Turnover rate
Also known as: attrition rate, employee turnover, churn rate
Turnover rate is the percentage of employees who leave the company over a given period (typically 12 months), calculated as departures divided by average headcount. It's the single most-tracked workforce health metric — high or rising turnover is usually a leading indicator of culture problems, comp gaps, or management issues.
Turnover rate is the workforce equivalent of customer churn. Some level is healthy — performance management produces voluntary and involuntary departures, and the market churns the talent pool. The signal isn't the absolute number; it's the trend and the segment. Stable turnover at 12% is fine; turnover rising from 12% to 22% in eighteen months is a fire. Even more useful: segment by team, manager, tenure, and reason. Aggregate numbers always under-report the problem because the team with 60% turnover gets averaged out by the team with 4%.
How to calculate it
Turnover rate = (number of departures during period ÷ average headcount during period) × 100. Average headcount = (start headcount + end headcount) ÷ 2. Annualize by multiplying quarterly turnover by 4, or summing 12-month departures and dividing by the trailing-twelve-month average headcount.
Voluntary vs involuntary
- Voluntary turnover: employee chose to leave (resignation, retirement). Signal of culture / comp / management
- Involuntary turnover: company chose to terminate (performance, restructuring, redundancy). Signal of hiring quality or business stress
- Track both separately — a single number hides whether you have a retention problem or a hiring problem
Benchmarks (annualized, knowledge work)
- Below 10%: very low — possibly stagnant, watch for performance issues
- 10-15%: typical for healthy companies
- 15-25%: elevated — investigate by segment
- Above 25%: usually indicates serious culture or comp issues
- Tech industry average: 13-15% voluntary turnover
- First-year turnover (often called early attrition): typically 2-3x the company-wide rate
Segments to track
- By team / manager — find the manager whose direct reports leave 3x the rate of others
- By tenure cohort — first-90-day, first-year, 2-3 year, 5+ year (different reasons)
- By reason: comp, role, manager, location, other-opportunity
- By performance band — losing your top quartile is much more expensive than losing your bottom quartile
- By department + level intersection — finding hotspots is more useful than aggregate
Frequently asked questions
- Turnover vs attrition — same thing?
- Often used interchangeably. Technically, attrition implies natural reduction (retirements, life events) not refilled, while turnover includes voluntary + involuntary departures that ARE refilled. In practice the labels are inconsistent across companies.
- What's a healthy turnover rate?
- 10-15% annually for knowledge work. Lower can indicate stagnation; higher suggests problems to investigate by segment.
- How fast can turnover signal problems?
- Watch the rolling 6-month trend. A 5+ percentage-point increase quarter-over-quarter is a fire alarm — investigate by team, manager, and reason before it compounds.
- Does HourSquare track turnover automatically?
- Yes — the reports hub surfaces it with segment breakdowns (team, tenure, manager) and exports to CSV/XLSX for finance handoff. Plain-English AI summarization of these reports is on the post-beta roadmap.