Employee Turnover

What Is Employee Turnover?

Sometimes called employee turnover rate, employee turnover refers to the measurement used by businesses to calculate how many people leave that business in any given time period.

This time period is most commonly a year, but you can adjust it for your organization.

If you have a larger organization, you can also calculate employee turnover by subcategories like specific departments.

Voluntary Turnover

This is when an employee leaves the business of their own volition. This may be due to finding a better job or any number of other reasons.

Involuntary Turnover

This is when the organization terminates the employee (or employees).

Why Does Employee Turnover Matter?

In simple terms, it matters because there is a cost involved with having a high employee turnover. Whenever somebody leaves your business, you then have to go through the process of recruiting a replacement for that employee.

In addition, there are some instances where severance pay is involved.

On top of the cost, there are always the broader implications of high employee turnover – like the morale of the remaining. In addition to this, you’re likely to lose some sort of value (if the employee was good at their job) like loss of knowledge in a specific department.

This handy little calculator can help you look at the cost that employee turnover might have on your business.

How Can You Avoid Excessive Employee Turnover?

Employee turnover can be reduced – or managed – in a number of ways. Here are a few examples.

  1. Create a positive workplace culture. This can involve prioritizing employee happiness, team events, or just a reward scheme in the workplace. A happy worker stays longer.
  2. If someone isn’t the right culture fit for your business, it can be toxic to the team morale. Don’t be afraid to let those people go.
  3. Hire the right people. Reducing employee turnover starts at the very beginning. Make sure that your roles are well defined and that your culture and expectations are clearly laid out.


See our full list of over 50 Small Business Terms here


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