What Is Turnover Rate (Employee Turnover Rate)? How Is It Calculated?

An employee leaving an organization does not merely mean that a vacant position has been created. Restarting the recruitment process, completing the handover of duties, training the new employee, and restoring productivity in the position to the expected level all require time and resources.

Therefore, turnover rate should not be regarded merely as a numerical result showing how many employees have left the organization. When the rate is analyzed together with the departments in which departures are concentrated, employees’ length of service, roles, performance levels, and reasons for leaving, it provides a more comprehensive view of the organization’s workforce structure.

For example, while the overall employee turnover rate across an organization may appear reasonable, the departure of experienced employees from a critical department within a short period may create a significant operational risk. Similarly, when newly hired employees leave the organization within their first six months or first year, this may indicate areas for improvement in recruitment criteria, job expectations, compensation policy, or the onboarding process.

In this respect, the employee turnover rate is one of the key workforce metrics that should be monitored not only by human resources teams but also by finance, payroll, operations, and senior management.

What Is Employee Turnover Rate?

Turnover rate refers to the percentage of employees who leave an organization during a specific period relative to the organization’s average number of employees. In Turkish, the terms çalışan devir oranı, personel devir oranı, or iş gücü devir oranı may be used.

This metric is generally calculated on a monthly, quarterly, or annual basis. Depending on the organization’s reporting needs, it may also be measured by department, location, job group, length of service, or manager rather than being limited to the company as a whole.

For example, 20 employees may have left a company during a year. When considered on its own, this figure does not indicate whether the number of departures is high or low for the company. This is because 20 departures from a company with 50 employees do not have the same impact as 20 departures from a company with 1,000 employees.

Turnover rate relates the number of employees who leave to the average size of the workforce, producing a ratio that can be compared across periods and organizational units. Under the commonly used calculation method, departures during the period are divided by the average calculated using the number of employees at the beginning and end of the period.

For the employee turnover rate to be meaningful, the organization must clearly define which types of departures are included in the calculation. Treating resignations, employer-initiated terminations, retirements, expirations of fixed-term contracts, and transfers between group companies as a single category may lead to misinterpretation of the result. Organizations should therefore standardize the scope of the calculation and maintain the same methodology throughout reporting periods. If only resignations are taken into account in one period while all employee departures are included in another, the two results cannot be compared reliably.

Note: Turnover rate is, on its own, an outcome metric. To understand why the rate has increased, it should be analyzed together with variables such as reasons for leaving, length of service, department, manager, performance level, and pay positioning.

Which Departures Are Included in the Employee Turnover Rate?

When calculating the employee turnover rate, all employee departures may be considered within a single total. However, monitoring only the overall rate is often insufficient to understand workforce mobility within an organization. The reason for an employee’s departure and which party made the decision to terminate the employment relationship directly affect the interpretation of turnover analysis. Employee movements should therefore be classified, at a minimum, as voluntary and involuntary departures.

Voluntary departures

Voluntary turnover refers to an employee leaving the organization of their own accord. Employees who resign to join another organization, make a career change, continue their education, or take a break from working life for personal reasons may be included in this category. A concentration of voluntary departures within a particular team or employee group may indicate issues relating to compensation and benefits policies, relationships with managers, career opportunities, workload, working model, or organizational culture.

However, it should not be concluded that every voluntary departure is caused by the organization. Relocation, family circumstances, or a different career plan may also be determining factors in an employee’s decision to leave.

Involuntary departures

Involuntary turnover refers to the termination of the employment relationship at the employer’s initiative. Terminations due to inadequate performance, behavioral issues, organizational restructuring, elimination of a position, or economic reasons may fall within this category.

When the rate of such departures increases, not only employee performance but also the accuracy of recruitment criteria, clarity of job descriptions, performance management, and managerial decisions should be evaluated. In particular, an increase in employer-initiated terminations during the probationary period may indicate areas for improvement in selecting candidates who are suitable for the position or in accurately communicating job expectations to candidates.

Retirement and natural workforce movements

Departures resulting from retirement, death, or certain circumstances beyond the employee’s control may also be included in the total employee turnover rate. However, such departures should not be interpreted in the same manner as resignations resulting from employee dissatisfaction.

An organization with a high retirement rate may experience an increase in overall turnover. This may not directly indicate an employee engagement problem, but it may create a separate risk in terms of succession planning and organizational knowledge transfer.

Internal transfers

An employee’s transfer to another department or position within the same legal entity is generally not regarded as a departure for the purposes of calculating company-wide turnover.

However, in department-based analyses, transfers may be separately monitored as workforce losses for the relevant unit. In transfers between group companies, it should be clearly stated whether the report is prepared at the legal entity level or at the group level.

What Are the Types of Turnover?

Employee turnover may be classified in different ways for different purposes. These classifications enable a more accurate understanding of the workforce movements underlying the overall rate.

Functional turnover

This refers to the departure of an employee whose performance is low, whose fit with the role is limited, or who does not possess the competencies required by the organization. When properly managed, such departures may not adversely affect the organization’s overall performance.

Dysfunctional turnover

This refers to the departure of an employee who performs at a high level, possesses critical knowledge, or works in a position that is difficult to fill. Even if overall turnover is low, an increase in dysfunctional departures may create a significant talent-retention and business-continuity risk.

Avoidable turnover

These are departures resulting from factors that the organization can influence, such as pay imbalances, managerial approach, workload, career development, or working conditions.

Unavoidable turnover

This results from circumstances that the organization cannot directly control, such as relocation, retirement, mandatory career changes, or an employee’s personal circumstances.

HR Practice: Maintaining only “resignation” or “employer-initiated termination” options in employee exit records is insufficient. Classifying departures according to dimensions such as avoidability, performance level, critical position, and seniority group makes turnover data more useful for management decision-making.

Why Is Turnover Rate Important?

Beyond being a standard metric included in human resources reports, turnover rate indicates the extent to which an organization is able to retain its workforce and how it manages changes in its workforce structure.

Makes recruitment and onboarding costs visible

Various resources are required to refill a position, including job advertisements, consultancy services, candidate interviews, reference checks, and onboarding procedures. The time required for a new employee to become fully proficient in their role is also part of this cost. When turnover rate is monitored regularly, it becomes easier to identify the departments in which recruitment cycles are being repeated and the areas accounting for the greatest share of the human resources budget.

Supports workforce planning

Departure trends from previous periods can help in planning future recruitment and replacement needs. Particularly in organizations that use seasonal labor, employ large workforces, or where operational continuity is critical, turnover data becomes one of the key inputs for workforce planning.

Reveals the loss of critical knowledge

When an experienced employee leaves, the organization may lose not only workforce capacity but also customer relationships, process knowledge, institutional memory, and experience acquired in the course of performing the role. Monitoring departures from critical positions as a separate metric contributes to the timely preparation of handover and succession plans.

Provides early warning signals about employee experience

A concentration of departures within a team reporting to a particular manager, the same department, or a similar seniority group may indicate a common issue relating to compensation, management approach, workload, or career opportunities. From this perspective, turnover data should be evaluated together with employee satisfaction surveys, absenteeism rates, performance results, and exit interviews.

Affects payroll and workforce cost planning

An increase in onboarding and offboarding activity directly affects payroll operations through prorated salary calculations, unused leave payments, compensation payments, changes in benefits, and recruitment costs. Indirect costs may also arise from overtime resulting from vacant positions, the use of temporary personnel, or the redistribution of duties among existing employees.

Provides insight into employer branding and service quality

In organizations experiencing frequent employee turnover, team stability, employee experience, and the reliability of recruitment processes may be adversely affected. An increase in employee turnover in customer-facing roles may also affect service continuity and customer experience.

How Is Turnover Rate Calculated?

When calculating turnover rate, the number of employees who leave the organization during a specific period is divided by the average number of employees during the same period. The resulting figure is multiplied by 100 to express the employee turnover rate as a percentage.

Turnover Rate (%) = Number of Employees Who Left During the Period ÷ Average Number of Employees × 100

For example, assume that a company had 180 employees at the beginning of the year, 220 employees at the end of the year, and that 30 employees left the organization during that year.

First, the average number of employees is calculated:

Average number of employees = (180 + 220) ÷ 2 = 200

The employee turnover rate is then calculated:

Turnover rate = 30 ÷ 200 × 100 = 15%

This result shows that the departures occurring during the year correspond to 15% of the average number of employees. However, whether the rate is high or low should not be determined solely on the basis of this calculation.

How Is the Average Number of Employees Calculated?

The average number of employees used as the denominator in the turnover rate represents the organization’s average workforce size during the period under review. The most common method is to add the number of employees at the beginning and end of the period and divide the total by two:

Average number of employees = (Number of employees at the beginning of the period + Number of employees at the end of the period) ÷ 2

This method provides a practical calculation for organizations in which the number of employees remains relatively stable throughout the period. However, in companies that are growing or downsizing rapidly or that use seasonal labor, relying solely on the employee numbers at the beginning and end of the period may not adequately reflect the actual average. In such cases, calculating the average monthly number of employees provides a more reliable result:

Annual average number of employees = Total monthly employee counts ÷ 12

More detailed human resources analytics systems may also use the average of daily or periodic employee counts. Using employee counts taken at more frequent intervals rather than only beginning and ending values can provide more precise results, particularly in organizations where workforce numbers fluctuate significantly.

How Is Monthly Turnover Rate Calculated?

Monthly turnover rate is calculated by dividing the number of employees who leave during a particular month by the average number of employees for that month.

Monthly turnover rate (%) = Number of employees who left during the month ÷ Monthly average number of employees × 100

Assume that a company has 240 employees at the beginning of the month and 250 employees at the end of the month, and that 6 employees leave during the relevant month.

Monthly average number of employees = (240 + 250) ÷ 2 = 245

Monthly turnover rate = 6 ÷ 245 × 100 = 2.45%

Monthly rates help identify short-term changes more quickly. For example, monthly data can be used to monitor whether departures increase following a change in management, an update to compensation policy, a period of heavy workload, or organizational restructuring.

However, a high rate in a single month does not always indicate a persistent problem. The result should also be assessed in light of factors such as seasonality, project completion, or the expiration of fixed-term employment contracts.

How Is Annual Turnover Rate Calculated?

Annual turnover rate is calculated by dividing the total number of employee departures during a calendar year or a 12-month reporting period determined by the organization by the annual average number of employees.

Annual turnover rate (%) = Number of employees who left during the year ÷ Annual average number of employees × 100

If 60 employees leave during the year at a company with an annual average of 500 employees:

60 ÷ 500 × 100 = 12%

The annual turnover rate is calculated as 12%.

The annual rate provides a more balanced metric than the monthly rate for comparing different periods and identifying long-term trends. However, the annual figure may obscure spikes in departures occurring in particular months or departments during the year. For this reason, monthly trends should also be monitored alongside the annual rate.

How Is Turnover Rate Calculated by Department?

Departmental turnover rate is calculated by dividing the number of employees who leave a particular department by the average number of employees in that department.

Department turnover rate (%) = Number of employees who left the department ÷ Department’s average number of employees × 100

For example, assume that the sales department has an average of 80 employees during the year and 16 employees leave the department:

16 ÷ 80 × 100 = 20%

If the finance department in the same company has an average of 40 employees and 2 employees leave:

2 ÷ 40 × 100 = 5%

Even if the organization-wide employee turnover rate appears balanced, the 20% rate in the sales department may indicate that this department should be examined separately. When conducting department-based analyses, factors such as employee profiles, the nature of the roles, availability of talent in the labor market, seasonality, and working conditions should also be taken into account.

How Should Turnover Rate Be Interpreted?

When interpreting turnover rate, it is not sufficient to consider only whether the rate has increased. The same rate may have entirely different implications for two different organizations.

For a sound assessment, the following questions should be considered:

• In which departments did the departing employees work?
• Were the departures voluntary or employer-initiated?
• How long had the departing employees worked for the organization?
• Is there a concentration of departures within the first six months or first year?
• Is the organization losing high-performing employees?
• How long does it take to recruit replacements for departing employees?
• Are departures concentrated within a team reporting to a particular manager?
• Are the reasons for departure changing over time?

For example, if an organization has an overall turnover rate of 10% and the majority of departing employees are low performers, the result may not represent a significant loss for the organization. Conversely, even if the rate is only 5%, the organizational impact may be greater if all departing employees possess critical expertise. Turnover rate should therefore always be interpreted together with the characteristics of the employees leaving and the impact of their departures on the organization.

What Should the Ideal Turnover Rate Be?

There is no single ideal turnover rate applicable to all organizations. An acceptable rate varies depending on the industry, business model, employee profile, nature of the positions, location, and labor market conditions. Employee mobility may be higher in industries such as retail, tourism, call centers, and sectors with intensive seasonal employment. Lower rates may be targeted for roles requiring specialized expertise, lengthy training, or critical organizational knowledge.

Organizations should therefore not rely solely on general industry averages. Their own historical data, comparable position groups, and the organization’s strategic needs should also be considered.

The following indicators may be considered together when determining an ideal turnover rate:

• Organization’s historical average
• Employee mobility within the industry
• Voluntary turnover rate
• Turnover rate in critical positions
• First-year turnover rate
• Loss of high-performing employees
• Time required to replace departing employees
• Estimated cost of employee departures

Just as high turnover is not always negative, low turnover does not always indicate a healthy organizational structure. Very low employee mobility may, in some organizations, indicate limited career mobility or a stagnant workforce structure.

What Are the Causes of High Employee Turnover?

Employees’ decisions to leave an organization are often not based on a single reason. Multiple factors, such as compensation, relationships with managers, career expectations, workload, and organizational culture, may collectively influence the decision.

Non-competitive compensation and benefits

Employees may be more likely to leave when comparable roles in the market offer higher compensation or more comprehensive benefits. Compensation policy should therefore be evaluated not only in terms of internal pay equity but also in conjunction with external market conditions.

Relationships with managers

An employee’s day-to-day experience is largely shaped by their relationship with their direct manager. Communication problems, unfair allocation of duties, insufficient feedback, or lack of support may weaken employee engagement.

Limited career development opportunities

Employees who do not see opportunities to advance in their roles, acquire new competencies, or assume different responsibilities may choose to continue their careers at another organization.

Workload and working conditions

Persistently high workloads, long working hours, irregular shifts, and poor work-life balance may increase employees’ tendency to leave the organization.

Mismatch of expectations during the recruitment process

A significant discrepancy between the role described during the job interview and the work the employee actually encounters may be one of the primary causes of early departures.

Insufficient onboarding

If a new employee does not receive sufficient information about their role, team, and organizational culture, their experience during the first months may be adversely affected.

Lack of recognition and feedback

When an employee’s contributions go unrecognized, their achievements are not acknowledged, or they receive feedback only when errors occur, their sense of engagement may weaken.

Organizational culture and trust issues

A lack of transparency in decision-making, a perception of discrimination among employees, or inconsistency between organizational values and day-to-day practices may adversely affect employees’ trust in and connection to the organization.

How Does High Turnover Affect Businesses?

The impact of a high employee turnover rate is not limited to the recruitment budget. It may affect numerous areas, ranging from operational continuity to customer experience.

Recruitment and training costs increase

Repeatedly filling vacant positions consumes the time of recruitment teams and managers. Training new employees also requires additional resources.

Productivity losses occur

When a position remains vacant, responsibilities may be distributed among existing team members. Even after a new employee starts work, it may take time for them to reach the expected level of productivity.

The workload of existing employees increases

Distributing the responsibilities of a departing employee among team members may increase the workload of other employees. In the long term, this may create a cycle that triggers further departures.

Organizational knowledge is lost

When experienced employees leave, process knowledge not documented in written procedures, customer history, and experience acquired through performing the role may also be lost.

Customer experience may be adversely affected

Frequent turnover among customer-facing employees may result in inconsistencies in service quality and weaken continuity in customer relationships.

Payroll operations become more complex

Frequent onboarding and offboarding increase the number of processes involving prorated salary, leave pay, compensation, benefits, and statutory notifications. This may increase the risk of errors, particularly in manual operations.

How Can Employee Turnover Rate Be Reduced?

To reduce turnover, focusing solely on employees who leave is not sufficient. The entire employee lifecycle, from recruitment to career development, should be evaluated.

Clarify recruitment criteria

The responsibilities of the position, working conditions, and performance expectations should be clearly communicated to candidates. In addition to suitability for the role, compatibility with the organizational culture should also be evaluated.

Structure the onboarding process

Providing a new employee with only administrative information during the first days is insufficient. Role expectations, team relationships, business processes, and objectives should be communicated within a structured program.

Develop managerial competencies

Supporting managers in areas such as team management, feedback, work allocation, and conflict management may directly affect employee experience.

Regularly evaluate compensation and benefits policies

Compensation levels should be reviewed in terms of market conditions, job responsibilities, and internal pay equity.

Create career and development opportunities

Clearly defined pathways for employees to progress within the organization or acquire new competencies support long-term engagement.

Monitor employee feedback

Employee engagement surveys, one-on-one meetings, exit interviews, and regular feedback mechanisms should be used together.

Monitor critical employees separately

Not every departure has the same impact. Risk indicators and succession plans should be established for employees in critical positions and for high-performing employees.

What Data Should Be Used in Turnover Analysis?

For turnover rate to be used effectively in management decision-making, recording only employment start and termination dates is insufficient.

The key data that may be used in the analysis include:

• Employment start and termination dates
• Reason for departure
• Voluntary or involuntary departure classification
• Department and location
• Position and job level
• Manager information
• Length of service
• Performance results
• Compensation level
• Benefits
• Absenteeism data
• Exit interview results
• Critical position information
• Time required to hire a replacement

When these data are evaluated together, it becomes possible to understand not only the level of employee turnover but also why it occurs and in which areas it is concentrated. When reporting employee data, access permissions should be limited, reports should contain only the level of detail necessary, and obligations relating to the protection of personal data should be observed.

Frequently Asked Questions

Are turnover rate and attrition rate the same?

Although these two concepts may be used interchangeably in some sources, not every organization uses the same definition. Turnover generally refers to movements involving employees who leave and whose positions may subsequently be filled by new employees, whereas attrition may be used to describe a natural reduction in the workforce where the vacated position is not refilled. The definitions used by the organization should be clearly specified in its reporting policy.

Is high turnover always bad?

No. A certain level of employee mobility may be functional for a business in circumstances such as the departure of low-performing employees, organizational restructuring, or a transition toward new competencies. The key issue to assess is which employees are leaving and why.

Are employees who leave during the probationary period included in the turnover calculation?

They may be included depending on the organization’s reporting scope. However, monitoring departures during the probationary period as a separate metric makes it easier to identify issues relating to recruitment quality and the onboarding process.

Are employees who leave due to retirement included in the calculation?

They may be included in the total turnover calculation. However, reporting retirement-related departures separately from voluntary resignations provides a more accurate basis for interpretation.

Are fixed-term employees included in the turnover calculation?

The scheduled expiration of a fixed-term contract may not constitute a departure resulting from employee engagement issues. If these employees are included in the overall calculation, it is recommended that they be reported under a separate category.

Can departments be compared directly?

Comparisons may be made; however, the nature of the roles within departments, employee profiles, labor market conditions, and seasonality should be taken into account. Assessing departments with different characteristics against the same reference value may be misleading.

How often should turnover rate be calculated?

Depending on the size of the organization and the level of employee mobility, turnover may be calculated monthly, quarterly, or annually. Monthly analysis shows short-term changes, while annual analysis indicates long-term trends.

How does turnover rate affect payroll costs?

Employee departures may increase the volume and complexity of calculations relating to prorated salary, leave pay, compensation, and other payments. When vacant positions are covered by existing employees, overtime and additional pay costs may also arise.

Are turnover rate and employee engagement the same thing?

No. Turnover is an outcome metric showing departures that have already occurred. Employee engagement, on the other hand, seeks to measure employees’ relationship with the organization and their inclination to remain with it. Analyzing the two metrics together can provide more meaningful results.

Is employee turnover rate sufficient as a standalone HR metric?

No. Turnover should be evaluated together with other metrics such as employee engagement, absenteeism, time to hire, first-year turnover rate, performance results, and cost per hire.

Conclusion

Turnover rate is one of the fundamental human resources metrics used to measure employee movement within an organization over a specific period. However, the true value of this rate lies not merely in the calculation itself, but in analyzing who the departing employees are, why they are leaving, and what impact their departures have on the organization.

A single organization-wide rate may obscure differences among departments, job groups, and seniority levels. Voluntary departures, losses of critical employees, first-year departures, and department-level movements should therefore be monitored through separate metrics.

Managing human resources and payroll data within an integrated structure increases the reliability of turnover analysis. Regular, comparable, and accurately classified data provide a stronger basis for decisions aimed at strengthening employee engagement, planning workforce costs, and retaining critical talent.