Employee Turnover

What Is Employee Turnover?

Employee turnover refers to the rate at which employees leave a company and are replaced by new hires. It includes both voluntary departures (such as resignations) and involuntary exits (like terminations or layoffs). This metric is often expressed as a percentage over a specific time period, usually monthly or annually.

A high turnover rate can indicate issues within an organization such as low job satisfaction, poor management, or lack of career development opportunities. Conversely, a low turnover rate may signal strong employee engagement, competitive compensation, and a positive work culture.

Types of Employee Turnover

1. Voluntary Turnover: When employees choose to leave the organization. Common reasons include better opportunities, poor management, or lack of advancement.
2. Involuntary Turnover: When employees are terminated due to performance issues, layoffs, or restructuring.
3. Functional Turnover: When underperforming employees leave, potentially benefiting the organization.
4. Dysfunctional Turnover: When high-performing or critical employees leave, which can negatively affect team productivity and morale.

Why Employee Turnover Matters

• Financial Costs: Recruitment, onboarding, and training new employees can be expensive. Estimates suggest replacing an employee can cost up to 1.5–2x their annual salary.
• Productivity Impact: Departures disrupt workflows and increase workloads for remaining staff.
• Workplace Culture: High turnover can reduce morale and create instability within teams.

How to Calculate Employee Turnover

Use the following formula to determine your company’s turnover rate:

Turnover Rate (%) = (Number of Separations / Average Number of Employees) × 100

This formula helps HR teams monitor trends and take corrective actions when turnover is unusually high.

Common Causes of High Turnover

• Poor leadership or toxic management
• Lack of growth opportunities
• Inadequate compensation and benefits
• Limited work-life balance or flexibility
• Weak onboarding or training programs
• Unclear job expectations

How to Reduce Employee Turnover

To improve retention, companies should:

• Enhance onboarding and training for new hires
• Invest in career development through mentorship, promotions, and upskilling
• Foster a positive workplace culture rooted in trust and inclusion
• Conduct exit interviews to identify patterns and reasons for leaving
• Offer flexible work arrangements, including remote or hybrid options
• Review compensation and benefits regularly for competitiveness

Employee Turnover Trends in 2025

In 2025, employee retention remains a top concern for HR leaders. The shift toward remote work, increased demand for work-life balance, and generational expectations from Millennials and Gen Z employees continue to shape how organizations approach turnover. Employers that proactively support growth, flexibility, and transparency are seeing improved retention and employee satisfaction.