Employee turnover: A guide


Table of Contents

What do you mean by employee turnover?

The productivity of an organization is highly defined by the number of employees in it. Employee turnover is used to determine the number of employees in an organization who either quit, were replaced or asked to leave. 

Employee turnover he’s generally on a yearly basis in most of the organizations. No matter how the employee left the organization or they were fired and they left themselves, their absence directly affects the productivity rate of the organization.

When the employee turnover rate he’s less, it is not always a bad thing. Because, most of the time the employees that left are placed by new employees. although, this transition does affect the overall productivity base of an organization. 

In this article, let us look more into the concerts of employee turnover.

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Types open employee turnover

  • Voluntary turnover – Voluntary turnover defines the number of employees who themselves decided to leave the organization. the employees make their choice to disassociate from the organization without coming under any external pressure.
  • Involuntary turnover – involuntary turnover means the employees that were fired are asked to leave by the authorities of an organization. The reason behind their firing is not always mentioned.
  • Desirable turnover – Turnover is set to be desirable when an organization loses the employees that were not performing well, please them with new hired employees. During this process it is important to keep the productivity of an organization steady.
  • Undesirable turnover – turnover is set to be undesirable when an organization loses its best performing employees. These employees are hard to replace and have a deeper impact on others.

How who calculate employee turnover rate

Talking about employee turnover, it does not always turn out good or bad. If an organization uses its best performing employees, it will affect the performance of the organization in a negative way. Whereas, when an organization loses its underperforming employees, places them with new talent, the results might as well turn out to be positive.

Let us look at how you will calculate employee turnover rate in your organization.

Monthly employee turnover rate

monthly employee turnover rate means the following three measures:

  • Number of active employees at the beginning of the month (AEB)
  • Number of active employees at the end of the month (AEE)
  • Number of employees who left during that month (EL)

Now, calculate the average number of employees like so:

Avg.= AEB + AEE/2

Example: there were 100 active employees at the beginning of the month and 84 active employees at the end of the month. the average it will be calculated as,

Avg.= 100+84/2


Lastly, forward the monthly turnover in percentage, you shall use the following formula:

For 3 employees left,

Monthly turnover % = 3/92 x 100 

= 3.26%

Your monthly employee turnover is 3.26%

Annual turnover rate

Most of the time, organizations prefer to calculate the employee turnover rate on an annual basis. For doing so, the process is as follows. 

Example: You have 100 employees at the start of the year and 125 at the end of the year while 5 employees left during the period, your annual employee turnover can be calculated as:

Annual employee turnover rate % = [5/(100+125)/2] x 100

= [5/(225/2)] x 100

= (5/112.5) x 100

= 0.04 x 100

= 4.44%

Your annual employee turnover rate is 4.44%

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Analyzing organization’s employee turnover rate

  • Who is leaving?

As discussed earlier an organization can lose employees that are underperforming as well as the good ones. Hence come on you need to identify which employees are leaving so that you can take necessary actions. An organization can make efforts in retaining the good employees or choose to let them go if they are the underperforming ones. A survey needs to be performed to identify which employees are leaving and then take necessary measures depending on the situation which will directly affect the organization performance.

  • When are they leaving?

The timing of employee departure is also important for understanding employee churn. If the employees are leaving some days after joining, you should take a look at your onboarding process and job description etc. If the employees that worked with an organization for years decide to leave, there might be an issue of less career opportunities, less engagement, lack of employee benefits, etc. Understanding these reasons will help you repair your employee processes.

  • Why are they leaving?

There might be various reasons for an employee to choose to leave an organization. it might be poor management, superiors, lack of engagement, employee processes, and so on. It is crucial that you get to the root of these reasons and act upon them as soon as possible to prevent future employee departures.

Why do you need employee turnover?

  • Better pay – employees may decide to leave their organizations for a better day at someone else’s. It is crucial that you understand different employees have different motivations to be productive. there will be employees that have worked with you for years and still decide to leave your organization for a better opportunity. 
  • Low engagement –  lack of regular feedback may lead to the employees thinking they are not being heard. They go for more challenging roles at some other place for quality work, they don’t feel listened to or supported by the management or did not receive enough training and guidance for their responsibilities. 
  • Less future opportunities – better performing employees are always on a lookout for much better opportunities to showcase their skills sets. They need to be involved in the workforce and provided with professional and personal growth. 
  • Poor management – poor employee management affects directly on the employee performances and productivity. Every employee needs to be monitored and managed depending on their responsibilities.
  • Poor work culture – employees pay more attention to the workplace they work in. organizations work culture is what sets it apart from the rest of the competition. The work culture is a mixture of physical and mental stability with the employees being respected and valued. 
  • Work-life balance – unhealthy work-life balance can also drive employees away. Employees should be able to pursue their dreams of studies or hobbies while working in your organization. Management should work with the employees to help them achieve a proper work-life balance. 


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