Turnover Rate | Meaning and Definition

What is a Turnover Rate?

The turnover rate is a percentage that shows how many employees departed a company during a specific time period, usually a year. The setting plays a big role in determining an acceptable turnover rate. Measuring the overall turnover rate of a firm only gives half of the picture. Using the method to calculate combinations of certain personnel and time periods might reveal high-turnover areas.

Continuing with the preceding example, a one-in-five staff turnover rate may appear tolerable for a small business. However, if five of those individuals quit the same post and management within a year, it suggests a concerning tendency that should be addressed at the managerial level rather than imposing broad adjustments. High staff turnover can have a variety of consequences for a company, including:

  •   Reduced overall productivity within the company
  •   Costs of employing and training new personnel are rising.
  •   Increasing the task of surviving employees to cover the workload of leaving personnel
  •   Employees’ faith in the company is eroding.
  •   Morale and business culture are deteriorating.
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