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Terms and Definitions

What is employee turnover?

Updated: May 24, 2024

Employee turnover definition and meaning

Employee turnover is the rate at which employees leave a company over a period of time, and can be voluntary, such as when employees resign to take on new jobs, or involuntarily, because of layoffs or firings.

More about employee turnover

There are two types of employer turnover:

  • Voluntary employee turnover: When an employee chooses to leave a job on their own, it is referred to as voluntary employee turnover. Why do individuals sometimes make this decision? Some workers find another job, decide to further their education, join the military, or relocate. In other cases, the individual may simply be looking for a different career and decide to leave without having another job lined up.
  • Involuntary employee turnover: When an employee is forced to leave a job without a choice between staying or leaving, it is commonly referred to as involuntary employee turnover. There can be a number of reasons why a company decides to part ways with a worker, including poor performance, an unsatisfactory background check, or misconduct. However, circumstances beyond the organization’s control sometimes come into play, such as a lackluster economy, a drop in customer demand, or a competitor taking greater market share.

What causes employee turnover?

There are several common causes of employee turnover, including:

  • Uncompetitive compensation: At the end of the day, most employees are at your company to earn an income. If they don’t believe they are being fairly compensated, they may choose to go elsewhere for better pay.
  • Low engagement: This occurs when employees don’t feel connected to or interested in the work they’re doing. They may turn to another company that offers them a position that better aligns with their interests and passions.
  • Employee burnout: When employees are overworked or lack the resources they need to successfully perform their jobs, they often face burnout. Employee burnout usually leads to physical and mental impairments, causing employees to quit.
  • Lack of feedback or recognition: Most employees want to feel valued and appreciated at work. If they don’t receive any recognition or feedback, they may be unsure of where they stand or how your company views them, and in turn, look for another job.

Can employee turnover be good?

Sometimes, employee turnover can be positive for a company. Depending on the situation, an employee’s departure may open the doors to a better, more qualified employee that you wouldn’t otherwise have hired. It can also force you to take a closer look at your hiring and retention strategies. If you find that many employees leave within the first several months of working, you may need to revamp your job descriptions, interview processes, and training protocols.

 

How to reduce employee turnover?

Fortunately, you can lower your employee turnover rate. Here are some tips to help you do so:

  • Dive deep into your competitors: Do some research and find out how similar companies are recruiting and retaining employees. Ask yourself whether your compensation and benefits are in line with theirs, and if there’s anything you can do to stand out from them.
  • Collect feedback: Employee feedback is invaluable, as it can inform you of your organization’s strengths and weaknesses. Make it a priority to continually ask your employees about their experiences at your company during performance reviews, when collecting 360-degree feedback, pulse surveys, and exit interviews.
  • Act on the feedback: It’s great to gather feedback from your employees, but it’s far more important to act on it. If you notice that many employees are bothered by your lack of flexibility, you may want to change your working hours or PTO policy.

How to calculate employee turnover rate

If you’re wondering what your employee turnover rate is, there is a formula you can use to find out. To do this, you’ll need to know the number of employees that left your company, as well as the number of employees you had during the same period, which may be measured annually or by quarters.

 

The first step is to divide the number of employees that are left by the average number of employees. Once you multiply your answer by 100, you’ll get your employee turnover rate expressed as a percentage for that period.

Using employee turnover in a sentence

“Since we began hosting a quarterly company town hall for staff members to hear from our leadership team, our employer turnover rate has significantly decreased.”

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