What is Turnover Rate?
The percentage of employees who leave an organization over a specific period, typically expressed as an annual rate.
Definition
Turnover rate measures the proportion of an organization's workforce that exits during a defined period — most commonly expressed as an annual percentage. The basic formula divides the number of separations by the average number of employees and multiplies by 100. For example, if a 200-person company has 30 departures in a year, its annual turnover rate is 15%.
Turnover can be segmented in several important ways. Voluntary turnover (employee-initiated resignations) is distinguished from involuntary turnover (terminations and layoffs). Regrettable turnover (departure of high performers or critical talent) is separated from non-regrettable turnover (departure of low performers). Functional turnover (healthy refreshment of the workforce) differs from dysfunctional turnover (loss of people the organization wanted to retain). These distinctions matter because a 20% turnover rate has very different implications depending on who is leaving and why.
Benchmarking turnover requires industry and geographic context. The technology sector typically sees higher turnover than government agencies. Customer-facing roles like retail and hospitality experience higher turnover than professional services. Organizations should compare their rates to relevant benchmarks and track trends over time rather than focusing on absolute numbers. More importantly, they should analyze turnover drivers — through exit interviews, stay interviews, and engagement data — to understand and address root causes rather than just monitoring the symptom.
Why It Matters
Turnover is one of the most expensive and disruptive workforce events. The cost of replacing an employee ranges from 50% to 200% of their annual salary when accounting for recruiting, onboarding, lost productivity, and knowledge loss. High turnover also damages team morale, institutional memory, and customer relationships. For HR leaders, understanding turnover patterns — who is leaving, when, and why — is essential for building effective retention strategies and demonstrating the ROI of engagement and culture investments.
How to Measure
Annual Turnover Rate = (Number of separations during period / Average number of employees during period) x 100. Track monthly and annualize for trend analysis. Segment by voluntary/involuntary, regrettable/non-regrettable, department, tenure band, and demographics. Compare to industry benchmarks and your own historical trends.
How Unmatched Helps
Unmatched's AI Analytics feature helps organizations measure, understand, and act on turnover rate through AI-powered analytics and actionable insights — all within one connected platform.
Explore AI AnalyticsRelated Terms
Employee Retention
An organization's ability to keep its employees over time, measured by the proportion of the workforce that remains during a given period.
Employee Turnover
The rate at which employees leave an organization and are replaced by new hires over a defined period.
Attrition
The gradual reduction of workforce size that occurs when departing employees are not replaced, distinct from turnover where positions are refilled.
Exit Interview
A structured conversation conducted with departing employees to understand their reasons for leaving and gather feedback about the organization.