What is Employee Turnover and How to Calculate it?

employee turnover

The act of replacing an employee with a new employee is known as turnover. Although it may appear to be normal, a high employee turnover rate might indicate a variety of issues, from bad management to low employee satisfaction.

Furthermore, this might be costly for the company because the company must recruit new employees and conduct training for the newcomers. Why is that so and how to calculate turnover? Take a look at the explanation here.

What is Employee Turnover?

“Turnover” is a common term in a workplace, especially for human resource management. So, what is the definition of employee turnover? Turnover refers to the number of workers who leave from their current company. For more definitions of employee turnover, check out what the experts say here:

Definition of Employee Turnover by Experts

  1. Siegall and Jewell (1998). Turnover refers to a person’s desire to pursue professional opportunities outside the company or to leave an undesirable job.
  2. Simamora (2004). Employees that voluntarily leave a company are referred to turnover.
  3. Rivai (2009). Turnover refers to an employee’s desire to leave or go to another job of his own decision.
  4. Ronald and Milkha (2014). Turnover refers to a person’s desire or tendency to leave a job for different reasons, such as a better position.

Types of Employee Turnover

According to Mathis and Jackson (2000), there are various types of turnover. Below are the examples.


Voluntary type is a turnover because of the employee’s willingness without any external compulsion. This is frequently due to financial benefits, job prospects, geographic location, or other personal factors.


Involuntary turnover is caused by the employee’s underperformance or the employee has done something wrong such as breaking the office rules.


This is the type of turnover which will benefit the company. For example, the employee who is underperformance needs to be replaced by someone who is more capable.


Dysfunctional turnover occurs when the employees with great performance separate from the company. It will affect the company’s productivity.


The company has control over preserving and dealing with issues that might contribute to turnover, such as when employees do not feel comfortable with the leadership system in the company. This is something that the company’s management can still overcome.


It is uncontrollable turnover if the factors caused come from outside of the company, such as the company location which is too far from the employee’s apartment. This is a kind of issue that the company cannot manage.

Causes of Employee Turnover

There are several factors that cause turnover in a company. Some of them are:


Employees under the age of 35 are more likely to resign. This is due to the desire to seek more career opportunities that match themselves.

Job Satisfaction

Job satisfaction is one of the leading causes of turnover. Jobs with low job satisfaction scores have a greater number of turnover.

Poor Compensation

When people leave a company, compensation is one of the major reasons especially for your workers.

Employment Period

The newcomers are more likely to leave. This usually happens in the beginning when they try to adapt with the new environment and still lack socialization.

Environment Factors

A person’s decision to separate from the company is frequently influenced by their geographic location. This is because the location has an impact on everyday life, such as public transportation availability and distance from home or family. Employees are often interested in a company with a strategic location.

Organizational Factor

Employees are less likely to relocate or leave if they believe their beliefs align with the corporate culture. Employees, on the other hand, will be less likely to stay in a company if they believe the organization’s values are incompatible to their own.

How to Calculate Employee Turnover

The numbers of turnover in a company must be monitored. Here’s how to calculate turnover.

Annual Employee Turnover Calculation

Here’s an example of employee turnover calculation in a company. The company had 50 workers at the end of 2020, and hired 50 new employees at the beginning of 2021. However, there were 10 workers left in 2020. The turnover calculation is provided below.

10 / ((50 + 50) : 2) x 100% = 20%. Hence, the turnover rate is 20%.

In sum, turnover rate is one of the keys to measure a company’s effectiveness to which management should pay close attention to. A company with a low turnover rate is mostly filled with satisfied employees.

Moreover, this will benefit the company itself since it saves the company’s time and budget by not having to recruit new workers or pay for employee training.

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