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30 November 2021

Calculating Turnover Rate

Emine Çelik Uzun
| Blog
Calculating Turnover Rate


What Is The Turnover Rate and How Is It Calculated?

Turnover rate is one of the most important calculations made by HR experts, which corresponds to the employee turnover rate in Turkish. It is generally used to express the rate of employees leaving the company.
Employees can leave a company for a variety of reasons, both voluntarily and involuntarily.
Voluntary quitting happens when employees voluntarily leave a company, usually because they went to work for another company.
Conversely, employer-decided termination occurs when employees are dismissed due to poor job performance, absenteeism, or violations of workplace policies, without the employee's decision to leave the company.
For this reason, when calculating the turnover rate, it should cover all those who left the job both voluntarily and with the employer's decision and should be calculated separately.
Turnover rate has a special importance both in measuring company culture and health, and in keeping employee costs at a certain level. As the qualifications of the resigned personnel increase, the costs also increase.

How To Calculate The Turnover Rate of The Company?

When companies calculate the turnover rate, they are usually based on a one-year period. The number of those who left the job voluntarily or by the employer's decision within a one-year period is determined. The determined number is divided by the total number of employees in a one-year period. It must be multiplied by 100 to get the ratio from the result obtained.
The simpler calculation of the average number of employees is calculated by dividing the number of employees in the year by 12.
Another type of calculation that is calculated according to metrics similar to the Turnover rate and that concerns HR employees is the Attrition rate. Let's also examine the turnover rate and the attrition rate, which are the main differences, although they are based on similar metrics.

What Is The Attrition Rate?

In some cases, companies do not need to replace the employee who leaves the job or they eliminate that position altogether. This situation is called attrition. The difference of the turnover ratio from this situation is the change of personnel.
Turnover rate varies by sector and department. When analyzed by sector, there are sectors where you can reach either 15% or 100%. Although the 100% rate seems like a high rate, in reality this is a very common situation for some sectors. When examined specifically for the departments within the company, it is observed that in some cases all personnel are changed due to the quotas applied in dynamic structures such as marketing.
While calculating the acceptable turnover rate for your company, the dynamics of the industry in which you operate should be considered.

What is a Healthy Turnover Rate?

The turnover rate often has a negative connotation because of the high cost of replacing employees. However, the turnover rate is not necessarily a negative thing.
If the high rate is the result of poor performers leaving the company, that can actually be a good thing. On the other hand, if top performers are leaving, it can be detrimental to a company. For this reason, it is difficult to define a healthy turnover rate because it varies according to each company and its internal dynamics. Therefore, the turnover rate should always be evaluated contextually.

Statistical data always has an important place for the human resources department. It is worth reminding once again that the two calculations that we try to explain briefly in this article are very important for companies to achieve their goals and keep their activities in a sustainable state.
Calculation processes are error-prone processes. Therefore, minimizing the human factor may offer a healthier solution. Fortunately, technology also serves us in the field of HR. As Turkey's first and only human resources-oriented ERP software, Stafik has modules that allow you to effortlessly perform the calculations that must be performed by human resources.