Employee turnover is the rate at which employees leave an organization over a given period. To calculate the turnover rate, divide total separations in the period by the average headcount for that period and multiply by 100; track voluntary and involuntary exits separately for clearer diagnostics.
In 2025, companies lose an average of 18% of their workforce every year — and each resignation costs up to 4× the employee's salary. Understanding and calculating turnover is just the first step. The real challenge is reducing it, and this guide will help you do both.
In this guide, we'll cover:
- What employee turnover actually is and how to calculate it
- Why turnover matters (including the cost to your organisation)
- 5 proven strategies to reduce turnover
- How HarmonyHR helps you build a retention-first HR system
What does "employee turnover" mean
Employee turnover is the number of employees who leave your organization over a set period, whether voluntarily (quits) or involuntarily (layoffs/discharges), often tracked monthly, quarterly, or yearly. U.S. labor statistics define these as quits or layoffs & discharges.
→ Voluntary turnover: employees who choose to leave (quits).
→ Involuntary turnover: employees who are terminated or laid off.
Tip: Report turnover at multiple levels (company, function, location, tenure bands). A single problematic team can inflate your "company average."
Turnover vs. attrition vs. retention (and "turnover" in accounting)
- Turnover (HR): the number of people leaving during a specified period (separations).
- Attrition: headcount shrinking through natural means (e.g., exits not backfilled).
- Retention: the inverse metric (share of employees who stay).
- "Turnover" in accounting (esp. U.K.): means revenue, not people leaving.
Turnover rate formula (with examples)
Formula (standard SHRM approach):
Turnover rate (%) = (Total separations during period ÷ Average headcount during period) × 100
Example: 26 exits in Q1, average headcount 140 → 26/140 × 100 = 18.6%.
Voluntary turnover (people who quit) and involuntary (layoffs/discharge) are useful breakouts. BLS also reports quits and total separations at the national & industry level.
How-To (step-by-step):
- Pick a period (e.g., last 12 months).
- Count all separations in that period (consider a separate count for voluntary).
- Compute the average headcount for that period.
- Apply the formula, then segment by team, location, manager, tenure.
- Track monthly, review quarterly, compare to your own trend first.
You may also want to review our article on 8 key HR metrics every manager must track in 2025 to see how turnover fits in your broader analytics stack.
What's a "good" turnover rate?
There's no universal 'good' turnover rate.
Use BLS JOLTS to compare quits and total separations by industry and over time. Next, add your company's history and role mix to the analysis. JOLTS data shows higher quits in leisure, hospitality, and retail, and lower turnover in government and education, reflecting differences in job structure and the labor market.
If your turnover is going up compared to last year and is much higher than similar companies, it's time to look closely at management, pay, workload, and career growth opportunities.
Industry benchmarks & what counts as "high" turnover
Turnover rates vary a lot by industry and job type. For example, retail and hospitality usually have the highest quit rates, while government jobs have the lowest. This shows how much benchmarks can differ.
Compare your figures against those of similar companies in your industry/region, rather than a single cross-industry number.
Snapshot of turnover by industry
| Industry | Typical Turnover Rate* | Key Notes |
|---|---|---|
| Retail / Wholesale | ~24.9% | One of the highest, high-churn roles, seasonal work |
| Healthcare (hospitals) | ~20% | High stress, burnout, competition for talent |
| Technology / IT | ~13 %-18 % | Competitive market, skills in demand |
| Government / Education | Under ~10% | Often more stable roles, less turnover |
| All industries average (US) | ~10-12% annually; monthly averages ~3.3% (2025) | Serves as a rough benchmark |
*Rates vary by geography, role, company size.
If your rate is much higher than your industry average, it's a warning sign. You may be losing talent faster than you can hire, which can hurt your company's growth and stability.
What turnover really costs
- Financial costs: Replacing an employee can cost between half to four times their annual salary.
- Productivity & culture: When turnover is high, knowledge leaves, team cohesion suffers, morale drops.
- Signal of deeper issues: High turnover often points to issues like poor management, lack of growth, or weak culture.
Putting simply: every percentage point you reduce in turnover can translate into thousands of dollars saved and more engaged employees.
Why people actually quit in 2025
- Career growth tops the list. In the Work Institute 2025 Retention Report, career issues remained the #1 reason for voluntary quits; work-life, management behavior, and well-being also figure prominently.
- Toxic culture is the single strongest predictor of attrition, per a large-scale analysis of US job change.
- Flexibility matters: a randomized hybrid-work trial at Trip.com showed about 33 to 35 percent lower attrition with hybrid schedules compared to full-office setups.
Also worth seeing: our article on Top 10 HR Trends for 2025-2026 You Can't Afford to Miss for more context on how retention fits into the future-of-work landscape.
The 5 most effective ways to reduce turnover
1. Hire the right people & set clear expectations
A poor hire or a mismatch in expectations often leads to an early exit, which can significantly increase your turnover rate.
What to do:
- Use structured interviews not just on skills but on cultural fit and role clarity.
- Craft clear job descriptions ("What you will do", "What success looks like", "Growth potential").
- Onboard with a 30-60-90 day plan setting clear milestones.
How HarmonyHR helps: Use real-time dashboards to track first-quarter exits by hire cohort and role, spot red flags in early attrition.
2. Provide competitive compensation & benefits + flexible work policies
Compensation isn't everything, but it is often the trigger for leaving. Flexibility and work-life balance now rank very high.
What to do:
- Conduct regular market-benchmarking for pay and benefits.
- Offer flexibility: hybrid schedules, remote options, wellness benefits.
- Make benefits visible and understandable. Many employees undervalue what they actually receive.
How HarmonyHR helps: Analytics module shows benefit utilization + correlation to tenure; self-service gives employees transparent view of their total compensation.
3. Develop clear career paths & focus on growth
When employees don't see where they're going, they'll go somewhere else.
What to do:
- Map internal career pathways ("Role A → Role B → Role C") and communicate them.
- Offer skill-training, mentoring, internal mobility and job-rotation.
- Set up regular development conversations, not just annual reviews.
How HarmonyHR helps: Use skill-matrix tracking to show employees their current skill set vs. required next level, trigger alerts when someone stays too long in the same level without growth.
4. Strengthen manager-employee relationships & foster strong culture
Many people leave managers, not companies. Culture and belonging influence retention.
What to do:
- Train managers on coaching, feedback, recognition.
- Establish peer-recognition programs, celebrate wins.
- Monitor engagement regularly, act on feedback.
How HarmonyHR helps: Dashboard shows manager turnover rates, flag teams with high exit incidence; recognition module enables peer-to-peer shout-outs and visible reward data.
5. Use HR analytics & retention-focused HRIS tools to monitor turnover risk
You can't fix what you don't measure. Data allows proactive strategies rather than reactive.
What to do:
- Set up dashboards tracking turnover rate by cohort, team, manager, tenure.
- Analyse leading indicators: engagement drops, manager changes, overtime spikes.
- Use patterns to intervene early (stay interviews, career check-ins).
How HarmonyHR helps: Analytics build custom segments (e.g., tenure < 1 year, high overtime), integrate onboarding/offboarding workflows so you capture full lifecycle data.
Also, for related insights, check out these articles:
- "10 stay interview questions to ask in 20 minutes"
- "The 2025 benefits shortlist: 5 perks your team actually wants"
- "Employee recognition in 2025: 10 ready-to-use phrases to keep your best talent"
Conclusion
Employee turnover is more than just a number on a dashboard. It is a signal. When people leave, your business loses momentum, knowledge, morale, and money. The good news is that you can reduce turnover by measuring it, understanding what causes it, and using clear retention strategies.
By combining the five strategies above with a system like HarmonyHR as your HR foundation, you set up the conditions for growth, stability, and high performance.
Want to take the next step? Book a demo of HarmonyHR today and see how you can start lowering turnover and building a workforce that is ready for the future.
Authoritative References
- Bureau of Labor Statistics (BLS) — "Job Openings and Labor Turnover Survey (JOLTS)": https://www.bls.gov/jlt/
- Society for Human Resource Management (SHRM) — "Calculate Employee Turnover Rate With This Step-by-Step Guide": https://www.shrm.org/topics-tools/tools/how-to-guides/how-to-determine-turnover-rate
- Work Institute — "2025 Retention Report: Employee Retention Truths in Today's Workplace": https://workinstitute.com/retention-reports/
FAQ
What does "turnover" mean in HR?
Employee turnover = how often employees leave during a period (monthly/annually). Track voluntary vs involuntary.
What is a "good" turnover rate?
Turnover rates considered healthy are typically under about 10 %, though this depends on industry. High-churn industries may see higher acceptable rates.
How often should I calculate turnover rate?
Quarterly is a good baseline; monthly for high-churn functions. The sooner you spot trends, the sooner you act.
Turnover rate formula / equation?
(# separations ÷ average headcount) × 100. See examples above.
Turnover vs revenue (business meaning)?
In HR, turnover = people leaving. In UK accounting, "turnover" often means revenue (top-line sales).
Turnover ratio?
In finance, "turnover ratio" can mean inventory/asset turnover; in HR, some use it synonymously with turnover rate. Clarify context.
What is "turnover frequency"?
Some use it informally to mean how often staff churn occurs, such as turnover rate calculated monthly or quarterly. In other fields, it has different meanings, so make sure you are using the HR context.
How to reduce turnover fast?
Start with onboarding, manager 1:1s + stay interviews, a flexibility policy where possible, and fix obvious pay compression.
Is all turnover bad?
Not necessarily. Some turnover (exit of low-performers, restructuring) may benefit the company. The goal is to minimise unwanted, avoidable turnover.
Can I predict employees who might leave?
Yes, you can use analytics to look at tenure, performance trends, engagement, manager changes, and more. This is part of a modern HR strategy.
Industry benchmarks?
Use BLS JOLTS quits and total separations for directional context; always compare to peers and your historical trend.