Staff turnover can be a challenge, especially when top performers move on. Though some studies show that over 40% of this phenomenon can be prevented, employers still struggle with it.
What you’ll learn
What you’ll learn
Updated: August 4, 2025
Key takeaways
- Staff turnover refers to the rate at which workers leave a company and are replaced by new hires
- A high staff turnover rate may signal organizational issues like inadequate compensation or a poor company culture
- While a healthy turnover rate varies by industry, it typically falls between 10-15% per year
- Common factors leading to high turnover are inadequate compensation, poor management, and a lack of growth opportunities
The good news is that there are ways to stay on top of your turnover rate, understand what’s behind it, and build a plan to address it. In this article, we walk through what staff turnover is, the two types to understand, its main causes, and what to do about it. Let’s jump in.
What is staff turnover?
In simple terms, staff turnover is the process by which employees leave a company and are replaced by new hires. Typically, the staff turnover rate is stated as a percentage of the workforce.
To calculate it, determine the number of employees who have departed during the time period you’re assessing. From there, divide that number by the average number of employees during that same period. Then, multiply your result by 100 to get the turnover rate as a percentage.
For example, if you had 10 employees last year and two left, your calculation is 2 / 10 = 0.2.
Then, 0.2 x 100 gets you 20% — this is your employee turnover rate.
What constitutes a good or poor rate will vary by industry, but on average, many businesses shoot for a rate of 10-15%. In some sectors, like hospitality or retail, it’s reasonable to expect higher turnover. In general, lower turnover typically correlates with higher employee satisfaction and business stability.
A high turnover rate usually indicates employee dissatisfaction with the workplace. This may be due to issues such as:
- Insufficient compensation or benefits
- Poor management or leadership
- A lack of career growth and development
- Employee burnout or deficiency of work-life balance
- An unstable culture
Voluntary vs. involuntary turnover
There are two types of employee turnover: voluntary and involuntary.
- Voluntary turnover occurs when an employee leaves of their own volition. They might have found a better job, been looking for higher compensation, or simply relocated.
- On the other hand, involuntary turnover happens when the organization lets an employee go, including scenarios such as a layoff, company restructuring, or firing for subpar performance.
When deciding on HR metrics to track, it’s helpful to measure both types of turnover in addition to the total staff turnover rate. This lets you dig into the reasons for employees’ leaving and, if needed, determine retention strategies.
What are the main causes of staff turnover?
There are several common causes of staff turnover:
- Insufficient compensation: Pay that does not align with industry standards or cost of living which leads to employees looking elsewhere
- Lack of growth and development opportunities: If employees don’t see a future for themselves at the organization, they’re likely to look for a position with more opportunities
- Inadequate management practices: Poor leadership, micromanagement, or a lack of support can drive employees to move on
- Poor work-life balance: Long hours, overwork, or a lack of flexibility can lead to employee burnout
- Unclear job expectations: If roles aren’t clearly defined, employees may feel lost or out of alignment with business goals
- Limited recognition and rewards: Even if compensation is sufficient, a lack of appreciation means employees may feel unmotivated or as if they’re not valued
Impact of staff turnover
Staff turnover has a broader impact than simply requiring your business to hire again. It can affect the company culture, organizational finances, and overall stability of the company. Here are a few of the biggest impacts of a high employee turnover rate:
- Financial costs: The cost (both the financial and time) of recruiting, onboarding, and training new employees is higher than the cost to retain a strong employee
- Loss of productivity: It takes time for a new hire to reach peak performance, which can slow down the team’s output and success
- Effect on team morale: As workers see their colleagues leave — whether due to dissatisfaction or being forced out — they can feel worried, stressed, and disengaged
- Strain on human resources: With a high need to replace employees, HR teams can become overburdened, leaving them with less time to focus on impactful long-term strategies
Employee retention keeps a subset of employers on their toes. In a recent survey, OnPay found that 10% of employers were “extremely concerned” about employees moving on, while 16% shared that they were “concerned” about staff turnover shaking things up.
We’ve covered a lot of ground, but we wrap up let’s see some ways to avoid turnover in the first place.
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Strategies to reduce staff turnover
Measuring and understanding turnover is a good start, but the greatest impact comes from learning how to keep levels from getting out of control. There isn’t a single solution, but if you understand the root causes in your organization, you can make a plan to address them and increase employee retention.
Here are a few key strategies to reduce staff turnover:
- Offer competitive pay and benefits: Conduct regular compensation and benefit audits and benchmarking to ensure you’re competitive and aligned with industry standards
- Provide career development programs: Give employees the coaching and training they need to progress in their career, whether that’s climbing the ladder or simply becoming an expert in their role
- Improve management training and support: Provide leaders with the tools they need to effectively manage, coach, and support their employees
- Consider town halls: This can be a company-wide meeting where people get to ask questions (or submit them anonymously beforehand), share ideas, and interact with departments they may not be familiar with
- Enhance work-life balance initiatives: If you can, offer flexible scheduling, hybrid or remote options, and wellness programs to help prevent burnout
- Promote open communication and feedback: Set regular check-ins with employees to share and receive feedback. Consider conducting employee surveys to monitor engagement and satisfaction
- Recognize and reward employee contributions: Acknowledge and celebrate the achievements of your team to make sure they feel valued and appreciated
- Develop a flexible work environment: Avoid one-size-fits-all policies. Instead, adapt to support various working styles and requirements
- Set employees up for success: Start preventing turnover from before day one with employee preboarding strategies. These will help you welcome new hires while setting expectations and helping them get their bearings right away
The best strategies for your business depend on what’s causing your turnover. If you discover that your turnover is related to poor morale, you might need to address your culture, work-life balance, recognition, or leadership. On the other hand, if your attrition is mostly involuntary due to performance, it’s time to assess how workers are hired, onboarded, and trained.
Addressing staff turnover makes good business sense
As employees come and go, reducing staff turnover requires more than simply tracking numbers. It means taking a closer look at your organization’s culture, identifying gaps to address, and implementing changes that positively impact employees. Sometimes this also means getting a better handle on payroll and HR tasks that might be falling through the cracks. If you are looking for a new payroll and HR software or just curious what other providers offer, OnPay offers a free trial where you can try all of our features. Good luck as you keep growing your team and know that ours is here to answer your questions!
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Jon Davis is the Sr. Content Marketing Manager at OnPay. He has over 15 years of experience writing for small and growing businesses. Jon lives and works in Atlanta.