Introduction to the Employee Turnover Rate KPI
The Employee Turnover Rate KPI measures the percentage of employees who leave an organization within a certain period. It’s a key HR and organizational health metric used to assess workforce stability, employee satisfaction, and the effectiveness of management practices.
What Is Employee Turnover Rate?
Employee Turnover Rate calculates how often employees exit the company relative to the average number of employees. The formula is:
(Number of Employees Who Left ÷ Average Number of Employees) × 100
Turnover can be categorized into voluntary (resignations) and involuntary (terminations, layoffs), helping companies better understand the reasons behind departures.
Why This KPI Matters
High turnover often signals deeper organizational problems, while low turnover usually reflects strong culture and good HR practices. Employee Turnover Rate provides insights into:
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Employee satisfaction and engagement
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Management quality and communication
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Hiring effectiveness and role fit
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Organizational culture and wellbeing
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Cost impacts of replacing employees
Since replacing employees is expensive and disruptive, maintaining a healthy turnover rate is crucial for operational stability.
How to Use This KPI Effectively
Organizations typically track turnover monthly, quarterly, and annually, segmenting by department, job level, tenure, or manager. When paired with KPIs like Employee Engagement Score, Absenteeism Rate, Cost per Hire, and Retention Rate, it gives a complete picture of workforce dynamics and helps identify targeted interventions to improve employee retention.