Life is not static. It’s completely natural for every business to have employees who come and go. However, it’s best when those transitions are as peaceful as possible and they don’t involve your best performers. How can you determine whether you have a healthy employee retention rate or not?

How to Calculate Turnover

To start, let’s talk about numbers. For any given period, calculating your turnover percentage is simple: Divide your number of terminations by your total number of employees at the start of the period, then multiply by 100. For example, if you started with 50 employees and terminated five over a quarter, you’d divide five by 50, then multiply by 100. That works out to mean you lost 10% of your employees that quarter.

What’s a ‘Good’ Amount of Turnover?

It depends on your industry and, believe it or not, whom you’re losing. For example, if 30% of your employees are underperforming, and that turnover rate includes losing those subpar employees, you could consider that healthy for your company.

However, high turnover and poor employee retention has other costs involved, such as training and loss of morale. These invisible costs affect the productivity, thus profitability, of your company. Don’t underestimate them!

Also, ask yourself what you can do to set yourself apart from the crowd. You may be in an industry where it’s normal for your turnover rates to be over 100%, such as restaurants or hotels. Why does that happen? What are common pain points in your industry? How can you address them with your team?

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