What is turnover rate? A complete guide for modern organizations in 2025

You water the plant. Place it by the window. Do everything the guidebook says. Yet, slowly, the leaves begin to fall. Not all at once, but just enough to make you pause.

Maybe the roots are cramped. Maybe the soil is tired. Or maybe there’s something deeper at play that isn’t obvious at first glance.

That’s how employee turnover works. People don’t always walk out because of one glaring issue. Sometimes, it’s quiet dissatisfaction, lack of recognition, no room to grow, or feeling unseen.

The turnover rate isn’t just a number; it’s a signpost. And when you learn to read it well, you’ll stop losing leaves before the plant ever wilts.

What is employee turnover?

Employee turnover refers to the rate at which employees leave a company and must be replaced by new hires. The personnel turnover definition is often used interchangeably, especially in traditional or HR-specific contexts. It is usually expressed as a percentage by calculating employee turnover rate over a specific period, such as a month or a year.

This metric is essential for organizations as it reflects the health of their workforce and can impact overall productivity and profitability. Turnover includes both voluntary exits—such as resignations—and involuntary ones, like layoffs or terminations. A high annual turnover rate often signals deeper issues, such as poor management, lack of growth opportunities, burnout, or misaligned company culture.

On the other hand, low or stable turnover is generally considered a sign of strong employee retention and a healthy work environment. Calculating employee turnover rate of a company helps leaders track workforce stability, reduce unnecessary recruitment costs, and improve long-term organizational performance. It also provides valuable insights into employee engagement and satisfaction across departments and roles.

What is the meaning of turnover rate?

Turnover rate is more than just a number. It’s a window into how stable and satisfied your workforce really is. Calculating employee turnover and understanding what it means can help leaders make smarter decisions around hiring, engagement, and long-term retention.

• Definition of turnover rate: The turnover rate employee metric indicates how frequently employees leave a company within a specific period and need to be replaced, helping organizations assess workforce stability and retention effectiveness.
• Commonly tracked as employee turnover rate: Organizations usually calculate employee turnover rate annually to measure how often they’re losing and replacing people.
• Includes all types of employee turnover: Both voluntary exits and involuntary turnover such as layoffs or terminations are factored in.
• Signals workforce health: A consistently high annual turnover rate may point to deeper issues like toxic culture, poor leadership, or unclear growth paths.
• Used in company turnover analysis: Businesses monitor this metric to identify patterns, especially across departments or job levels.
• Impacts overall staff turnover rate: High turnover affects team dynamics, onboarding costs, and morale across the company.
• Supports effective turnover reduction strategies: Once you know your annual turnover rate, you can act on it—whether that means improving onboarding, adjusting pay, or investing in career development.
• Helps benchmark against industry standards: Comparing your calculated employee turnover rate benchmarks by industry helps contextualize if your rate is average or unusually high.

Retention vs Turnover vs Attrition: Clearing the terms

Understanding how turnover, attrition, and retention differ helps HR teams manage workforce changes more effectively and benchmark against industry turnover trends.

Root causes: Toxic culture, pay, burnout & career stalls

Employee turnover is rarely caused by a single issue. In most cases, it stems from persistent organizational challenges that erode employee trust, motivation, and satisfaction. Here are the most common root causes that increase turnover rates and reduce retention:

• Toxic culture: A work environment that tolerates disrespect, exclusion, poor leadership, or favoritism often leads to a rise in organizational turnover and difficulty retaining top talent.
• Pay dissatisfaction: When employees feel underpaid or perceive inequity in compensation, they’re more likely to leave, especially when average turnover rate benchmarks show better pay elsewhere.
• Burnout: Long hours, unrealistic expectations, and lack of recovery time contribute to mental and physical exhaustion — a growing driver of voluntary turnover across industries.
• Career stalls: Employees who feel stuck, underutilized, or lack clear growth paths often disengage and start seeking new opportunities, increasing job turnover silently before resigning.
• Lack of recognition: When contributions go unnoticed, even high-performing employees may leave, impacting staff turnover rate and morale.
• Poor manager relationships: One of the top drivers of employee turnover rate is ineffective or unsupportive leadership, which negatively impacts and accelerates disengagement and attrition.
• Misaligned values: If employees feel their personal values conflict with the company’s mission or day-to-day practices, it can lead to silent exits or quiet quitting.

What are the types of employee turnover in a workplace?

Employee turnover in the workplace can be categorized into several types, each with its causes and implications. The primary types of employee voluntary and involuntary turnover, are:

• Voluntary turnover: This occurs when employees willingly choose to leave the organization. Reasons for voluntary turnover can range from pursuing better career opportunities, dissatisfaction with the job or work environment, personal reasons, or retirement.
• Involuntary turnover: Involuntary turnover happens when an employer initiates the separation of an employee because of factors like poor performance, violations of company policies, downsizing, or layoffs.
• Functional turnover: Functional turnover involves the departure of employees who are not contributing effectively to the organization. While they may not have performance issues that lead to termination, they choose to leave due to limited job satisfaction or personal reasons.
• Dysfunctional turnover: Dysfunctional turnover refers to the departure of productive and high-performing employees, often due to dissatisfaction with the work environment, management, or other organizational factors. This type of turnover can be particularly costly for companies.
• Controllable turnover: Controllable turnover is turnover that an organization has some influence over and can manage through effective HR practices. This includes addressing issues like job satisfaction, professional development, and compensation.
• Uncontrollable turnover: Uncontrollable turnover occurs due to factors beyond the organization's control, such as retirement, family-related issues, or employees leaving for reasons unrelated to work.
• Seasonal turnover: Some industries, like retail and agriculture, experience seasonal turnover as employees are hired for short-term or temporary positions during peak seasons.

How to calculate the employee turnover rate?

It is crucial to calculate employee turnover for assessing workforce stability and identifying areas for improvement. To calculate the rate, use the following turnover rate calculator:

Employee Turnover Rate (%) = (Number of Employees Who Left During a Period / Average Total Number of Employees During the Same Period) x 100

Here's a step-by-step guide on how to calculate it:

1. Determine the period: Decide the time frame for which you want to calculate the turnover rate. Common periods are monthly, quarterly, or annually.
2. Count departures: During the chosen period, count the number of employees who left the organization for any reason. This includes resignations, retirements, terminations, and any other forms of employee departures.
3. Calculate average total employees: Determine the average total number of employees during the same period. This should include all employees who were on your payroll during that time.
4. Plug into the formula: Insert the numbers into the formula mentioned above.
5. Multiply by 100: To express the result as a percentage, multiply the outcome by 100.

For example, if you had 250 employees at the beginning of the year, and 20 employees left during the year, the final turnover percentage would be:

Turnover Rate (%) = (20 / 250) x 100 = 8%

This means that 8% of your workforce left the organization during that year. Calculating turnover rates regularly can help organizations gauge the health of their workforce and identify trends that may need attention, such as high turnover in specific departments or job roles.

What is a good turnover rate?

A good turnover rate aligns with the specific goals and circumstances of an organization. There is no universal "good" turnover rate because what's acceptable varies greatly across industries, company sizes, and regions.

Several factors influence what can be considered a good turnover rate, including:

• Industry norms: Different industries naturally have different turnover rates. For instance, industries like retail and hospitality typically have higher turnover rates due to the nature of the work.
• Company size: Smaller companies may have higher turnover rates simply because the departure or entry of a few employees can significantly impact percentages. Larger companies might have lower turnover percentages but may still experience a large number of employees leaving.
• Geographical location: Turnover rates can vary by region or country due to differences in labor markets, economic conditions, and job opportunities.
• Job roles & company culture: Certain job roles may naturally have higher turnover due to factors like stress, demand, or competition. Besides, a strong company culture that emphasizes employee engagement, well-being, and growth tends to have lower turnover rates.
• Economic factors: Economic downturns or upswings can also affect turnover rates. In a strong job market, employees might be more likely to seek better opportunities, while in a recession, they may be more inclined to stay put.

What does a healthy employee turnover rate look like?

A healthy employee turnover rate varies depending on the industry, organization size, and specific circumstances, but in general, it should strike a balance between stability and renewal. Here are some characteristics of a healthy turnover rate:

• Industry alignment: It should be in line with industry benchmarks. Different industries have different norms; for instance, industries like automobile and healthcare tend to have higher turnover rates, while sectors like healthcare or government have lower ones.
• Steady, manageable turnover: Healthy turnover is not erratic or volatile. It should exhibit a degree of stability, with occasional spikes related to seasonal or project-based hiring needs.
• Retention of top talent: A healthy turnover rate should ensure that top-performing and high-potential employees are retained, and their departure is minimized. Losing key talent regularly is a sign of unhealthy turnover.
• Alignment with business strategy: It should align with the organization's strategic objectives. For instance, if a company is in a growth phase, slightly higher turnover as it expands and hires new talent might be acceptable.
• Reasonable costs: Healthy turnover minimizes excessive costs associated with recruitment, training, and onboarding. High turnover can result in significant financial burdens.
• Positive workplace culture: A healthy turnover rate reflects a positive workplace culture that values and retains employees, prioritizing employee life cycle and providing opportunities for development and advancement.
• Employee feedback: Regular employee feedback and exit interviews should be conducted to understand the reasons behind turnover and make improvements accordingly.
• Gradual replacement: Employees who leave should be gradually replaced with well-qualified candidates, ensuring a smooth transition in the hiring process without overburdening the organization.
• Low voluntary turnover: Voluntary turnover, where employees choose to leave, should be kept to a reasonable minimum. High voluntary turnover suggests dissatisfaction or attrition issues.
• Strategic hiring: New hires should contribute positively to the organization and fit into the company culture, minimizing turnover caused by a poor hiring process and decisions.

A healthy employee turnover rate strikes a balance between stability and adaptation, aligns with industry norms, minimizes costs, and reflects a positive workplace culture. It should be monitored and managed in a way that supports the organization's strategic objectives and long-term success.

Turnover benchmarks by industry

High employee turnover rates vary widely across industries due to differences in job characteristics, work environments, and labor market conditions. Here are some general employee turnover trends in employee turnover statistics that define turnover across industries:

1. Retail: Voluntary turnover occurs in Retail more often with turnover rates ranging from 60% to 100% or more. This turnover rate meaning is because of the seasonal nature of the industry, entry-level positions, and limited opportunities for career advancement.
2. Hospitality: Similar to retail, involuntary turnover occurs in the hospitality industry, which includes hotels and restaurants, typically faces high turnover rates. It can range from 70% to 100% of the number of employees, primarily driven by seasonal demand and the nature of part-time and hourly jobs.
3. Technology: The technology sector tends to have lower turnover rates, often below the average number of 10%. High demand for skilled workers, competitive salaries, and opportunities for career growth contribute to employee retention.
4. Healthcare: Employee turnover rates in healthcare vary by role. While registered nurses (RNs) may have turnover rates around the average number of 15%, lower-skilled positions in healthcare facilities, like nursing assistants, may experience higher turnover, approaching 30% of the number of employees or more.
5. Manufacturing: Turnover rates in manufacturing typically range from 10% to 20%. Factors like automation, job security, and the need for specialized skills can influence turnover.
6. Finance: The finance industry generally experiences moderate turnover rates, often around the average number of 10% to 15%. High salaries, career progression opportunities, and the specialized nature of roles contribute to lower turnover.
7. Government: Government and public sector jobs often have the lowest turnover rates, frequently below 5%. These positions offer stability, benefits, and retirement plans, making them attractive for long-term employment.
8. Education: Education has a range of turnover rates. K-12 teachers might see turnover rates around 10% to 15%, while higher education faculty and staff may have lower turnover, closer to 5%.
9. Construction: Turnover in the construction industry can vary but often falls between 20% and 30%. Seasonal work, project-based employment, and demand fluctuations influence turnover.
10. Professional Services: Fields like law, accounting, and consulting usually experience lower turnover rates with their number of employees often below 10%. These roles demand specialized skills and offer substantial earning potential.

It's important to note that these figures are approximate and can vary based on factors like location, company size, and economic conditions.

5 Data-backed statistics on turnover rate

Reducing a company's turnover rate requires more than surface-level fixes — it demands intentional, research-backed strategies that address root causes while reinforcing employee satisfaction and engagement.

• Engagement and culture matter most: 37% of employees leave due to poor engagement and culture, making it the top turnover driver even more influential than pay, according to Gallup.
• Work-life balance drives exits: Gallup also found that well-being and work-life issues account for 31% of all employee departures, making it the second biggest turnover trigger.
• Preventable exits are common: Gallup reveals that 42% of employees who voluntarily left said their organization or manager could have taken steps to prevent them from leaving — yet meaningful conversations often never happened.
• The cost of turnover is massive: Hubstaff data shows companies spend up to 33% of an employee’s annual salary to replace them, with voluntary turnover costing U.S. businesses over $1 trillion each year.
• Lack of growth fuels attrition: According to Workplace Intelligence, 74% of employees would consider leaving if they don’t see opportunities for advancement or upskilling.

The role of employee retention software in preventing employee turnover

Employee retention software is one of the most effective tools for diagnosing and addressing the root causes of turnover before they result in actual exits. When done right, they turn silent dissatisfaction into actionable insight.

• Spot early warning signs: Retention softwares capture feedback from employees before they resign. Low scores in areas like recognition, leadership, or career growth can indicate future voluntary turnover.
• Identify patterns by role or team: By analyzing responses and turnover data across departments or functions, HR can pinpoint where turnover of staff is more likely to occur — especially in high-stress or under-supported roles.
• Track turnover risk factors: Employee retention software helps uncover controllable turnover drivers like compensation concerns, toxic culture, or lack of flexibility — issues that aren’t always voiced in 1:1s or exit interviews.
• Support personalized interventions: When retention software insights are shared with managers, they can take targeted actions to improve engagement and prevent dysfunctional turnover.
• Strengthen organizational alignment: Over time, consistent feedback helps align employee expectations with company culture, reducing mismatched hires and improving long-term retention.
• Improve turnover rate benchmarks: Regular insights creates a feedback loop where you can monitor improvements, reduce reactive hiring, and track progress against industry turnover benchmarks.
• Enhance employer brand through action: Acting on insights from the employee retention data shows employees their voice matters, leading to improved job satisfaction and lower employee turnover rate over time.

Conclusion

A healthy turnover rate isn’t achieved by chance. It’s the result of intentional leadership, strong communication, and a work environment where employees feel seen, heard, and valued. Reducing turnover isn’t just about offering perks or better pay; it’s about building a culture where people choose to stay because the work, the growth, and the experience are worth it.

If you’re looking to retain top talent and prevent silent disengagement, CultureMonkey’s employee retention software can give you the visibility you need. With stay surveys, sentiment analysis, and actionable feedback loops, it helps you identify turnover risks early and respond with clarity. Because keeping great people starts with listening—and acting on what you hear.

FAQs

1. How do you calculate monthly turnover?

To calculate the monthly employee turnover rate, divide the number of employees who left during the month by the average number of employees for that month, then multiply by 100.

How to figure turnover rate: (Number of separations ÷ Average number of employees) × 100

This turnover calculation formula gives you the monthly employee turnover rate as a percentage, helping you track workforce stability and identify trends in staff turnover over time.

2. Is a high turnover rate good?

A high turnover rate is typically not good, as it often reflects problems like poor leadership, low engagement, or limited career growth. It increases hiring costs, disrupts workflows, and affects team morale. However, in some cases, like replacing underperformers or during strategic changes, it can be beneficial. The impact depends on the cause and how it’s managed.

3. What causes high turnover?

High turnover is often caused by poor management, limited growth, low pay, burnout, and weak culture. Employees also leave due to a lack of recognition, misaligned values, or toxic environments. External factors like industry norms or job market shifts contribute as well. Identifying these causes early helps reduce employee turnover rate and build a more stable, engaged workforce.

4. How can we reduce turnover quickly?

To reduce turnover quickly, improving communication, addressing concerns promptly, and offering competitive pay are a few prominent ways. Strengthen onboarding, recognize contributions, and provide flexible work options. Conduct stay interviews to learn what keeps people engaged. Proactively fix cultural or managerial issues early. Retention surveys help identify risks and guide quick, targeted actions to retain key talent effectively.

5. Does turnover mean quitting?

Turnover doesn’t always mean quitting, but quitting is a common part of it. Turnover refers to the rate at which employees leave an organization, whether voluntarily, like resigning or retiring, or involuntarily, such as being laid off or terminated. So, while quitting contributes to turnover, it also includes other forms of employee departure from the company.

6. What is considered a high turnover rate?

A high calculated turnover ratio is typically considered anything above 20%, but this varies by industry and role. Sectors like retail or hospitality may naturally have higher rates, while others expect more stability. Persistent high turnover often signals issues with management, culture, or job satisfaction and can lead to increased costs, lost productivity, and reduced employee morale.