Employee Turnover: Definitions and Calculations
What is employee turnover, which types are there and how do you calculate it? A short guide for HR professionals.
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iWallet | Blog Yazarı
February 21, 2020
5 min read
Employee turnover is the number or percentage of workers who leave an organisation and are replaced by new employees. Measuring turnover helps employers who want to examine why people leave or estimate hiring costs for budgeting. Turnover terminology can be confusing, so knowing the specific definitions and calculations is useful for HR professionals.
Comparing types of turnover
Although there are different types of turnover, the general definition is the same: turnover happens when an employment relationship ends. Turnover and attrition are sometimes used interchangeably to describe an employee's departure, but they are different. Attrition usually refers to the end of employment due to retirement, the elimination of a position or the death of an employee. It differs from turnover because, with attrition, the position is not filled by a new employee.
Involuntary turnover
When employees are dismissed for poor performance, absenteeism or breaching company policy, it is called involuntary turnover. Employees dismissed for performance or policy breaches may not be entitled to certain legal benefits, such as unemployment benefit.
Voluntary turnover
When an employee leaves a company of their own accord, it is called voluntary turnover. Employees leave for many reasons: they may accept a job with another company, move to a new area or need to deal with a personal matter that makes working impossible. When an employee ends the employment relationship voluntarily, they usually give the employer written or verbal notice of their intention to resign.
Desirable and undesirable turnover
Turnover often has a negative connotation, but it isn't always a bad thing. For example, replacing an employee whose performance falls below the company's expectations with someone who meets or exceeds them is desirable turnover. Replacing an employee with persistent absenteeism or lateness with someone who does the job well is also desirable, because it can increase the company's profitability.
Desirable turnover happens when the people who replace departing employees bring new talent and skills that give the organisation a competitive advantage. Undesirable turnover, on the other hand, means the company loses employees whose performance, skills and qualifications are valuable resources.
Basic turnover calculations
Basic turnover calculations are fairly simple. If your company has 100 employees and 15 are dismissed or leave, your turnover rate is 15 percent. Most organisations use more detailed calculations to understand what lies behind their turnover. Imagine a company of 100 people where five employees leave in January, one in May and four in November. Your annual turnover rate is 10 percent, and your average monthly turnover rate is about 0.83 percent.
Turnover can also be calculated separately for different types, such as involuntary and voluntary, or for more specific reasons, such as poor performance, absenteeism or employees accepting jobs elsewhere. These calculations help you estimate hiring costs, training needs and the staff time needed for recruitment.
Comparing types of turnover
Although there are different types of turnover, the general definition is the same: turnover happens when an employment relationship ends. Turnover and attrition are sometimes used interchangeably to describe an employee's departure, but they are different. Attrition usually refers to the end of employment due to retirement, the elimination of a position or the death of an employee. It differs from turnover because, with attrition, the position is not filled by a new employee.
Involuntary turnover
When employees are dismissed for poor performance, absenteeism or breaching company policy, it is called involuntary turnover. Employees dismissed for performance or policy breaches may not be entitled to certain legal benefits, such as unemployment benefit.
Voluntary turnover
When an employee leaves a company of their own accord, it is called voluntary turnover. Employees leave for many reasons: they may accept a job with another company, move to a new area or need to deal with a personal matter that makes working impossible. When an employee ends the employment relationship voluntarily, they usually give the employer written or verbal notice of their intention to resign.
Desirable and undesirable turnover
Turnover often has a negative connotation, but it isn't always a bad thing. For example, replacing an employee whose performance falls below the company's expectations with someone who meets or exceeds them is desirable turnover. Replacing an employee with persistent absenteeism or lateness with someone who does the job well is also desirable, because it can increase the company's profitability.
Desirable turnover happens when the people who replace departing employees bring new talent and skills that give the organisation a competitive advantage. Undesirable turnover, on the other hand, means the company loses employees whose performance, skills and qualifications are valuable resources.
Basic turnover calculations
Basic turnover calculations are fairly simple. If your company has 100 employees and 15 are dismissed or leave, your turnover rate is 15 percent. Most organisations use more detailed calculations to understand what lies behind their turnover. Imagine a company of 100 people where five employees leave in January, one in May and four in November. Your annual turnover rate is 10 percent, and your average monthly turnover rate is about 0.83 percent.
Turnover can also be calculated separately for different types, such as involuntary and voluntary, or for more specific reasons, such as poor performance, absenteeism or employees accepting jobs elsewhere. These calculations help you estimate hiring costs, training needs and the staff time needed for recruitment.