Turnover Rate
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Definition
Turnover rate is the percentage of employees who leave an organization during a period. The standard formula is separations during the period divided by average headcount for the period, multiplied by 100. It counts both voluntary exits (resignations) and involuntary exits (layoffs and dismissals), and is usually reported monthly and annually.
How the turnover rate formula works
Turnover rate = (separations during the period / average headcount during the period) x 100
Average headcount = (headcount at start of period + headcount at end of period) / 2. Teams with monthly data often average the 12 month-end headcounts instead, which is more accurate when headcount swings during the year.
The U.S. Bureau of Labor Statistics uses the same logic for its national figures: "The separations rate is computed by dividing the number of separations by employment and multiplying that quotient by 100" (BLS JOLTS).
Decide these before you calculate, and keep them fixed so trends are comparable:
- Who counts. Most teams include regular full-time and part-time employees and exclude contractors, interns and temporary staff.
- What counts as a separation. Resignations, dismissals, layoffs and retirements count. Internal transfers do not.
- Splits. Report voluntary and involuntary separately, and consider regrettable vs non-regrettable and first-year turnover.
Example
Illustration: a company starts the year with 240 employees and ends with 260. During the year 45 people leave: 30 resign and 15 are dismissed or laid off.
| Measure | Calculation | Result |
|---|---|---|
| Average headcount | (240 + 260) / 2 | 250 |
| Annual turnover rate | 45 / 250 x 100 | 18.0% |
| Voluntary turnover | 30 / 250 x 100 | 12.0% |
| Involuntary turnover | 15 / 250 x 100 | 6.0% |
For a single month: January starts at 240 and ends at 244, with 4 separations. Average headcount is (240 + 244) / 2 = 242, so monthly turnover is 4 / 242 x 100 = 1.65%. Multiplying by 12 gives a rough annualized rate of about 19.8%. That is a projection, not a result, and seasonal businesses should annualize with care.
For context, BLS reports that the annual average monthly total separations rate across U.S. employers was 3.3% in 2025, made up of 2.0% quits, 1.1% layoffs and discharges and 0.2% other separations (BLS JOLTS, March 2026 release). Rates differ widely by industry, so compare against your own sector and your own history.
Related terms
- Attrition: departures that are not replaced, a narrower measure.
- Turnover intent: survey measure of how many people plan to leave.
- Stay interview: a way to learn why people stay before they leave.
- People analytics: the reporting that segments turnover by team, tenure and manager.
- Employee retention strategies: guide to reducing turnover.
- Exit interview template: a free template for learning why people left.
Common mistakes
- Dividing by end-of-period headcount. In a growing company this understates turnover; in a shrinking one it overstates it.
- Mixing voluntary and involuntary exits. A layoff in one quarter can hide a resignation problem, or create a false alarm.
- Counting transfers as exits. Internal moves are mobility, not turnover.
- Changing definitions mid-year. Excluding part-timers from March onwards makes the trend meaningless.
- Only looking at the company total. Turnover is usually concentrated in a few teams, roles or tenure bands. Segment it.
What is the difference between turnover rate and attrition rate?
Turnover rate counts every departure. Attrition rate, in its strict sense, counts only departures that are not replaced, so it measures how much headcount shrinks through natural exits.
What is a good employee turnover rate?
There is no single figure. Compare against your industry and your own history, and look at voluntary turnover and first-year turnover separately, because those are the parts most within a company's control.
Sources
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