One of the first questions I ask new clients is: “how are you measuring success?”
And we’ll typically talk about onboarding / offboarding KPIs, retention, and yes … employee turnover.
What is employee turnover?
Employee turnover, sometimes called employee churn, is the rate at which employees leave an organization over a given period; it’s typically measured monthly or annually.
Turnover comes in two forms, and the distinction matters more than most dashboards reflect:
- Voluntary turnover; employees who choose to leave: resignations, retirements, or a move to another opportunity. This is measured by the BLS as the “quits rate.”
- Involuntary turnover; separations initiated by the employer: layoffs, performance-based terminations, and workforce reductions.
Across the US economy in 2025, the average monthly quits rate was 2.0%, against a layoffs-and-discharges rate of 1.1%. In plain terms: people are leaving roughly twice as often by choice as they are being let go … which is exactly why you need to focus on employee retention early.
What is attrition vs. turnover?
The two terms are often used interchangeably. They’re different, though related.
- Turnover typically refers to any departure that gets backfilled … the role stays as a new person fills it.
- Attrition usually refers to departures where the position isn’t refilled, often as part of planned headcount reduction.
Most day-to-day HR reporting is really talking about turnover; attrition shows up more in workforce planning and budget conversations.
How do you calculate employee turnover?
The standard employee turnover formula is straightforward:
Employee Turnover Rate (%) = (Number of Employees Who Left / Average Number of Employees) × 100
To find your average number of employees for the period, add your headcount at the start of the period to your headcount at the end, then divide by two.
Example
A company starts the year with 480 employees and ends with 520, for an average of 500. Over the course of the year, 65 employees left (voluntarily and involuntarily combined).
Turnover rate = (65 / 500) × 100 = 13%
Most organizations calculate this monthly and roll it up quarterly and annually, and break this figure down by involuntary vs. voluntary.
What is a good, normal, or high turnover rate?
This is the question I get asked most, and the honest answer is: it depends heavily on your industry, role mix, geography, and often the economy’s status.
A single company-wide number tends to hide more than it reveals. As one industry analysis put it: a hospital administrator, a registered nurse, and a home health aide face different pay, different pressures, and different alternatives … one blended rate hides more than it shows.
That said, a widely cited rule of thumb treats turnover below roughly 10% annually as healthy for most white-collar industries, while acknowledging that many sectors operate well above that threshold for structural reasons — physical demands, compensation pressure, or seasonal staffing models.
Here’s how monthly quits and layoffs break down by industry, based on 2025 BLS data:
| Industry | Monthly quits rate | Monthly layoffs/discharges rate |
| Accommodation & food services | 4.2% | 1.1% |
| Retail trade | 2.6% | 1.1% |
| Professional & business services | 2.3% | 2.0% |
| Healthcare & social assistance | 2.0% | 0.7% |
| All industries (average) | 2.0% | 1.1% |
A few things I find worth noting:
- Accommodation and food services leads on both quits and layoffs, roughly four-to-one, which is a high-churn environment on both sides.
- Healthcare, despite constant conversation about clinical staffing shortages, actually runs close to the all-industry average on quits, with a notably low layoff rate.
- Professional and business services stands out for a different reason: a layoff rate of 2.0% is one of the highest in this data, meaning a meaningful share of “turnover” in that sector isn’t retention-driven at all; no onboarding or engagement fix will move a number that’s actually about business-driven headcount decisions.
What causes high employee turnover?
The research on this is remarkably consistent year-over-year. The most commonly cited drivers include:
- Lack of career development or advancement opportunity
- Inconsistent or poor management
- Inadequate recognition
- Compensation that’s fallen behind market rate
- Poor onboarding and unclear early expectations
- Weak company culture or misalignment between stated and actual values
Nearly half (42%) of turnover could’ve been prevented, according to Gallup … and Work Institute’s analysis of 150,000+ exit surveys showed 75% could’ve been prevented. That’s a massive miss!
And if a client doesn’t know how they’re measuring success here, that’s where we focus our time … how they should be measuring it, why they aren’t, and what we can do to help. If there’s no measurement for success, they’re probably not investing in it.
What does employee turnover actually cost?
It scales with seniority and role complexity; according to SHRM and Gallup separately, it can be anywhere from 50-200% of the departing employee’s salary once you factor in re-hiring costs and lost productivity in the role (plus trickledown effects on the team impacted).
Even if you stay conservative at 33%, it adds up; if you have just 100 preventable exists in a calendar year with an average salary of $40,000, that costs your organization over $1.2 million … and that scales up with higher-paying leadership roles.
Is a first-year turnover number different?
Yes, and first-year turnover deserves its own tracking … we consider it a critical HR KPI!
Departures within the first 90 days to a year behave differently than tenured turnover, and it’s usually a stronger signal of a hiring or onboarding gap than a broader engagement problem. We’ve written specifically about what drives retention in that critical first-90-day window, but if you’re seeing a spike in this, the first place to look is how you preboard and onboard new hires and set them up for success.
How do you actually reduce employee turnover?
There’s a few factors.
First, Gallup found that compensation and benefits was the top reason cited by those who left … but that was only 30%. Better manager interactions, organizational issues, and career advancement add up to a greater percentage … so tackling these head-on, even if budgets don’t allow for significant pay raises, can have a major impact on retention.
Second, you need to look at why employee experience is bigger than any single HR program … especially since turnover is a downstream symptom of the experience an organization delivers across the full employee lifecycle.
If you’re ready to build the kind of structured onboarding and retention process that moves these numbers, Click Boarding’s platform is built to help.
