Inbound Marketing

Turnover Rate: What It Is & How to Calculate It

By 27th December 2018 No Comments

Seeing your employees leave for new opportunities can be a bittersweet experience. At first, you’re sad to see them go, especially if you’ve developed a close bond with them. But you also know that they’re moving onto bigger and better things — and you're excited for them

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However, if employee departure starts to become a regular occurrence at your company, the feeling should become more bitter than sweet, and eventually turn into concern.

Having a high turnover rate means your culture might be toxic, or your employees don’t feel fulfilled working at your company. Constantly replacing employees can also skyrocket costs and plummet productivity — if your company is a revolving door, you not only have to spend money recruiting and interviewing candidates, but you also have to train new hires who need a significant amount of time to be able to tackle a full workload.

Fortunately, there’s a way to determine if your turnover rate and, in turn, your company culture is healthy. Read on to learn how to do it.

How to Calculate Turnover Rate

  1. Pick a period of time that you want to measure your employee turnover rate over.
  2. Add the number of your employees at the beginning of the time period to the number of your employees at the end of the time period. Then, divide that number by two. This quotient will be your average number of employees.
  3. Divide the number of employees who left during this time period by your average number of employees.
  4. Multiply this quotient by 100 to calculate your turnover rate.

To help you calculate your own turnover rate, let’s run through a quick example.

Employees at beginning of the year: 500

Employees at the end of the year: 600

Average number of employees: (500+600)/2 = 550

Number of employees who left this year: 40

Turnover rate: 40/550 = 7.27%

What is a high turnover rate?

A “high” turnover rate is a completely subjective measure. Turnover rates vary wildly across different industries, so it’s impossible to use a one-size-fits-all percentage to determine if your company has a high turnover rate. To accurately gauge the severity of your turnover rate, compare your percentage to companies within your industry.

If you want to see the average turnover rate of your industry, LinkedIn analyzed their network of 500 million professionals to compile a report of the industries with the highest turnover rate in 2017. Below, we listed the 10 industries that experienced the highest turnover last year.

Average Turnover Rate By Industry

Technology (Software) 13.4%
Retail & Consumer Products 13.0%
Media & Entertainment 11.4%
Professional Services 11.4%
Government/Education/Non-Profit 11.2%
Financial Services & Insurance 10.8%
Telecommunications 10.8%
Oil & Energy 9.7%
Aero/Auto/Transport 9.6%
Healthcare & Pharmaceutical 9.4%

Remember, the severity of your company’s turnover rate completely depends on your industry. So to accurately gauge the health of your company’s turnover rate and culture, make sure to reference this blog post or keep an eye out for LinkedIn’s industry turnover analysis each year.

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