What is the employee turnover rate?
The number of leavers over a period as a share of average headcount.
In detail
A common calculation is: number of departures in a period ÷ average headcount over the same period. When an employee leaves, the investment in hiring and training starts over, and experience and customer relationships may leave too.
For example
With an average of 80 employees over a year and 12 departures, the annual turnover rate is 15%.
How companies use it
Distinguish voluntary from involuntary departures, and look at them by department, role and length of service. If new hires leave soon after joining, it usually points to a problem in recruitment or onboarding.
Common misconceptions
Assuming that the lower the turnover the better. A moderate level of movement brings new ideas; what really deserves attention is whether strong employees are leaving.
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