How To Calculate and Fix Your Organization’s Turnover Rate

Let’s face it; turnover rate isn’t just a number. It’s a signal.

And quite a scary one at that.

After all, if people keep leaving, there’s a reason—and that reason is costing you more than you think.

In this guide, I’ll walk through what your turnover rate actually means, how to figure it out, and how to fix what’s broken.

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Because whether you’re in HR or in charge, figuring out your turnover rate is how you get ahead of churn.

So…

What Is Employee Turnover (Really)?

Most people think turnover just means someone quit. But there’s more to it than that.

This term – employee turnover – refers to the number or percentage of employees who leave your company over a specific period—typically a month, quarter, or year. And that includes both voluntary exits (someone resigns) and involuntary ones (layoffs, firings, retirements).

In fact, there are five types of turnover to keep in mind:

• Voluntary turnover – when employees leave on their own (resignations)
• Involuntary turnover – when the company initiates the exit (layoffs, firings)
• Internal turnover – when employees move to a different department or role
• External turnover – when they leave the company entirely
• Regrettable turnover – what a departure from the company has a negative impact on the organization (i.e., a high-performer leaving.)

Why does this matter? Because not all turnover is bad. A little turnover can be healthy—especially if it clears out underperformers or makes room for fresh ideas. But if your high performers are walking out the door? You’ve got a serious retention problem.

Here’s why.

Turnover Is Expensive—The Cost of Turnover

The cost of employee turnover is often underestimated. According to Gallup, replacing an employee can cost anywhere from 50% to 200% of their annual salary, depending on the role. For high-skill or executive positions, it’s often at the upper end.

And it’s not just about hiring costs. You’re also dealing with:

• Lost productivity
• Lower team morale
• Slower onboarding
• Weakened culture

If you’re a 100-person startup losing 2 people per month, that’s a 24% annual turnover rate. That’s above the average in most industries (which ranges from 10% to 20%, depending on the field).

Real-World Example

Take a SaaS company with a sales team of 20. If three reps quit in a quarter, that’s 15% turnover. If those three were your top performers bringing in $500K each per year? That’s a $1.5M revenue hole—plus the time and cost to replace them.

That’s why turnover isn’t just an HR stat. It’s a business risk.

Understanding your turnover—what kind it is, how often it’s happening, and why—gives you the insight you need to fix what’s broken.

How to Calculate Employee Turnover

The basic formula for calculating turnover rate is: Turnover Rate = (Number of Employees Who Left During the Period / Average Number of Employees During the Period) × 100

Let’s break that down with an example:

Imagine you had 100 employees at the start of the year and 90 at the end. That means your average headcount is (100 + 90) / 2 = 95.

Let’s say 18 people left during the year.

Turnover Rate = (18 / 95) × 100 = 18.95%

That’s your annual turnover rate.

What About Monthly Turnover?

The same formula applies—just adjust the timeframe.

Say you had 100 employees in May, and 3 left during that month.

Turnover Rate = (3 / 100) × 100 = 3% for May.

Monthly rates are useful for spotting sudden spikes or changes over time.

Rolling 12-Month Turnover

This is a great way to smooth out short-term fluctuations and see longer-term trends.

Add up all the departures from the past 12 months, divide by the average number of employees over that same period, then multiply by 100.

Turnover Rate = (Total Departures in Last 12 Months / Average Headcount Over 12 Months) × 100

It’s especially useful if your company is growing fast and your headcount is changing a lot month to month.

Important Note

Only include voluntary and involuntary departures—don’t count internal transfers or people on temporary leave.

Also: Be consistent with your timeframes. If you’re looking at quarterly turnover, make sure your average headcount and number of departures both reflect that same 3-month period.

This calculation gives you a starting point. The next step is figuring out what your number means—and what to do about it. That’s what we’ll cover next.

TIP: Use our ready-made turnover rate calculator to uncover your actual turonver rate quickly.

Is Your Turnover Rate High or Low? Benchmark It

So, you’ve crunched the numbers. You’ve got your turnover rate. But what does that number actually mean?

The answer: it depends on your industry.

Turnover looks wildly different depending on where you work. For example:

• Retail: ~25% turnover is the norm (source).
• Healthcare: Turnover in nursing homes can hit 53.3%, while hospitals average around 22.7% (source).
• Tech: Known for volatility—some estimates put tech turnover as high as 60% (source).
• Manufacturing: Typically sees 28.6% turnover (source).
• Banking and finance: Much lower at around 19.8% (source).
• Education & government: Often under 10% (source).

If you’re at or slightly above your industry’s average, it might not be cause for alarm. But if you’re well above it—especially in roles that are expensive or slow to replace—you’re likely leaking value.

A Quick Gut Check:

• <10%: Low. Could be a sign of strong culture or low mobility.
• 10–20%: Normal range for most industries.
• 20–30%: Common in high-turnover industries, but worth watching.
• 30%+: Red flag—time to dig deeper.

Benchmarking helps you frame the problem. It tells you whether your turnover is expected—or a sign of something broken.

Best Strategies to Reduce Turnover

Turnover is often a symptom of something deeper: a mismatch between what employees need and what they’re actually getting.

Here are proven, practical strategies to help you keep your people around longer.

1. Give People a Voice—and Actually Listen

When people feel heard, they’re more likely to stay. It’s that simple.

Tools like Suggestion Ox let you collect anonymous employee feedback on a regular basis. That’s key—because even in great cultures, most employees won’t say what’s really on their minds unless they know it’s safe to do so.

With Suggestion Ox, you can:

• Run always-on anonymous digital suggestion boxes
• Conduct anonymous 2-way conversations
• Identify recurring issues early (before they become exits)

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2. Improve Onboarding

First impressions matter. A poor onboarding experience increases the risk of early exits—especially within the first 90 days. In fact, research from Brandon Hall Group shows that organizations with a strong onboarding process improve new hire retention by 82% (source).

But great onboarding isn’t just paperwork and tech setup. It’s about helping new hires feel welcomed, aligned, and set up for success.

Here’s what that looks like in practice:

• Pre-boarding: Start before Day 1. Send a welcome message, company swag, or a simple video from the team. Reduce that first-day anxiety.
• Structured ramp-up: Create a 30-60-90 day plan that lays out expectations, learning goals, and key milestones. No one wants to float aimlessly.
• Cross-team exposure: Encourage new hires to sit in on meetings or shadow teams outside their function. This helps build context fast.
• Assign a buddy: Pair each new hire with a peer mentor—someone they can ask the “dumb” questions they won’t take to their manager.

The best onboarding doesn’t just check boxes. It sets the tone for everything that comes next. impressions matter. A poor onboarding experience increases the chance of turnover in the first 90 days.

3. Prioritize Career Development

People leave when they don’t see a future.

It doesn’t matter how great the culture is or how nice the office coffee machine is—if someone feels like they’ve hit a ceiling, they’ll start quietly updating their LinkedIn.

That’s why career development needs to be proactive, not passive. Don’t just wait for someone to ask about a promotion. Build systems that show employees where they can grow, and how they can get there.

Start with clear job progression frameworks. These don’t need to be complex. Just clear. What does it take to move from mid-level to senior? What are the expectations? Who decides?

Then bake career conversations into your 1:1s. Not once a year. Not just at performance reviews. Regularly. Ask questions like:

• What skills do you want to build this year?
• Where do you want to be in 12 months?
• What’s one project you’d love to own?

Support those goals with resources:

• Learning budgets
• Internal mentoring
• Access to stretch projects

When people see a future, they build one with you. When they don’t, they build it somewhere else.

4. Don’t Let Managers Be the Problem

Bad managers are the #1 reason people quit. That’s not just anecdotal—it’s backed by data. According to a Gallup study, 50% of employees have left a job to get away from a manager at some point in their career (source).

And yet, most companies still treat management like a promotion, not a skillset.

If someone’s good at their job, they get put in charge. But leading people is a different game. It’s about clarity, support, emotional intelligence, and trust—not just setting deadlines and reviewing dashboards.

Start by giving your managers the right tools. That means training in:

• How to run effective 1:1s
• Giving constructive feedback
• Setting clear expectations
• Creating psychological safety

Then hold them accountable for more than output. Measure retention on their teams. Run anonymous 360 reviews. Ask skip-level questions like, “Do you feel supported by your manager?”

5. Offer Flexibility (and Mean It)

Remote work. Flexible hours. Async-first.

These aren’t just perks anymore—they’re expectations.

If you want to hold onto top talent, you need to give people real control over how and where they work. And not in theory—in practice.

That means letting people shape their schedules around deep work, family life, or personal energy cycles. It means trusting employees to manage their output without forcing them into arbitrary 9-to-5 blocks. And it means not punishing flexibility with guilt trips, silent judgment, or performance bias.

The payoff? Huge. A 2022 McKinsey report found that 87% of employees would take flexible work if offered—and flexible roles saw dramatically lower quit rates.

Flexibility isn’t about perks. It’s about autonomy, trust, and treating adults like adults.

Retention doesn’t happen by accident. It’s built through intentional systems, consistent feedback loops, and leadership that actually gives a damn.

In the next section, we’ll show you the tools that can help make that happen.

Best Tools to Help You Reduce Turnover

Great strategy needs great tools. Here are a few that can help you reduce turnover and build a stronger, stickier culture.

1. Suggestion Ox – for anonymous employee feedback

This is your go-to tool if you want to hear what employees are really thinking. Suggestion Ox lets you run anonymous digital suggestion boxes and pulse surveys, so you can surface issues early and act before people walk. It’s fast to set up, easy to use, and built for teams who actually want to improve—not just collect data and move on.

Use it to:

• Uncover hidden pain points
• Track recurring feedback themes
• Show employees you’re listening (and prove it with action)

2. Lattice – for performance and development

Lattice helps you manage 1:1s, run performance reviews, and track OKRs. But its real value? Making career growth visible. Use it to map out career paths, set goals collaboratively, and keep development front and center.

If you’re serious about retaining high-performers, you need a tool that helps them grow. This is that.

3. Donut – for connection and belonging

Turnover isn’t always about career growth—it’s often about culture. Donut helps remote and hybrid teams build stronger relationships with coffee chats, onboarding buddies, and peer intros inside Slack. It’s light-touch, but it makes a difference.

If people feel like they belong, they’re more likely to stay. Donut makes that easier.

Final Thought

Turnover isn’t random. It’s a reflection of how your team feels, works, and grows. Run the numbers, listen to what they’re telling you, and act on it. Because the best way to lower churn and boost the trunover rate? Build a company people actually want to stick around for.