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HR Metrics

How to Calculate & Analyse the Turnover Rate of Talent in Your Organisation


All organisations will experience a turnover of talent, it’s just a question of whether they have a healthy turnover rate. When employees leave your company, it can be due to career development, job dissatisfaction, or personal reasons.

This is where your turnover rate of talent comes in. In this guide we’ll discuss how you can go about calculating employee turnover rate, and how you can use it as a starting metric in understanding the underlying issues contributing to high turnover.


What is turnover rate of talent?

Talent turnover rate is an HR metric that measures the rate at which talent leaves an organisation, creating vacant positions. This is also known as employee turnover, and can be voluntary or involuntary. It’s a metric that can be used in identifying and evaluating underlying issues and areas for improvement in talent management and the retention of top talent.

The cost of high talent turnover rates

Regardless of what your employee turnover rate is, or whether employees leave by choice or are let go, it will have an impact on your business. Said impact can come in the form of both direct and indirect costs to the business.

Direct costs are the tangible, measurable expenses to a business as a result of employee turnover. These include:

On the other hand, indirect costs refer to the intangible costs that negatively impact a business, such as:

So, what does this all mean? Well, while your employee turnover rate shows how many employees exit the business, it doesn’t reveal the underlying causes behind why talent chooses to leave. Of course, turnover is to be expected, and you can have a healthy turnover of talent rate. Gallup says that a healthy turnover rate is around 10%. But it’s also important to use your turnover rate alongside other HR metrics to understand what may be causing voluntary turnover and identify areas to improve retention.

What are the challenges of measuring employee turnover?

Some might argue that measuring employee turnover rates only highlights problems of the past rather than the current state of the organisation—and they would be right. But that doesn’t make employee turnover a useless metric.

While relying solely on a one-time measurement of your employee turnover rate isn’t useful, continually measuring over time can reveal trends and patterns in your workforce that point to the underlying drivers of employee turnover. Of course, this alone won’t reveal the underlying causes, which is why you still need to combine your employee turnover rate with other HR and engagement metrics to help analyse and explain the data.

How to calculate talent turnover rate

When you calculate employee turnover rate, the first things you need to define are:

  1. The specific group you’re measuring turnover for (this could be the whole organisation or a specific department)
  2. The time period you’re measuring for (such as a specific year or quarter).

To calculate employee turnover rate, you just need to divide the total number of employees who left during a certain period by the average number of employees who were employed during that same time. Then you can multiply the answer to get a percentage.

The turnover rate of talent = (total number of employees who left/average number of employees) x 100

So, if you want to measure the turnover rate for your organisation, which had 100 team members on average over the financial year, and you had 10 staff leave who resigned, retired, or were made redundant  over that year, then your formula will be:

example turnover rate of talent: (10/100) x 100 = 10%

Maybe you want to measure a specific department’s turnover. Let’s say your development team consists of an average of 35 employees over a quarter, but three employees left during that time. Your average turnover rate will be:

example of turnover rate of talent: (3/35) x 100 = 8.57%

These numbers don’t reveal much on their own, other than the fact that 10% of employees left your organisation over the course of the financial year, or 8.57% of developers left your development team in a quarter. What you need to do is analyse your staff turnover to understand why turnover happens and what can be done to improve your employee retention rate.

Keep in mind that what’s considered a “good” employee turnover rate varies across different industries and job roles, so what seems abnormally high in one company might actually be standard for their particular industry. For example, three out of a 35-person development team resigning in a quarter might not seem so bad at face value, but we’ll give you a few scenarios to consider.

  1. All three developers were let go within a year of starting at your organisation, signalling an issue with recruitment or development processes—basically, that neither are robust nor aligned with the development team’s capability needs
  2. Two of those developers resigned in the same month, and exit interviews flagged that they felt under-supported by their managers. In case we need to make that really clear, said turnover rate shows an issue with culture and management.
  3. The developers who left were all tenured employees exploring new opportunities; for example, your head of development and product manager. All had successors prepped and ready to go, so no ramifications were felt.

The point we’re trying to make is that one percentage figure could look good or bad without context. This is where different HR metrics come into play. You can use different metrics to analyse turnover rates and their underlying causes, allowing you to identify and action improvements to the workplace. This way you can determine the factors contributing to overall employee satisfaction, and how they might be affecting employee turnover rates.

Strategies for reducing talent turnover rates

Ideally, organisations want to reduce their overall turnover rate and increase employee retention rates. This way, you keep organisational capabilities and expertise, build stronger company culture, and save on recruitment costs.

The first step to doing this is analysing the cause of your company’s turnover to identify areas for improvement. You can do this with other metrics, feedback and evaluations that look into employee engagement and workplace culture, allowing you to address specific issues impacting your average employee turnover rate. There are a few strategies organisations can utilise to do this.

Key takeaways

Turnover rate of talent is an important starting metric to understand why employees leave an organisation. Alongside metrics looking into engagement, motivation, and capabilities, calculating employee turnover helps businesses identify underlying causes driving turnover and develop retention strategies to address their voluntary turnover rate.

When you aim to reduce high employee turnover, you need to remember that creating a positive working environment for employees is the most crucial step in retaining talent. This includes offering opportunities for career development, open communication and collaboration, and involving employees in business strategy to provide and positive working environment where employees feel valued.

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