The employee turnover rate is one of the simplest HR numbers to calculate and one of the easiest to read wrong. The formula takes ten seconds. The hard part is knowing which turnover to count, what period to measure, and what the resulting number actually tells you, because a single blended percentage can hide the problem you most need to see. This walks through the calculation, a worked example, the types of turnover worth separating, and how to tell whether your rate is a problem.
Get the number right and it becomes an early-warning system. Get it wrong, or only ever look at the headline figure, and it tells you almost nothing you can act on.
How to calculate employee turnover rate
Employee turnover rate is the number of employees who left during a period, divided by the average number of employees during that period, multiplied by 100. That is the whole formula, and it works for any window you choose, monthly, quarterly, or annual.
The one part people get wrong is the denominator. Use the average headcount for the period, not the starting or ending number, because headcount moves as people join and leave. The simple version is the headcount at the start of the period plus the headcount at the end, divided by two. So if you began the year with 48 people, ended with 52, and 6 left, your average headcount is 50, and your annual turnover rate is 6 divided by 50 times 100, or 12%.
Pick your period deliberately. An annual rate is the standard headline figure and the one you will compare against benchmarks. A monthly or quarterly rate is more useful for spotting a problem early, and breaking the number down by tenure, how many of those leavers were in their first six months, is where the real insight lives.
The types of turnover worth separating
A single turnover number blends things you should be looking at separately. The most important split is voluntary versus involuntary: people who chose to leave versus people you let go. They have completely different causes and fixes, and lumping them together muddies both. Beyond that, the number that should keep you up at night is regrettable turnover, the good people you wanted to keep, as opposed to desirable turnover, where a poor fit moves on and the team is better for it.
In our experience, the headline turnover rate tells you almost nothing on its own. The number worth watching is regrettable turnover by tenure, because that is the one you can actually act on, and it is usually concentrated in the first few months, which points straight at hiring and onboarding rather than pay.
What is a good employee turnover rate?
There is no universal “good” turnover rate; it varies widely by industry, role, and region, so the most useful benchmark is your own trend and your own sector rather than a single number. For context, the US quits rate has averaged around 2% of employment per month in recent years, according to the Bureau of Labor Statistics, with wide variation across industries like hospitality and professional services. As a rough rule of thumb, annual voluntary turnover in the low double digits or below is considered healthy in many professional settings, but the comparison that matters is against your own past and your own industry.
| Annual voluntary turnover | What it usually signals |
|---|---|
| Under ~10% | Generally healthy for most professional teams |
| ~10-20% | Worth a closer look at who is leaving and when |
| Over ~20% | A real problem, and usually concentrated early in tenure |
| Regrettable turnover, at any level | The number to act on first |
The trap is treating the headline number as the whole story. A 15% rate made up mostly of poor fits leaving is healthier than a 9% rate that is entirely your best people walking out the door. Always read the rate alongside who left and when.
From measuring to fixing
Calculating the rate is diagnosis, not treatment. Once you know the number and, more importantly, the shape of it, who is leaving and at what tenure, the work is lowering it, which is a different exercise entirely. If your rate is high and front-loaded in the first few months, that is a hiring and onboarding signal; bringing that number down starts well before anyone resigns, with better remote-fit hiring, a deliberate first ninety days, and the retention fundamentals that keep good people.
Ran the math and didn’t like the number?
Prestige builds remote teams designed to keep that rate low, and steps in before it climbs.
That ongoing work is what Prestige OSS runs for the teams we build. We hire for remote fit, onboard deliberately, and keep the retention basics going week to week, which is a big part of why our own managed teams hold around 90% annual retention. You still own the strategy; we make sure the turnover number stays low enough that you rarely have to think about it, and if someone does leave, the replacement is on us.
Frequently Asked Questions
Divide the number of employees who left during a period by the average number of employees during that period, then multiply by 100. For the denominator, use the average headcount, the count at the start plus the count at the end, divided by two, rather than a single point-in-time number.
It depends heavily on your industry, role, and region, so there is no single benchmark. As a rough guide, annual voluntary turnover in the low double digits or below is considered healthy in many professional settings, but the most meaningful comparison is against your own trend and your own sector.
Voluntary turnover is when an employee chooses to leave; involuntary turnover is when you end the employment through layoffs or terminations. They have different causes and different fixes, so track them separately. Voluntary turnover among your strong performers, regrettable turnover, is the figure to prioritize.
Add your headcount at the start of the period to your headcount at the end, then divide by two. For more accuracy over a volatile period, average the headcount across each month instead, but the start-plus-end method is fine for most purposes.
Use an annual rate as your headline figure and for benchmarking, and a monthly or quarterly rate to spot trouble early. Breaking turnover down by tenure and by voluntary versus involuntary tells you far more than any single annual percentage.
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