Cracking the code for calculating employee turnover rates

If you've ever wondered how to calculate your employee turnover, don't worry — you're in the right place.

Your company's turnover rate can provide valuable insights into your recruitment process and retention strategies and help identify potential problems that could lead to staff leaving.

It can be daunting to work out if maths isn’t your strong point. That’s why we’re breaking down how to calculate labour turnover and walk you through the calculation step-by-step.

So, let's dive into how to calculate staff turnover...

Understanding employee turnover

To accurately calculate employee turnover, it's essential to grasp its basic definition.

Employee turnover also known as staff turnover is a way to measure the rate at which employees leave a business over a specific period.

It's often expressed as a percentage and can be calculated using different formulas, depending on the specific context and information available.

What is the employee turnover rate?

The employee turnover rate is the percentage of employees who leave a company during a specific period, providing insight into management practices, training programs, and employee morale.

When looking at employment turnover rates, there are two types of separation to take into account. They are voluntary turnover and involuntary turnover.

Voluntary turnover occurs when employees choose to leave your company, including cases of resignation or retirement.

Involuntary turnover, on the other hand, is when you terminate their employment, usually due to reasons such as underperformance, financial difficulties, downsizing or layoffs.

It's important to note that the rate doesn't include internal moves such as promotions or transfers, but it does include the vacancy created by such moves.

How to calculate employee turnover rate?

The turnover rate formula is as follows:

Employee Turnover Rate = (Number of Employees Who Left / Average Number of Employees) x 100

This might look daunting so let's break it down.

Step one- Choose your time period

Before you begin your staff turnover calculation, you'll want to decide on the time frame you want to calculate turnover. You can do this monthly, quarterly, or yearly.

However, quarterly, or annual turnover rate calculations are more useful for most businesses as it takes longer for the numbers to become significant enough to observe meaningful patterns.

Step two - Gather your data

Next, you need to collect essential data. Specifically, you need these four pieces of information:

• The number of employees at the beginning of your chosen period
• The number of employees at the end of the same period
• The total number of employees who left during the same period
• The average number of employees during the same period

You can get this information from your HR records or payroll system.

Step three - Determine employee arrival

Identify the number of new employees who joined your company during the chosen time frame. This information is typically found in your HR records or onboarding documents.

Step four - Calculate employees leaving

Count the number of employees who left your company during the same time period. This includes resignations, terminations, retirements, and any other forms of separation.

Step five - Calculate your average number of employees

You should use the following formula to work out your average number of active employees:

Average Number of Employees = (Starting Employees + Ending Employees) ÷ 2

Take the number of employees at the beginning and end of your chosen time frame and add them together then divide that number by 2. This will give you your average number of staff for that period.

Step six - Calculate your employee turnover rate

Once all the steps above have been completed, now is the time for the turnover rate formula mentioned before:

Employee Turnover Rate = (Number of Employees Who Left / Average Number of Employees) x 100

First, you should divide the total number of leavers in your chosen period by your average number of employees in that same period. Then, multiply the total by 100.

The number left is your staff turnover rate as a percentage for your chosen time period.

Step seven - Interpret your results

Employee turnover data is a great way to see how your business is performing.

A high turnover rate indicates that a significant portion of your workforce is leaving, which can be a cause for concern.

It’s important to note that high employee turnover rates can be costly for businesses, making it essential to reduce these rates to save costs.

On the other hand, a low turnover rate suggests better employee retention.

Whether your results yield a high or a low turnover rate, it's best practice to analyse the data in the context of your industry and company goals.

While it's important to measure turnover, it's also good to know the why...

Step eight - Analyse reasons for turnover

To gain more insights, consider examining the reasons behind the turnover. Conduct exit interviews, surveys, or discussions with employees before they leave to understand the underlying causes.

Numerous factors can contribute to staff turnover, making it a complex issue to address. Some common factors include:

• Low job satisfaction
• Limited growth opportunities
• Ineffective leadership
• Inadequate compensation
• Poor work-life balance

By identifying the underlying causes of labour turnover within your business, you can take targeted measures to lessen its impact and increase your employee retention rate.

Step nine - Take action

There is no point in conducting turnover calculations if you're only going to sit on the data and do nothing with it. So, based on your analysis, take appropriate actions to address any issues causing high turnover.

This might involve improving working conditions, offering better benefits, or providing opportunities for career growth.

Step ten - Monitor your progress

Once all the steps mentioned above are complete, it's best practice to repeat these steps regularly to measure turnover over time and evaluate the impact of your actions.

This will help you fine-tune your strategies for retaining employees.

Remember that employee turnover can have a significant impact on your business, both financially and culturally. Calculating turnover regularly and proactively addressing any issues can help you maintain a motivated and stable workforce.

Get help with BrightHR

Calculating staff turnover is not just about crunching numbers; it's about gaining meaningful insights into your workforce dynamics.

By understanding the various formulas, types, and factors influencing turnover, you can make informed decisions to create a positive work environment, enhance employee retention, and ultimately drive business success.

How to calculate staff turnover with the help of BrightHR

While it can be time-consuming BrightHR is here to help, with custom reporting, you can collect the data you need, and filter irrelevant data with just a few clicks.

Plus, with unlimited HR document storage, you can rest assured that all your confidential information is stored securely in our cloud-based system.

How to lower high turnover rates with BrightHR

Boost your staff happiness, reduce turnover, and improve employee retention with BrightHR's comprehensive range of benefits.

Our exclusive online marketplace, Bright Exchange, gives your employees access to thousands of exclusive discounts and unmissable offers without any extra costs. Plus, you can advertise your business on the platform free of charge, increasing your brand reach.

BrightWellbeing provides 24/7 mental health support, life and leadership coaching, and legal and financial assistance, which can enhance employee morale and productivity, and reduce staff sickness and absence.

Empower and incentivise your team with our employee recognition platform, which makes it easy to boost productivity and morale with our praise system that encourages teamwork and allows you to instantly spot and celebrate top performers.

With BrightLearn, you can effortlessly develop and upskill your staff, without incurring hefty training costs. Our Learning Management System gives your staff access to interactive learning and course completion certificates, while you track their progress.

By offering your employees the benefits mentioned above you can effectively lower your turnover rates and create a positive work environment.

Not a BrightHR customer? Book a free demo and revolutionise your business growth and performance today.