Turnover Rate: What It Is & How to Calculate It

Seeing your employees leave for new opportunities can be a bittersweet experience. At first, you’re sad to see them go, especially if you’ve developed a close bond with them. But you also know that they’re moving onto bigger and better things — and you're excited for them

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However, if employee departure starts to become a regular occurrence at your company, the feeling should become more bitter than sweet, and eventually turn into concern.

Having a high turnover rate means your culture might be toxic, or your employees don’t feel fulfilled working at your company. Constantly replacing employees can also skyrocket costs and plummet productivity — if your company is a revolving door, you not only have to spend money recruiting and interviewing candidates, but you also have to train new hires who need a significant amount of time to be able to tackle a full workload.

Fortunately, there’s a way to determine if your turnover rate and, in turn, your company culture is healthy. Read on to learn how to do it.

To help you calculate your own turnover rate, let’s run through a quick example.

Employees at beginning of the year: 500

Employees at the end of the year: 600

Average number of employees: (500+600)/2 = 550

Number of employees who left this year: 40

Turnover rate: 40/550 = 7.27%

If you want to see the average turnover rate of your industry, LinkedIn analyzed their network of 500 million professionals to compile a report of the industries with the highest turnover rate in 2017. Below, we listed the 10 industries that experienced the highest turnover last year.

Average Turnover Rate By Industry

Technology (Software) 13.4%
Retail & Consumer Products 13.0%
Media & Entertainment 11.4%
Professional Services 11.4%
Government/Education/Non-Profit 11.2%
Financial Services & Insurance 10.8%
Telecommunications 10.8%
Oil & Energy 9.7%
Aero/Auto/Transport 9.6%
Healthcare & Pharmaceutical 9.4%

Remember, the severity of your company’s turnover rate completely depends on your industry. So to accurately gauge the health of your company’s turnover rate and culture, make sure to reference this blog post or keep an eye out for LinkedIn’s industry turnover analysis each year.

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Original source: https://blog.hubspot.com/marketing/turnover-rate

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