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How to Determine Employee Turnover Rate

March 27, 2023

Written by Complete Payroll

employee turnover rate woman working

What’s your company’s employee turnover rate? Is it higher or lower than the national average? How does it stack up against other companies in your industry?

If you’re not sure about the answers to these questions, read on. Knowing your turnover rate allows your company to make strategic decisions about hiring, employee benefits, retention, and more. 

In this article, we’ll explain how to calculate your turnover rate and compare it to other companies. We’ll also share insights about what could be impacting your ability to maintain consistent staffing levels.

Calculating Your Rate of Employee Turnover

Your employee turnover rate is a measure of how frequently people are leaving your organization. It provides a window into employee job satisfaction, company benefits, and the effectiveness of your HR department.

To calculate your company’s employee turnover, start by counting how many employees are leaving each month. Look at how many departed between the first and last day of the current/previous month, then count how many departed in each of the past 12 months. 

This sets the stage for creating both a monthly and annual turnover figure. Together, these numbers show where things stand today and how your turnover is tracking during the year.

You’ll also need to know your average number of monthly employees. Pull this number from your employment records or HR/payroll platform

Now divide the total number of departing employees per month by your average number of monthly employees. Multiply by 100 and this is your monthly turnover as a percentage.

(Monthly Departing Employees / Average Monthly Employees) x 100 = % Staff Turnover

The calculation above shows your monthly staff turnover rate. Repeat this calculation for each month to see where things stand month by month and begin to perform an analysis, which is explained in more detail below.

Analyzing and Comparing Your Employee Turnover Rate

The U.S. national average turnover rate is about 47%, which is down from the decade’s high of almost 57% at the height of the COVID-19 pandemic. A national turnover rate of 40% to 50% has been typical for the past few decades.

Turnover rates vary dramatically by industry. The restaurant industry, for example, has one of the highest turnover rates at over 75%. The U.S. government sector typically maintains one of the world’s lowest turnover rates at about 18%.

Below is a selection of average turnover rates in various industries. How does your turnover rate compare?

  • Finance and insurance 26%
  • Educational services 26%
  • Financial activities 29%
  • Wholesale trade 34%
  • Durable goods 35%
  • Real estate 35%
  • Mining and logging 36%
  • Education and health services 37%
  • Information 39%
  • Health care/social assistance 39%
  • Manufacturing 40%
  • Nondurable goods 47%
  • Transportation 49%
  • Construction 57%
  • Professional services 64%
  • Retail trade 65%
  • Arts and entertainment 76%
  • Leisure and hospitality 85%
  • Accommodation/food services 86%

Factors Impacting Employee Turnover

While calculating your employee turnover rate is fairly easy, managing the factors impacting turnover is much more difficult. Employees leave your company for a wide variety of reasons, from the size of their paychecks to personal lifestyle decisions.

Take a close look at company benefits packages and the incentives for employees to stay for the long haul. Could your organization be doing something to negatively impact long-term employee loyalty?

Research from the Society of Human Resource Management (SHRM) shows the following factors are most likely to affect employment tenure. 

  • Compensation: 74% of HR executives rank compensation as the #1 factor in employee turnover.
  • Flexibility: 43% of HR professionals cite employer inflexibility about hours, time off, or remote work as a factor in turnover.
  • Development/advancement: 21% of HR professionals say they’re seeing employees leave due to limited opportunities to learn or advance within the company.
  • Leadership: The issue of “uncaring/uninspiring leaders” is another top factor from the SHRM survey.

Managing the impact of these factors takes a comprehensive, analytical approach to HR. If your company is struggling with a high turnover rate or waning employee loyalty, consider making a switch to a more modern HR platform with better employee management features.

Complete Payroll Centralizes Your HR Management

When you need HR management and support, Complete Payroll has you covered. Our HR software makes it easy and cost-effective to manage employee data through the entire employment lifecycle.

Your employees and management staff all benefit from using a single, unified HR system and self-service platform. To learn more, visit our blog and explore using our Advanced HR Software to centralize your HR and minimize employee turnover.

Request a demo of our Advanced HR platform

Learn More: Advanced HR Software - Complete Payroll

DISCLAIMER: The information provided herein does not constitute the provision of legal advice, tax advice, accounting services or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional legal, tax, accounting, or other professional advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation and for your particular state(s) of operation.

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