How To Calculate Turnover Rate?

For the purpose of human resources management, if there are 10 people leaving and there are 100 employees, the turnover rate is 10%?

Not so simple.

This article is not trying to complicate some simple arithmetic, or helping you to distort the turnover rate of your company. After all, it normally does not affect anyone's payroll. However, you, as an HR manager or team leader, should still understand or appreciate that turnover rate should reveal the timing of resignation, and also other forms of termination during the year.

1) First Of All, New Joiners Should Be Considered:

For example:

  • Number of staff at the beginning of 2015: 100
  • Number of staff newly joined: 30
  • Number of staff at the end of 2015: 120
  • Number of staff resigned: 10

Turnover Rate: 10/[(100+120)/2] = 9.1%

2) Is There Any Difference If New Joiners Arrive At The Beginning Of The Year, Or End Of Year?

Yes. For more sophisticated calculation, there is difference between joining in the end of January, and joining in the end of November.

If the 30 new joiners join in the end of January:

Month Number of Staff
Jan 100
Feb-Dec 130

Graphical illustration:

Calculation:

  • Average number of staff: (1 x 100 + 11 x 130 ) / 12 = 127.5
  • Number of staff resigned: 10
  • Turnover Rate: 10/127.5 = 7.8%

If the 30 new joiners join in the end of November:

  • Average number of staff: (11 x 100 + 1 x 130 ) / 12 = 102.5
  • Number of staff resigned: 10
  • Turnover Rate: 10/102.5 = 9.8%

3) What If There Are 15 Staff Members Retiring?

Turnover rate should be higher because, as anyone can imagine, number of staff member who may resign will be less if 15 of them have already retired.

For example:

  • Number of staff at the beginning of 2015: 100
  • Number of staff newly joined in end of January: 30
  • Number of staff resigned in end of February: 15
  • Number of staff resigned: 10
Month Number of Staff
Jan 100
Feb 130
Mar-Dec 115

Calculation:

  • Average number of staff: (1 x 100 + 1 x 130 + 10 x 115) / 12 = 115
  • Number of staff resigned: 10
  • Turnover Rate: 10/115 = 8.7%

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