Employee turnover refers to the rate at which employees leave an organization and are replaced by new hires within a specific time frame, typically measured monthly, quarterly, or annually. This metric reflects the organization’s ability to retain staff and is a critical indicator of overall workplace health, culture, and stability.

High turnover can signal dissatisfaction, poor management, or a misalignment between employee expectations and company practices, while low turnover may indicate strong engagement, but could also suggest stagnation if it limits diversity or innovation.

Why Employee Turnover Matters

Turnover impacts multiple areas of a business, including:

• Operational efficiency: Loss of skilled employees can disrupt workflows and delay projects.
• Company reputation: High turnover may damage your employer brand and make hiring more difficult.
• Financial cost: Replacing an employee can cost between 30%–150% of their annual salary due to recruitment, training, and lost productivity.
• Team morale: Frequent departures can lower team cohesion and increase workloads for remaining staff.

Understanding your turnover trends helps identify root causes and implement strategies to reduce avoidable attrition.

Types of Employee Turnover

Voluntary Turnover

This occurs when an employee chooses to leave the company, often for reasons like:

• Career advancement
• Higher pay elsewhere
• Relocation or personal changes
• Burnout or dissatisfaction
• Lack of flexibility

Involuntary Turnover

This happens when the employer ends the employment relationship, usually due to:

• Performance issues
• Role redundancy or restructuring
• Misconduct or violations of policy
• Company-wide layoffs

Both types should be tracked separately to gain clearer insights into workplace dynamics.

Industry Benchmarks for Employee Turnover

Turnover rates vary widely by industry. Based on U.S. Bureau of Labor Statistics data:

• Leisure and Hospitality: 84.9%
• Professional and Business Services: 64.2%
• Construction: 56.9%
• Manufacturing: 39.9%
• Financial Activities: 28.5%
• Government: 18.1%

Understanding your industry average can help contextualize your organization’s turnover trends and set realistic benchmarks.

Common Causes of Employee Turnover

Some turnover is natural, but high rates often indicate issues that need addressing. Common causes include:

• Lack of growth opportunities or internal mobility
• Low compensation or noncompetitive benefits
• Toxic leadership or poor management practices
• Lack of flexibility or poor work-life balance
• Poor cultural fit or weak onboarding
• External job offers with better terms
• Personal life changes (e.g., caregiving, relocation)

Strategies to Reduce Employee Turnover

Reducing turnover involves identifying what drives employees away and taking action to address those pain points.

Offer Competitive Compensation and Benefits

Ensure your salary packages and benefits meet or exceed industry standards to attract and retain top talent.

Foster Career Development

Invest in employee learning, mentorship, and clearly defined growth paths. Employees are more likely to stay when they see long-term potential.

Cultivate a Positive Company Culture

Create a work environment that values transparency, inclusion, recognition, and psychological safety. Conduct stay interviews to identify what's working.

Prioritize Work-Life Balance

Implement flexible work schedules, remote work options, and wellness initiatives. A burnout-free team is more likely to stay engaged and loyal.

Improve Onboarding and Engagement

First impressions matter. A thoughtful onboarding experience combined with ongoing engagement programs can build stronger employee relationships from the start.

Monitoring Turnover Globally

In international and remote teams, cultural differences, local labor laws, and communication gaps can increase turnover risk. Use global HR platforms like Deel to maintain visibility and manage compliance, engagement, and benefits across regions.

By understanding and managing employee turnover effectively, companies can improve productivity, reduce costs, and create a more resilient and engaged workforce.