Understanding turnover rate
Turnover rate quantifies employee turnover as a percentage, making it easy to track trends over time and compare against benchmarks. It's a key metric for understanding workforce stability and the effectiveness of your retention strategy.
What it measures
- Workforce stability
- Retention effectiveness
- Trends over time
- Comparative performance
Why it matters
- Identifies problems early
- Enables benchmarking
- Informs strategy
- Tracks intervention success
Calculating turnover rate
The standard formula and variations:
Turnover rate formulas
Annual Rate = (Separations ÷ Avg Employees) × 100
Example: (15 ÷ 100) × 100 = 15%
Monthly Rate = (Monthly separations ÷ Avg employees) × 100
Track monthly then annualise for comparison
Voluntary Rate = (Resignations ÷ Avg employees) × 100
Excludes terminations and redundancies
Turnover benchmarks by industry
- Hospitality/Retail: 20-40% (high due to seasonal and casual work)
- Healthcare: 15-25% (varies by role type)
- Professional services: 10-15%
- Manufacturing: 10-15%
- Technology: 12-20% (competitive market)
- Government: 5-10% (higher stability)
Context matters
A 20% turnover rate might be excellent in hospitality but concerning in professional services. Always compare to relevant industry benchmarks. Also look at the composition - voluntary vs involuntary, high performers vs underperformers.
Analysing turnover data
Segment analysis
- By department/team
- By tenure length
- By performance rating
- By manager
Trend analysis
- Month-over-month patterns
- Year-over-year comparison
- Seasonal patterns
- Post-intervention impact
Improving turnover rate
Identify root causes
Use exit interviews and stay interviews to understand why people leave. Address specific issues rather than applying generic solutions.
Focus on early tenure
High turnover in first year often indicates onboarding issues. Invest in strong onboarding to improve early retention.
Address problem managers
High turnover in specific teams often points to manager issues. Look at turnover by manager and address outliers.
Key takeaways
Turnover rate measures the percentage of employees leaving over a period. Calculate it regularly, compare to industry benchmarks, and segment the data to identify where interventions are needed. Focus on reducing dysfunctional turnover - losing good performers - rather than targeting zero turnover.
RosterElf's staff management helps Australian businesses improve turnover rates through better scheduling, employee management, and workforce analytics.
