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Employee Turnover - HR metric every serious business needs to track

Updated: Jun 7, 2023

Employee Turnover @M923 Consulting

Employee turnover is a critical metric that every business desiring to remain an ongoing concern must track.

What is Employee Turnover?

It is a measure of the rate at which employees leave a company and is expressed as a percentage of the total workforce.

There are two types of employee turnover

This is when an employee voluntarily decides to terminate their contract with their employer. Typically, this is via a resignation or retirement
This occurs when an organisation takes action to terminate an employees' contract. This typically occurs as a result of various reasons such as performance concerns, misconduct etc.

Regardless of the type of turnover, it is pertinent that business fully understand and are in control of their employee turnover activities.

Why Employee Turnover Matters

"In mid-January 2023, the proportion of businesses that reported they expect turnover to decrease in February 2023 was down 12 percentage points to 17% compared with business expectations in the previous month for January 2023. This was the smallest proportion that expected a decrease in turnover since September 2022." - ONS'23. This means increasingly, more UK businesses are pesimistic about employee turnover rates reducing as we progress into 2023.

Employee turnover can have a significant impact on a company's bottom line. High turnover rates can be costly, as they often require businesses to spend significant resources on recruiting and training new employees. High employee turnover can also be a major challenge for businesses, leading to increased recruitment costs, lost productivity, and reduced employee morale. Moreover, when employees leave, their knowledge and expertise leave with them, and it can take time for new employees to gain the same level of knowledge and expertise, which can impact business productivity and efficiency.

High employee turnover can also negatively impact employee morale, which can lead to decreased productivity, increased absenteeism, and lower job satisfaction. This can create a vicious cycle where employees leave the company because they are unhappy, leading to even more turnover.

Calculating Employee Turnover

To calculate employee turnover, you need to divide the number of employees who have left your company by the average number of employees you had during the period you are measuring. This will give you a percentage that represents your company's employee turnover rate.

For example, let's say you had 50 employees at the start of the year and 10 of them left the company during the year. You also hired 10 new employees during the year, so your average number of employees for the year was 45. To calculate your employee turnover rate, you would divide 10 by 45, which gives you a turnover rate of 22.2%.

Impact of Employee Turnover on UK Businesses

Employee turnover is a significant issue for UK businesses, particularly in certain industries. According to a report by XpertHR, the average employee turnover rate in the UK is 15.5%. However, turnover rates can vary significantly by industry, with the highest rates typically seen in sectors such as retail and hospitality.

In addition to the costs associated with recruiting and training new employees, high employee turnover rates can also impact businesses by reducing employee morale and productivity. Employees who are unhappy are more likely to miss work, and when they are at work, they may be less productive. This can lead to lower levels of customer satisfaction and ultimately, lower revenue for the business.

Reducing Employee Turnover

Reducing employee turnover should be a top priority for businesses that want to improve their bottom line and create a positive work environment for their employees. There are several strategies that businesses can use to reduce turnover rates, including:

  • Creating a positive work culture: A positive work culture can help to improve employee morale and job satisfaction, reducing the likelihood that employees will leave.

  • Offering competitive compensation: Offering competitive compensation packages can help to attract and retain high-quality employees.

  • Providing opportunities for career growth and development: Employees are more likely to stay with a company if they feel that they have opportunities for career growth and development.

  • Offering flexible work arrangements: Flexible work arrangements, such as remote work options, can help to improve work-life balance for employees, reducing the likelihood that they will leave the company.


Employee turnover is a critical metric that every serious business must track. It can have a significant impact on a company's bottom line, and reducing turnover should be a top priority for businesses that want to improve their bottom line and create a positive work environment for their employees. By implementing strategies to reduce turnover rates, businesses can improve their bottom line and create a more productive and engaged workforce.

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