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Employee turnover: What it is and how to calculate it

Employee turnover is the rate at which employees leave your company and need to be replaced. Learn how turnover impacts performance with this guide.

Av Hannah Wren, Staff Writer

Senast uppdaterad June 3, 2024

What is employee turnover?

Employee turnover measures the number of employees leaving your business within a specified time frame. It includes voluntary exits, layoffs, and terminations and excludes internal changes like transfers and promotions.

Imagine reaching out to your HR team and either receiving no response or consistently generic, ineffective replies. People quit their jobs for various reasons, but a significant and often overlooked factor is the quality of the employee experience (EX).

According to the Zendesk Employee Experience Trends Report 2024, 90 percent of EX leaders believe standout EX is key to retaining top talent. In this guide, we’ll explore effective strategies to enhance the support you provide to your workforce, along with other practical tips to help lower your turnover rate.

More in this guide:

Why monitoring employee turnover is important

Employee turnover rate is a crucial workforce management metric that provides insight into worker engagement and satisfaction. Without measuring turnover, understanding its underlying causes is impossible, leading to significant blind spots in assessing company culture and employee morale.

Turnover is an indicator of the health of your company and workforce. If you’re hemorrhaging top talent, you’ll spend more recruiting, hiring, and training new employees.

High turnover can also impact customer experience (CX) and customer satisfaction. Departing employees take knowledge and experience with them, which can lead to service disruptions and inconsistencies that increase customer frustration. If you’re not monitoring turnover, you could miss several potential impacts.

How to calculate employee turnover rate

Calculating employee turnover involves plugging a few variables into this employee turnover formula:

Turnover rate = (Number of employee separations ÷ Average number of employees) x 100

To get the variables you need for the employee turnover calculation, follow these steps:

  1. Set your time frame. Most businesses calculate annual turnover, but you can also measure seasonal or other periods.
  2. Find your headcount for the period. Anyone on payroll counts toward this figure, but you can exclude contractors and temporary employees.
  3. Note total separations for the period. This includes layoffs, firings, and retirements, but not instances of temporary leave.
  4. Calculate your average number of employees. Use the following formula:

Average number of employees = (Number of workers at the start of a period + Number of workers at the end of a period) ÷ 2

The result is your employee turnover rate. You can now explore some of the potential causes behind the number.

Voluntary vs. involuntary employee turnover: Differences + how they affect you

While your employee turnover rate accounts for all departures, it doesn’t explain why workers leave. Consider segmenting turnover into more specific categories to gain clearer insights, as the different reasons behind employee turnover can provide critical context for enhancing team retention.

The main difference between voluntary and involuntary turnover is the employee’s choice in the matter:

  • Voluntary turnover is when an employee chooses to leave, such as when switching jobs, returning to school, or retiring.
  • Involuntary turnover is when you lay off staff or fire employees for not meeting job expectations or budgetary reasons.

Turnover can also be desirable (when it benefits the company) or undesirable (when it hurts the business). These categories can overlap—a termination can be involuntary and undesirable, such as when laying off a top-performing employee because of budget constraints.

Causes of employee turnover

There isn’t one single cause of staff turnover. People leave and lose their jobs based on many factors, some of which aren’t in a company’s control. However, some of the most common reasons for employee turnover include:

  • Lack of opportunity for growth or career development

  • Natural career progression

  • Feeling burnout and stress from overworking

  • Negative feelings towards a boss or management

  • Toxic work environment

  • Personal issues or life events

  • Competitive offers from other companies

  • Lack of work-life balance

  • Involuntary departure decided by the company

  • Lack of tools, training, or resources to do their jobs. Pro tip: Keep helpful information up to date in an internal knowledge base for easy access.

Keeping turnover causes in mind can help you improve employee experience management and stay more aware of employees who may be affected by any of these reasons.

Employee turnover rate by industry

The U.S. Bureau of Labor Statistics (BLS) reports that the average turnover in 2023 was 41 percent. By industry, that figure ranged from as high as 79 percent in the hospitality industry to as low as 18 percent among government jobs.

Employee turnover by industry varies widely, with the average turnover at 41 percent.

Here’s how the average turnover looks across several top industries:

IndustryEmployee turnover rate
Accommodation and food services79%
Professional and business services57%
Construction54%
Trade, transportation, and utilities49%
Health care, social assistance, and education39%
Information services and technology32%
Financial activities29%
Government18%

How to analyze employee turnover rate for improvement

Assessing your turnover rate goes beyond merely calculating it. Understanding the reasons behind employee departures and identifying their pain points provides a clearer picture of daily operations. Employers should look for patterns in turnover to uncover the main causes and leverage these insights to improve EX.

Forecasting future labor requirements is a significant challenge, according to 69 percent of CX leaders.

You can analyze turnover by asking a few questions when looking at your results:

  • Who is leaving?

  • What explanations for leaving come up in exit interviews?

  • When did turnover reach its highest and lowest levels?

  • Are there patterns in turnover?

  • What are the most common service issues that employees submit to your HR help desk?

  • How will this impact workforce forecasting?
  • What have employees said about staff attrition?

  • How do they describe their employee experience journey?

Build a better employee experience

Understand why 90 percent of EX leaders believe great EX is essential for retaining top talent by reading our 2024 Employee Experience Trends Report.

How to reduce employee turnover: 7 strategies

With the right training, coaching, tools, and support, you can make employees want to stay with your company long-term. Boost employee engagement and retention by leveraging these seven tips to minimize turnover.

1. Leverage AI

AI can help reduce employee turnover by making their jobs easier and more enjoyable because it can take over mundane work, freeing up employees to focus on more engaging tasks. According to the Zendesk EX Trends Report 2024, 76 percent of IT and HR leaders agree that AI tools enable employees to take on new responsibilities that were previously impractical. And 81 percent say it allows employees to tackle complex tasks more effectively.

Imagine you’re a customer service manager looking to reduce agent turnover. Instead of making your team answer the same repetitive questions, you can deflect those tickets to an AI agent or other type of chatbot.

76 percent of IT and HR leaders agree that AI tools enable employees to take on new responsibilities that were previously impractical.

2. Recognize high-performing employees

A supportive work environment goes a long way toward encouraging employees to stick around. Thankfully, you don’t need to rely on manual notes and reminders to give employee recognition.

Opting for WFM and QA software that analyzes employee performance allows you to spotlight consistent high performers and acknowledge their achievements. It also increases employee satisfaction because it ensures workers know you’re paying attention and appreciate their efforts.

3. Listen to feedback

You can’t get all the insights you need on the employee experience without collecting feedback from your teams. To improve employee happiness, encourage your staff to offer insight into what works—and what doesn’t—in their roles. By listening to employee concerns, you can retain your best people and improve your bottom line.

Collect feedback by automatically sending employee satisfaction surveys after internal service interactions. Pay attention to trends in common ticket requests that may be causing employees frustration.

For example, after sending employees a satisfaction survey, OpenTable learned that submitting support tickets to its internal help desk was cumbersome. Based on that feedback, the company invested in a new employee service tool that enabled teams to receive support over multiple service channels and get updates on the status of their requests. The result was happier employees.

Sending an anonymous employee engagement survey can also provide valuable insights into the EX. You may even consider looking over job review sites to see what users say about your business. Cross-reference data from all departments to shape the changes employees want throughout your organization.

4. Embrace flexible workplaces

Employees today expect flexibility and adaptability from their employer, not rigidity and reliance on the old ways of doing things. In our 2024 EX Trends Report, 87 percent of IT and HR leaders said flexible work scenarios and schedules are necessary for enhanced productivity. That’s a lot of support for employees who might perform better if allowed to take advantage of hybrid or remote work.

One way to enhance employee satisfaction within a distributed workforce is to have the right tech stack to support organizational flexibility. For example, employee self-service tools allow internal teams flexibility when interacting with their colleagues. Eighty percent of those surveyed in our EX Trends Report agreed that job satisfaction significantly improved due to enhanced self-service tools.

Meanwhile, AI agents can reply to employee support requests around the clock. Finally, be sure you’re investing in tools that prioritize security by ensuring complex or sensitive interactions can be handled safely by the right people.

5. Get ahead of employee burnout

As workloads increase, employers must prioritize employee well-being to avoid burnout. Mental health days, additional or unlimited PTO, and fair distribution of work responsibilities are great ways to help avoid burnout and ensure work-life balance is a priority.

To fairly distribute responsibilities, you can use workforce management software to assess where employee workloads are too high. Then, consider who has a lighter workload to absorb some of the reassigned responsibilities. You can also keep an eye on performance to make sure that the new employee handling the workload doesn’t suffer because of it.

6. Invest in employee training and coaching

Training and coaching equip employees with the skills and knowledge they need to excel in their roles. This can boost their confidence and make them feel more valuable to the company, reducing the likelihood of them seeking opportunities elsewhere.

The right WEM tools can give you visibility into knowledge gaps and team performance to help you identify coaching opportunities. This opens potential paths for growth within the company and encourages employees to stay on board. Employee development can also engage employees, allowing them to learn new things, collaborate with colleagues, and feel challenged.

7. Make HR support easy to access

Your employees need to know they have reliable avenues to get their questions answered and receive support when necessary. HR access is easy with HR help desk software, which reduces frustration and fosters trust in your company. With the right solution, your employees can reach HR through familiar channels, like Slack, Microsoft Teams, or email. Additionally, AI knowledge bases ensure employees can always access accurate information, while AI agents provide 24/7 support. Employees who struggle to get answers or navigate complex HR processes, like onboarding or training, might feel unsupported and undervalued, increasing the likelihood they’ll leave.

Easy access to HR also enables early intervention for concerns like conflict resolution, harassment, or work-life balance challenges. HR can help de-escalate these issues and find resolutions that support employee retention.

Cost of employee turnover

High employee turnover dramatically cuts into a business’s profits. Experts cite the cost of turnover as anywhere from one-third to three or four times an employee’s annual salary to replace them. That means that an employee earning $80,000 per year could cost you up to $240,000 to replace if they churn. Yikes.

The range of factors affecting the cost of employee turnover is broad:

  • The timing of the departure

  • The departing employee’s seniority, position, and industry connections

  • The number of workers who reported to the departing employee

  • The number of replacement employees you go through

  • The cost of hiring and training those replacements

Even replacing entry-level employees costs the equivalent of a few months of salary, including onboarding and offboarding. Ultimately, retaining your workforce is in the best interest of your business.

Frequently asked questions

Provide seamless employee service for higher retention

Successful businesses treat team members as valuable assets. While some staff will move on, reduced employee turnover can boost morale, improve service continuity, and increase your training ROI.

Numerous factors influence the employee experience, but one straightforward and impactful way to enhance it is by guaranteeing that employees receive quick, personalized, and effective responses whenever they contact your HR team. Achieving this level of service, however, requires the right HR help desk software.

Zendesk offers an AI-powered employee service solution that requires zero code or engineering help. Try it today by signing up for a free trial.

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