Definition
A measure of the rate at which employees leave an organisation and are replaced over a given period, usually expressed as a percentage. It is a key indicator of workforce stability, employee satisfaction, and the effectiveness of people management practices.
UK Context
The CIPD's annual Resourcing and Talent Planning Survey reports UK median labour turnover at approximately 15% per year across all sectors. Turnover varies significantly by sector, with hospitality and retail typically experiencing higher rates. Turnover costs in the UK are estimated at 6,000 to 30,000 pounds per leaver depending on the role, when accounting for recruitment, training, and lost productivity.
Best Practices
- Calculate turnover quarterly and benchmark against sector averages from CIPD or other reliable sources
- Analyse turnover by department, manager, tenure, and demographics to identify patterns
- Conduct exit interviews to understand reasons for leaving and identify actionable improvements
Frequently Asked Questions
How is labour turnover calculated?
The most common formula is: (Number of leavers in period / Average number of employees in period) x 100. For example, if 12 employees leave in a year from an average workforce of 100, the annual turnover rate is 12%.
What is a good turnover rate?
This depends heavily on the sector. The UK median is approximately 15% per year. Rates below 10% suggest strong retention; rates above 20% may indicate issues requiring investigation. However, some turnover is healthy and necessary for bringing in fresh talent and ideas.