21.10.2026

Employee Turnover

Employee Turnover: Causes, Calculation and Tips for Reduction

Employee turnover affects every company, regardless of its size or industry. Often, it serves as an indicator of significant challenges such as poor employee experience, insufficient employee retention or inefficient processes. At the same time, a moderate level of turnover can provide opportunities for innovation by making room for fresh ideas and perspectives.

Content

What is Employee Turnover? (Definition)

Employee turnover (also known as labour turnover) encompasses all personnel changes within a company. It is often regarded as a metric for the stability of an organization. It offers valuable insights into the quality of company culture, leadership practices and employee retention. Besides voluntary resignations from employees, it also includes task changes, internal restructuring and natural departures such as retirement.

Types of Employee Turnover

Natural Turnover: Includes retirement, parental leave or the expiration of fixed-term contracts. Companies have little to no influence over these changes.
Voluntary Turnover: Employees actively decide to leave the company, often for better career opportunities or personal reasons.
Involuntary Turnover: The company initiates terminations, whether for operational reasons or due to performance deficits.
Internal Turnover: Employees transition to other departments or positions within the company, reflecting internal opportunities for growth.
External Turnover: Employees leave the company entirely, creating vacancies.
New hire Turnover: This type refers to departures within the first twelve months of employment. Optimization in onboarding processes can significantly mitigate this turnover.

How to Calculate the Employee Turnover Rate?

The employee turnover rate is a key metric that measures the number of departures relative to the workforce. It is calculated using different formulas and reveals whether employee movement in a business is high or low.

Basic Formula

The basic formula is the simplest method to calculate the employee turnover rate. However, it is inaccurate as it disregards new hires.

The basic formula is: Employee Turnover Rate (%) = (Departures / Workforce at the Beginning of the Year) x 100

Example: A company starts the year with 100 employees, of which 10 leave during the year and 20 join as new hires. The employee turnover rate is: (10 / 100) x 100 = 10%. The 20 arrivals remain unaccounted for in this calculation.

BDA Formula

The BDA formula relates departures to the average workforce. When no more accurate monthly averages are available, the average is often approximated using the beginning and end workforce figures.

The formula is: Employee Turnover Rate (%) = (Departures / Ø Average Workforce) x 100
How to calculate average workforce? (Beginning workforce + Ending workforce) / 2

Example: Using the figures from the basic formula:
Ø Average Workforce = (100 + 110) / 2 = 105
Employee Turnover Rate = (10 / 105) x 100 = 9.52%

Schlüter Formula

This more detailed formula accounts for the dynamics within a company by dividing the departures by the sum of the beginning workforce and the new hires.

Employee Turnover Rate (%) = (Departures / (Beginning Workforce + New Hires)) x 100

Example: In this case, the turnover rate would be calculated as: (10 / (100 + 20)) x 100 = 8.33%

What is the Average Turnover Rate in different countries?

Employee turnover rates vary significantly across countries due to differences in labor market regulations, economic stability, unemployment rates, and cultural factors. For example, a flexible employment system can lead to higher turnover, while rigid labor markets may result in lower rates. Here is a comparison of the average turnover rates by country:

Country	Average Annual Turnover Rate	Key Drivers & Characteristics
United States (US)	Approx. 20%-23% overall	Highly dynamic turnover: Frequent job changes motivated by salary increases and career advancement opportunities.
Australia	Approx. 18%-22%	Highly dynamic labor market: While workers show high mobility, recent economic slowdowns have slightly curbed their willingness to switch jobs.
United Kingdom (UK)	Approx. 16%-19%	Similar to the US in terms of mobility: Skill shortages in several industries lead to increased job-switch tendencies.
Turkey	Approx. 15%-18%	Economically influenced: High inflation and currency instability drive workers to switch jobs for better salaries.
France	Approx. 13%-15%	Strict labor policies: Driven largely by younger employees and increases in fixed-term contracts.
Netherlands	Approx. 12%-14%	Stable market: A strong part-time and flexible-work culture ensures steady employee retention figures.
Sweden	Approx. 11%-13%	High employee satisfaction: Scandinavian labor models promote long service through excellent work-life balance.
Spain	Approx. 3%-10% dependent on contract type	Very low voluntary turnover: High unemployment (approx. 10%) fosters risk aversion and reluctance to leave secure jobs.

An optimal employee turnover rate is considered between 8 and 12% (excluding internal or positional changes). Values below 5% are often observed in highly regulated industries, such as the public sector. However, low turnover risks stagnation and “operational blindness”. Conversely, a turnover rate exceeding 20% typically signals structural issues that require intervention.

Reasons for High Employee Turnover

Internal Causes

Insufficient leadership, lack of career advancement opportunities or a poor work atmosphere are among the most common internal reasons. When employees are dissatisfied, the likelihood that they will change jobs increases.

External Causes

Economic fluctuations or a competitive job market also impacts employees’ willingness to switch jobs. In periods of economic growth, the number of job changes rises as employees are presented with better career opportunities.

Demographic Factors

Young employees are the most likely to change jobs, as they are often looking for opportunities for growth. Older employees, in contrast, are less likely to change jobs because they prefer stability or are afraid of change.

Consequences of a High Employee Turnover Rate

A high employee turnover rate poses significant risks and challenges for businesses:

Direct and Indirect Costs: Every departure entails substantial financial burdens. Direct costs encompass job advertisements, interviews and onboarding, while indirect costs include efficiency losses within affected teams or productivity gaps without a suitable replacement.
Knowledge Loss: Long-tenured employees often possess deep insights into processes, customers and internal structures. Their departure results not only in knowledge loss but also adds additional workload to remaining team members for knowledge transfers.
Stress and Overload: When others’ tasks need to be compensated for, the workload on the remaining team increases. Over time, this may lead to burnout risks and put other employees’ retention at risk.
Reduced Motivation and Team Dynamics: The repeated departure of colleagues can weaken confidence in the workplace and create unrest within the team. New hires require onboarding time, which can temporarily reduce overall team productivity.
Damaged Reputation: Companies with high turnover rates quickly gain a reputation for being unstable. This can deter potential talent, reducing long-term appeal in the job market.

5 Tips on How to Reduce Employee Turnover

A well-thought-out strategy can effectively mitigate employee turnover. These five approaches have proven successful in practice:

Optimized Onboarding: New hire turnover often results from uncertainties in the initial months of employment. Clearly structured onboarding programs that address both cultural and operational aspects can significantly reduce these departures.
Recognition in Daily Work: Small gestures like regular and honest feedback as well as public acknowledgment of achievements increase team engagement.
Transparent Communication: Reliable updates on company decisions and projects help employees feel valued and included, particularly during periods of uncertainty.
Targeted Training Programs: Developing skills shows employees that their personal growth is valued. This strengthens their connection to the company and reduces their intention to leave.
Improved Work-Life Balance: Flexible working hours, remote work options and transparent scheduling practices enhance employees’ ability to balance work and personal life. Modern workforce management tools like the software from plano WFM can help achieve this by combining staff planning, time recording and employee autonomy over schedules.

Employee Turnover in the Retail Industry

Employee turnover rates in the retail industry are among the highest compared to other sectors. What makes sustainable employee retention particularly challenging in this field?

Why is Employee Turnover in Retail Particularly High?

A key factor contributing to the high turnover rate in the retail sector is the elevated share of part-time employees and casual workers, such as temporary staff. These employees often lack a long-term connection to the employer, seek flexibility or pursue such roles temporarily, for instance, during their studies. Additionally, seasonal spikes in workload (e.g., the pre-Christmas rush) and the continuous emotional strain of customer interactions exacerbate the challenge. Consequently, many employees view their jobs as demanding and unpredictable, negatively impacting employee experience and long-term retention. The irregular work hours and shift patterns also create obstacles, especially in achieving work-life balance.

Reducing Employee Turnover in Retail Using plano WFM

To strengthen long-term employee retention in retail, fair, transparent and participatory shift planning is highly effective. plano’s Workforce Management (WFM) solution helps reduce employee turnover through intelligent staff planning and self-services:

Enhanced Participation with myplano and Self Rostering: Employees can actively co-design their shifts. Whether it’s shift swaps, request preferred shifts or making spontaneous adjustments, the myplano app allows employees to easily handle such tasks. This flexibility boosts the acceptance of shift plans and strengthens personal connections to the company.
Fair and Transparent Scheduling Via AI: With automated schedule optimization, personal preferences, legal regulations and actual staff needs are considered. This approach creates equitable and sustainable plans, avoiding both overstaffing and understaffing.
Accurate Staffing Level Analysis: Using advanced AI algorithms, plano analyzes historical data, current trends and customer influences to calculate precise staffing requirements for every shift. This minimizes shortages, reduces overtime and increases operational efficiency.
Streamlined Administrative Processes: Shift requests, leave applications and time recording are managed completely digitally and efficiently through the myplano app. This not only reduces administrative burdens but also prevents errors and enhances satisfaction among employees.
Reduced Overwork, Increased Satisfaction: With plano WFM, staffing is optimized to ensure sufficient personnel during high-demand periods while avoiding overwork during quieter times. This leads to more satisfied teams.

Thanks to these features, plano WFM is far more than just a planning tool. plano enhances employee experience through targeted measures to foster participation and transparency while enabling retail companies to lower their turnover rates.

Conclusion: Handling Employee Turnover Effectively

Employee turnover is not inherently a problem. When actively managed, it can be used as an opportunity to optimize teams and strengthen company culture. Integrating modern staff planning solutions like plano WFM not only improves efficiency but also fosters employee loyalty and strengthens employee experience. Take advantage of a strong and satisfied workforce!