monthly.

A software company starts March with 50 employees. It ends March with 54 employees. During March, 3 employees left.

First, find the average number of employees:

(50 + 54) ÷ 2 = 52

Now calculate turnover:

3 ÷ 52 × 100 = 5.8%

The monthly turnover rate is 5.8%.

Is that high? Maybe. One month alone does not tell the whole story. But if this happens every month, your HR dashboard may start sweating.

Voluntary vs. Involuntary Turnover

Not all turnover is the same. Some people leave by choice. Others do not.

Voluntary turnover happens when employees decide to leave.

Examples include:

• They got a better job offer.
• They moved to another city.
• They felt burned out.
• They wanted better pay.

Involuntary turnover happens when the company makes the decision.

Examples include:

• Layoffs
• Firing
• Contract ending
• Performance issues

You can calculate both separately.

Voluntary Turnover Rate = Voluntary Leavers ÷ Average Employees × 100

Involuntary Turnover Rate = Involuntary Leavers ÷ Average Employees × 100

This helps you see what is really going on. If voluntary turnover is high, employees may be unhappy. If involuntary turnover is high, hiring or training may need work.

Example: Voluntary and Involuntary Turnover

Imagine a retail store with an average of 40 employees.

During the year:

• 6 employees quit
• 2 employees were fired

Voluntary turnover:

6 ÷ 40 × 100 = 15%

Involuntary turnover:

2 ÷ 40 × 100 = 5%

Total turnover:

8 ÷ 40 × 100 = 20%

This store has a total turnover rate of 20%. But the bigger issue is voluntary turnover. People are choosing to leave. Time to investigate.

Why Employee Turnover Rate Matters

Turnover is not just a number. It affects real people and real money.

High turnover can mean:

• More hiring costs
• More training time
• Lower team morale
• Lost knowledge
• More stress for remaining employees

Replacing one employee can cost a lot. Some estimates place replacement costs at 30% to 200% of that employee’s annual salary. That is a wide range. But either way, it is not pocket change.

If a manager earning $70,000 leaves, replacing them could cost thousands. Maybe even tens of thousands. Ouch.

What Is a Good Employee Turnover Rate?

There is no magic number. Sorry. The HR fairy does not hand out perfect percentages.

A “good” turnover rate depends on your industry.

• Retail and hospitality often have higher turnover.
• Government and education often have lower turnover.
• Startups may see more movement.
• Large companies may have steadier numbers.

For many companies, annual turnover between 10% and 20% may be considered normal. But context matters.

If your turnover rate jumps from 12% to 28% in one year, pay attention. Something changed. It may be leadership. It may be workload. It may be pay. It may be all three wearing a trench coat.

Common Mistakes to Avoid

Turnover math is simple. But mistakes still happen.

• Counting new hires as leavers: Do not do that. Only count employees who left.
• Using the wrong period: Match your leaver count and employee average to the same dates.
• Ignoring part time workers: Decide if they count. Then stay consistent.
• Mixing internal transfers with exits: If someone moved departments but stayed at the company, they may not count as turnover.
• Looking at only one month: Trends are more useful than one lonely number.

How to Use Turnover Data

Once you have the number, do not just admire it. Use it.

Ask questions like:

• Which department has the highest turnover?
• Are new hires leaving quickly?
• Are employees leaving after performance reviews?
• Do exit interviews show common complaints?
• Is turnover higher under certain managers?

Numbers are clues. They are not the whole detective story. Pair them with employee surveys, exit interviews, and manager feedback.

Simple Turnover Tracking Table

You can track turnover in a spreadsheet. Keep it clean and simple.

Period	Beginning Employees	Ending Employees	Employees Left	Turnover Rate
Q1	120	126	9	7.3%
Q2	126	130	6	4.7%

For Q1, the average employee count is (120 + 126) ÷ 2 = 123. Then 9 ÷ 123 × 100 = 7.3%.

Final Thoughts

Employee turnover rate is one of the easiest HR numbers to calculate. It is also one of the most useful.

Remember the formula:

Employees Who Left ÷ Average Number of Employees × 100

That is it. No wizard hat required.

Track it regularly. Compare it over time. Break it down by department, location, manager, or job role. Then use what you learn to build a better workplace.

Because when good employees stay, teams get stronger. Customers get better service. Managers sleep better. And the office snack drawer lasts slightly longer. Maybe.