The Definition of High Turnover Rate

Turnover rate refers to the rate at which you must replace employees in your company. Human resources leaders know that keeping employee turnover low helps a company maintain productivity. Recruiting and hiring is a costly endeavor that takes time, requires training and often demands more competitive benefits packages. Save yourself the hassle by keeping employee turnover rates low. If your company's turnover rate is high, take the time to understand why and to find a strategic solution.


The average turnover rate for all employment is 3.5 percent, but some industries have higher rates than others. If your company's turnover rate is higher than the average for your industry, then you may have a problem.

Calculating Turnover Rate

The actual equation to determine turnover rate is to divide the number of separations in a month by the average number of employees and multiply that number by 100 to determine the turnover percentage.

Turnover Rate = Number of Separations ÷ Average Number of Employees x 100

Separations can be counted as those who quit, get fired, retire or take time off due to disability or family leave. Use your average number of employees, because this number is fluid when employees are coming on board and leaving.

Define a High Rate

Different industries have different expected turnover rates. The average turnover rate for all employment is 3.5 percent. Industries with higher turnover rates include food service, sales, construction, and arts and entertainment organizations. Turnover in these industries is well above the 3.5 percent rate, going as high as 6.1 percent in arts and entertainment.

Financial companies, and education and government services tend to have a lower than average turnover rate. Education and government are at 1.3 and 1.4 percent, respectively. Consider your industry and whether the turnover rate is high or low for that industry and the national average in general.

Looking at the Real Problem

It is important to not just look at the turnover rate but to determine why you have a high turnover rate. An aging workforce is a different problem than an unhappy workforce. Employees taking time off for family leave or disability is a different problem than having to fire people for lack of performance. Your turnover rate may be the result of one issue or a combination of several issues. Consider all factors when looking at the rate, and determine if you need to plan for upcoming retirements, improve training efforts or do a better job recruiting people.

Reducing or Addressing Turnover

Determining why you have high turnover is the first step toward addressing it. Obviously, dealing with an aging workforce is not a bad problem to have if those workers have been loyal and effective for years. This problem is solved by getting younger employees or new recruits, to be mentored and trained to replace those planning for retirement. This may mean double staffing in some areas, but it prevents lapses in production and creates the smoothest transition.

If you find yourself firing people or people are leaving because they aren't happy, consider your recruiting and training efforts. Improved training may improve performance and employee satisfaction. If this is the case, implement new programs that develop your existing talent.

If you realize that training is not the issue, look at new recruiting and interview methods to improve the quality of the people you recruit. It is important to consider benefits and compensation when looking at high turnover. If you are not competitive in the market, you will continue to lose strong talent to competitors who pay better and provide more in benefits.