Turnover rate
How to Calculate Your Turnover Rate
Your employee turnover rate is the percentage of your workforce that leaves over a given period. The formula is simple. The judgment calls are where everyone gets it slightly wrong.
June 6, 2026 · 6 min read
Your employee turnover rate is the percentage of your workforce that leaves over a given period.
The basic formula is simple: divide the number of separations by your average headcount, then multiply by 100. The harder questions are which departures to count, how to turn a monthly number into an annual one without overstating it, and what counts as a good rate once you have it.
This walks through all of it, with current benchmarks.
The basic formula
Turnover rate is calculated like this:
Turnover rate = (separations during the period / average headcount during the period) × 100
Average headcount is your starting count plus your ending count, divided by two. So if you began the year with 140 employees, ended with 160, and 15 people left, your average headcount is 150, and your turnover rate is (15 / 150) × 100, which is 10%.
That is the whole calculation. Where it gets interesting is in the details everyone gets slightly wrong.
Which separations to count
Not every departure means the same thing, and lumping them together hides the signal.
Total turnover
Counts everyone who left, voluntary or not. It is the broadest figure, and on its own it tells you the least about what is actually happening.
Voluntary turnover
Counts only the people who chose to leave, resignations. This is the number that matters most for retention, because it is the one you can actually influence. Always calculate it separately. It is the figure that reflects whether people are choosing to leave you.
Involuntary turnover
Counts layoffs, terminations, and the like. Some organizations also separate out retirements and other unavoidable exits. A high total turnover rate driven by a one-time layoff tells you something very different from the same rate driven by your best people resigning.
Turning a monthly rate into an annual one
Most companies should track turnover monthly, because annual figures hide the seasonal and departmental patterns that tell you where the real problem is. But that creates a question: how do you turn a monthly rate into an annual one to compare against benchmarks?
There are two methods, and the difference matters.
The simple method
Multiplies the monthly rate by twelve. A 3% monthly rate becomes 36%. This is quick but systematically overstates the real figure, because it ignores that each month’s departures shrink the pool available to leave the next month.
The compounded method
Is the more accurate one: annual rate = 1 − (1 − monthly rate)^12. A 3% monthly rate works out closer to 31% annualized, not 36%. For monthly rates under about 2%, the two methods give nearly the same answer, so the simple version is fine. Above that, the gap widens and the compounded method is the honest one. Reaching for simple multiplication on a high monthly rate will make your turnover look worse than it is.
What counts as a good turnover rate
The instinct is to want a single benchmark, a number below which you are fine. The honest answer is that a good rate depends almost entirely on your industry, and comparing yourself to the national average is close to meaningless.
As a rough rule, a total annual turnover rate at or below 10% is generally considered healthy across the economy. But very few industries actually live there. The benchmarks for 2026 look roughly like this:
Government, around 11%
Runs lowest of any sector.
Manufacturing, high teens to high 20s
Depending on sub-sector.
Professional services, low to mid teens
Among the more stable knowledge-work sectors.
Technology, around 24%
With high replacement costs per departure.
Healthcare, around 30% on average
Though hospitals run lower and nursing homes and home care run dramatically higher.
Retail, high 50s
A structurally high-turnover sector.
Hospitality and food service, often above 60%
Topping the list, and sometimes past 75%.
Context is the benchmark
The useful question is not “is my rate below 10%.” It is “is my rate below my industry’s average, and is it trending down.” A 25% rate is alarming for a law firm and a quiet year for a restaurant group.
The most actionable definition of a good rate is threefold: below your industry peer group, trending downward over time, and concentrated in the roles where a departure does the least operational damage.
A 12% rate that is all coming from your most critical specialists is worse than an 18% rate concentrated in easily replaced seasonal roles.
From rate to action
Calculating the rate is the easy part, and on its own it does nothing. The number tells you the scale of the problem. It does not tell you who is about to leave, why, or what to do about it.
This is the trap of turnover metrics. A company can track its rate beautifully, benchmark it precisely, watch it climb, and still lose people, because the rate is a rear-view measurement of departures that already happened. By the time it moves, the people are gone.
The rate is where the conversation starts, not where it ends. Knowing you have a 15% voluntary turnover problem is useful only if it pushes you toward the next questions: which of my current people are at risk right now, what is driving each of them, and what conversation would change it, in time to matter. Those questions are about individuals and the future. The turnover rate is about the group and the past.
Calculate the rate. Benchmark it honestly. Then treat the number as the alarm, not the answer, and go find the people it is warning you about before they become next year’s statistic.
The turnover rate tells you the scale. Anchor tells you who, why, and what to do, before the next departure.