What Is Employee Turnover?

Employee turnover measures the rate of employee departure from a company over a specific period.

Sounds clinical, but here’s what it really means: it’s that gut punch you feel when your best developer puts in their notice. Or when you realize you’ve hired for the same role three times this year. It includes everyone who walks out the door—whether they’re leaving for a better offer (voluntary) or you had to show them the door (involuntary).

When people keep leaving, it’s usually trying to tell you something. Maybe your managers need help managing. Maybe that “competitive” salary package isn’t competing anymore. Maybe your team is burned out and nobody’s talking about it. The expensive part isn’t just the recruiting fees—it’s watching institutional knowledge walk out the door every few months and starting from scratch again.

That’s why smart companies obsess over keeping their people. Because replacing them costs more than just money. It costs momentum.

How to calculate employee turnover

Understanding the turnover rate helps organizations improve their workforce planning and craft effective compensation strategies.

To calculate employee turnover:

1. Identify the number of employees who left during a chosen period, such as a month or year.
2. Calculate the average number of employees by adding the numbers at the beginning and end of the period and dividing it by two.
3. Divide the number of employees who left by the average number of employees, then multiply by 100 to express the turnover rate as a percentage.

Typically, employee turnover is calculated on a monthly, quarterly, or annual basis. For example, if eight employees left in a quarter and the average headcount is 80, the turnover rate is 10%.

Here’s something that helps: Don’t lump all turnover together. Track who’s leaving because they want to (got a better offer, moving cities, starting their own thing) versus who you had to let go. The story each tells is completely different. If people keep quitting, you might have a culture problem. If you’re doing all the firing, maybe it’s your hiring process that needs work. You can’t fix what you don’t measure.

The real cost when your best people keep leaving

A certain amount of employee turnover is normal and to be expected (depending on the industry). But excessive turnover negatively impacts the business. High turnover affects:

• Productivity and morale. When someone leaves, it’s not just their desk that feels empty. Watch what happens to the team they left behind—suddenly everyone’s doing their own job plus pieces of the one that just walked out the door. That “we’ll manage until we find someone” period? It stretches from weeks into months while you search for the perfect replacement in a market where everyone’s hiring.
  
  The math is brutal. Your remaining team members go from productive to overwhelmed. They start updating their own resumes because now they’re doing 1.5 jobs for 1.0 paychecks. Morale tanks. More people leave. And that open position you were trying to fill? Now you’ve got three. It’s the domino effect every employer dreads—and it starts with just one person walking out the door.
• Recruiting and training costs. From recruiting new talent to training them, replacing employees is expensive. According to Gallup, “the replacement of leaders and managers costs around 200% of their salary, the replacement of professionals in technical roles is 80% of their salary, and frontline employees 40% of their salary” in 2024.
• Institutional knowledge loss. Every time someone leaves, a piece of your company’s brain walks out with them. Not the stuff written in manuals—the real knowledge. Like how Janet knows exactly which client needs a check-in call before renewals. Or how Mike figured out that undocumented workaround that keeps your biggest system running. Or the relationships Sarah built over five years that get deals done with a single text.
  
  You can’t download that into the new hire’s brain. They’ll spend months making expensive mistakes and asking questions that seem obvious to everyone who’s been around. Meanwhile, your clients notice the difference, projects slow down, and everyone realizes just how much unwritten expertise just disappeared. The learning curve isn’t just steep—it’s expensive.

Turnover is especially important to monitor for distributed, remote, and global teams where culture and communication gaps can widen.

How to stop the revolving door

Competitive compensation and benefits

Pay people what they’re worth. Revolutionary concept, right? But it’s not just about the salary number. It’s the whole package—knowing they can take their kid to the doctor without going bankrupt, watching their 401(k) actually grow, maybe even getting that dental work done they’ve been putting off. When people feel like you’re taking care of them and their families, they stop having coffee with recruiters. It’s that simple. You can have the best culture in the world, but if someone else offers 20% more plus better healthcare, your culture is about to get a lot smaller.

A combination of pay and benefits was the most commonly cited reason (16% of respondents) that employees left their jobs in 2024, according to Gallup researchers.

Career development and upskilling

Show your people a future that’s bigger than their current job title. When someone can see themselves growing at your company—maybe leading a team in two years, maybe learning skills that make them indispensable—they stop scrolling through job boards at lunch.

It’s not complicated. People want to get better at what they do. They want to learn new things. They want to know that next year won’t look exactly like this year. But here’s what too many companies miss: if you don’t create those opportunities, someone else will. Gallup found that nearly 1 in 10 employees who quit in 2024 left because they hit a ceiling and couldn’t see a way up. That’s talent walking out your door, not because you treated them badly, but because you forgot to show them what comes next.

Strong onboarding and role clarity

Just as important as focusing on employees’ professional development is providing them with a positive onboarding experience. When new hires are guided through a structured onboarding process that provides a clear understanding of their role and responsibilities, they are less likely to leave the organization. Early clarity about their place within the company reduces uncertainty, helps them quickly integrate, and fosters a sense of purpose.

“The first several months are when employees form first impressions of working at a company, and first impressions are difficult to change,” reported Benjamin Granger, Chief Workplace Psychologist at Qualtrics, describing the significance of the results from Qualtrics’ 2024 Employee Experience Report. But 39% of employees who have worked at a company for fewer than six months plan to quit within the year. This sobering statistic from the Employee Experience Report suggests that organizations should prioritize enhancing a new hire’s first days.

Frequent feedback and employee engagement

Frequent feedback and regular performance reviews play a crucial role in retaining employees and reducing turnover. When employees receive ongoing, meaningful feedback, they feel more engaged and perform better, according to Gallup.

Those regular one-on-ones you keep meaning to schedule? They’re worth more than you think. That’s when managers notice the wins that might otherwise slip by—like how someone streamlined that process everyone hated or mentored the new hire without being asked. It’s also when you spot who’s ready for a stretch project or needs new challenges before they get bored. Make time for these conversations, and people tend to grow with you instead of growing out of you.

Flexible work policies and wellness support

Flexible work options are vital for retaining talent. A hybrid approach to work, where employees can alternate between remote and in-office work, reduces turnover without compromising employee productivity, according to research published in the journal Nature. “The reduction in quit rates was significant for non-managers, female employees, and those with long commutes,” the authors noted.

In addition, organizations that foster a culture where wellness is prioritized can stand out in the competitive talent market and encourage employees to stay. Gym memberships, stipends for wellness-related activities like exercise classes, paid leave for bereavement or caregiving, and on-site cafeterias with healthy food options are examples of the many ways employers can support employees’ well-being.

Positive workplace culture

Last but not least, creating a workplace culture that supports employees reduces excessive employee turnover. The Society for Human Resource Management (SHRM) cites five pillars of a positive workplace culture: honest and unbiased management, civil behavior, meaningful work and opportunities, open communication, and empathy. A company that has a culture with these attributes is likely to experience fewer employee departures than its counterparts, per SHRM’s State of Global Workplace Culture in 2024.

Here’s something interesting: while everyone wants to work somewhere that doesn’t crush their soul, how much culture matters depends on where your employees call home. According to SHRM’s research, your teams in Brazil, Canada, and Mexico? They’re not just hoping for a positive culture—they’re making career decisions based on it. Get the culture right in these countries, and people stay. Get it wrong, and they’re already interviewing elsewhere. Same company, same policies, but the culture piece hits different depending on the passport.

What everyone else’s turnover looks like (reality check)

There is no universal average employee turnover rate. They vary by industry, as the table below shows:

Note: Average turnover rates vary by region, company size, and job type. If your average turnover rate is higher than the rates listed above, it may be due to other factors at play.

Retain your talent with support from Pebl

What makes turnover even more painful is when that person leaving is in Singapore or São Paulo, and now you have to find a replacement who understands both your company culture and local market dynamics. The distance makes everything harder—from spotting the warning signs to fixing the problems that make people leave.

That’s where Pebl’s Employer of Record (EOR) services change the game. We handle the local compliance headaches, make sure benefits actually make sense in each country, and help create the kind of smooth onboarding that makes new hires want to stick around. Because research indicates that when people feel supported from day one, they tend to stay past day 100.

Managing talent across over 185 countries is hard enough without watching your best people walk. Ready to build global teams that last? Contact us to talk about keeping your international talent engaged and on board.

This information does not, and is not intended to, constitute legal or tax advice and is for general informational purposes only. The intent of this document is solely to provide general and preliminary information for private use. Do not rely on it as an alternative to legal, financial, taxation, or accountancy advice from an appropriately qualified professional. The content in this guide is provided “as is,” and no representations are made that the content is error-free.

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