What is Employee Turnover? Definition, Tips, Trends, and Strategies

by | Published on Aug 14, 2023 | Human Resources

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What is Employee Turnover

Did you know that high employee turnover can significantly impact your business’s bottom line and overall success? With the ever-evolving job market, it has become increasingly important for companies to understand the concept of “what is employee turnover” and implement effective strategies to reduce it. This blog post will guide you through types of employee turnover, how to calculate turnover rates, common causes, and best practices to improve employee retention. So let’s dive in and take control of your company’s future!

Short Summary

  • Understanding employee turnover is essential for businesses to maintain a healthy work environment and ensure their success.
  • Employee turnover rate can be determined by dividing the number of employees who left during a specific period by the average number of employees during that period, expressed as a percentage.
  • High employee turnover can have detrimental effects on financial performance, productivity, and reputation. Businesses should take proactive steps to reduce rates & retain successful operations.

Understanding Employee Turnover

Employee turnover refers to the departure of employees, either voluntarily or involuntarily, due to organizational changes, role dissolution, or performance issues. It is critical for businesses to monitor and manage turnover rates to maintain a healthy work environment and ensure business success, especially when employees leave for various reasons.

Factors that can contribute to employee turnover include:

  • Unfavorable workplace circumstances
  • Inadequate management
  • An unfavorable company culture
  • Limited career advancement opportunities
  • Inaccurate job descriptions
  • Disengagement

Voluntary vs. Involuntary Turnover

Voluntary turnover occurs when employees depart of their own volition, whereas involuntary turnover is caused by termination or other uncontrollable circumstances. Employees may leave voluntarily due to various factors such as:

  • obtaining a new job
  • personal reasons
  • educational pursuits
  • dissatisfaction with their job.

Involuntary turnover, on the other hand, can lead to apprehension among remaining employees regarding their job stability, but can also reinstate the efficiency and productivity of those adversely impacted by the former employee.

Types of Employee Turnover

Turnover can be classified as functional or dysfunctional, depending on its impact on the organization and employee productivity. Functional turnover occurs when an employee leaves the organization and is replaced by a more productive and efficient individual, leading to increased productivity and efficiency for the organization.

Conversely, dysfunctional turnover involves an employee leaving the organization and being replaced by a less productive and efficient individual, resulting in decreased productivity and efficiency. Understanding the different types of turnover can help businesses develop targeted retention strategies.

How to Calculate Employee Turnover Rate

Calculate Employee Turnover

Employee turnover rate can be calculated by dividing the number of employees who left during a specific period by the average number of employees during that period, and it is typically expressed as a percentage. To calculate the monthly employee turnover rate, simply focus on the data within a one-month period.

Calculating employee turnover rate is imperative in order to compare it with industry average and national average and to recognize and reduce the causes of turnover.

Monthly vs. Annual Turnover Rates

Monitoring both monthly and annual turnover rates can help identify patterns and potential issues within the workforce, allowing for timely interventions and improvements. By comparing these rates, businesses can better understand their workforce trends and take appropriate actions to address any underlying issues.

This can help to ensure that the workforce remains productive and engaged, and that any potential problems are avoided.

Industry Benchmarks

Comparing turnover rates to industry benchmarks can help businesses understand their performance relative to competitors and identify areas for improvement. For example, the employee turnover rate benchmarks vary depending on the industry, with construction having a turnover rate of 63%, manufacturing at 44%, and trade, transportation, and utilities at 61%.

By analyzing turnover rates against industry benchmarks, companies can identify potential problem areas and implement targeted strategies to reduce turnover rates.

Common Causes of High Employee Turnover

High turnover can result from various factors, including:

  • Inadequate compensation
  • Poor management
  • Lack of career advancement opportunities
  • Poor work-life balance

Identifying and addressing these causes is crucial for reducing turnover rates and maintaining a successful business. For example, inadequate remuneration may lead employees to seek better-paying opportunities elsewhere, while poor management can contribute to employee dissatisfaction and increased turnover.

Addressing these factors can help create a positive work environment, improve employee morale, and ultimately reduce employee turnover rates. It is essential for businesses to continuously evaluate their workplace conditions, management practices, and employee support systems to ensure a healthy work environment and retain top talent.

How to Reduce Employee Turnover

Compensation surveys are a valuable tool for organizations aiming to manage and reduce employee turnover. Fair and competitive compensation can improve employee satisfaction and engagement, further contributing to a stable and committed workforce.

Turnover by Department
Example of Employee Turnover by Department

Implementing effective recruitment and onboarding processes, fostering open communication and recognition, and promoting work-life balance can help improve employee retention and reduce turnover rates. By focusing on these strategies, businesses can create a positive workplace culture that encourages employee engagement and loyalty, leading to a more stable and productive workforce.

Creating a positive workplace culture is essential for businesses to retain their employees and ensure a productive workforce.

Recruitment and Onboarding

Prioritizing the recruitment of best-fit candidates and investing in comprehensive onboarding processes can help new employees feel valued and more likely to stay with the company long-term. A well-structured hiring process, including thorough background checks and accurate job descriptions, ensures that the right employees are hired for the position.

Additionally, investing in onboarding can foster a sense of appreciation among new employees, potentially leading to increased retention rates.

Employee Feedback and Recognition

Encouraging open communication, seeking feedback, and recognizing employee achievements can help improve employee satisfaction and retention. Research has shown that employees who experience positive feedback from their managers are four times more likely to remain engaged, with only 3.6% actively seeking a new job.

By creating a culture of recognition and fostering open dialogue, companies can enhance employee satisfaction and loyalty, ultimately reducing turnover rates.

Work-Life Balance and Employee Well-being

Promoting a healthy work-life balance and addressing employee burnout can help reduce turnover rates and improve overall employee well-being. Strategies to foster work-life balance may include implementing flexible work schedules, making mental health resources available, and granting paid time off.

Furthermore, addressing employee burnout is significant as it can lead to a lack of direction, abilities enhancement, or assurance, which can contribute to employee turnover.

The Impact of High Employee Turnover on Business

Impact of Turnover on Business
An Example of Employee Turnover on Business

High employee turnover can negatively affect a company’s financial performance, productivity, and reputation. Elevated turnover can result in increased recruitment and training costs, decreased productivity, and potential damage to a company’s reputation.

It is crucial for businesses to address the underlying causes of high employee turnover and implement targeted strategies to achieve low employee turnover, reducing turnover rates and maintaining a successful business.

Monitoring and Tracking Employee Turnover

Tracking Turnover
An Example of Monitoring Turnover

Regularly tracking and analyzing employee turnover rates can help businesses identify problem areas, implement targeted interventions, and measure the success of retention initiatives. By monitoring turnover rates and conducting employee surveys, businesses can gain valuable insights into the effectiveness of their retention strategies and make necessary adjustments to improve employee satisfaction and retention.

By understanding the reasons behind employee turnover, businesses can develop targeted strategies to reduce turnover and improve employee performance.

Employee Retention Best Practices

Retaining Employees

Creating a culture of belonging, preventing employee burnout, fostering regular feedback, and acting on employee concerns are key strategies for improving employee retention and reducing turnover rates. By implementing these best practices, businesses can create a supportive work environment that promotes employee engagement, job satisfaction, and long-term commitment to the organization.

Moreover, focusing on employee well-being and offering career development opportunities through effective human resources management can help retain top talent and maintain a successful business in the long run.


In conclusion, understanding employee turnover and its consequences is crucial for businesses looking to maintain a successful and productive workforce. By implementing effective strategies such as improving recruitment and onboarding processes, fostering open communication and recognition, and promoting work-life balance, companies can reduce employee turnover rates and improve overall employee satisfaction and retention. It is essential for businesses to continuously monitor and track employee turnover rates, identify problem areas, and measure the success of their retention initiatives to ensure a thriving workplace and a prosperous future.

Frequently Asked Questions

What is the meaning of employee turnover?

Employee turnover is the process of workers leaving an organization or company. It’s measured by calculating the number of employees that depart during a given period of time, including voluntary and involuntary exits.

High employee turnover can be costly for a business, as it can lead to a decrease in productivity, an increase in recruitment and training costs, and a decrease in employee retention.

What is the main cause of employee turnover?

The main cause of employee turnover is often related to inadequate compensation or poor management, such as lack of growth and development opportunities, inefficiency, and an unsatisfactory workplace culture.

These factors can lead to employees feeling undervalued or overwhelmed by their workload and can drive them away from the organization.

What is an example of employee turnover?

Employee turnover occurs when an employee leaves a position voluntarily or is involuntarily separated from the company, prompting the need to recruit and hire someone else to fill the role.

This is included in a company’s turnover rate and can be caused by an employee taking a higher position or being laid off due to a lack of work.

Is employee turnover good or bad?

Functional employee turnover can be beneficial for an organization, while dysfunctional turnover is detrimental.

What does high employee turnover mean?

High employee turnover means that a high number of employees are leaving the company, while low turnover means that people tend to stay in their jobs longer.

This often results in an increased cost for companies due to the need to recruit, hire, and train new people.