Employee turnover is a critical metric for businesses who want to ensure they’re retaining valuable talent. Understanding how to calculate turnover rate can help organizations identify areas where improvements may be made to reduce employee attrition and increase overall workforce stability.

In this article, we’ll walk you through eight simple steps for calculating your company’s employee turnover rate.

1. Determine the Time Frame

Choose a specific time frame for measuring your turnover rate. This can be done quarterly, yearly, or any other period relevant to your business. For example, you might calculate turnover on an annual basis or over a fiscal year.

2. Calculate the Opening Headcount

Determine the number of employees in your organization at the start of the time frame chosen. This headcount includes both full-time and part-time employees.

3. Calculate the Closing Headcount

Determine the number of employees in your organization at the end of the time frame chosen. Like opening headcount, this includes both full-time and part-time employees.

4. Find the Average Headcount

Calculate the average headcount by adding both opening and closing headcounts together and dividing by two. The formula is:

Average Headcount = (Opening Headcount + Closing Headcount) / 2

5. Determine Employee Separations

Count the number of employees that left the company during the time frame selected, whether voluntarily or involuntarily (e.g., terminations, resignations, retirements). Do not include internal transfers or promotions.

6. Calculate Turnover Percentage

Now that you have all necessary data in hand, calculate turnovers as a percentage with this formula:

Turnover Percentage = (Total Employee Separations ÷ Average Headcount) × 100%

7. Analyze Results

Interpret your turnover percentage against industry benchmarks, historical data within your business, or other external factors to better understand areas needing improvement.

8. Find Opportunities for Improvement

Use the turnover rate as a starting point to find opportunities for development on employee retention strategies, including onboarding, professional development, and employee engagement opportunities.

In conclusion, calculating your company’s turnover rate is crucial for understanding how well you’re retaining valuable employees. By following these eight steps, you’ll be better equipped to identify any areas of concern in workforce stability and create targeted strategies to improve employee retention.