This unit is arithmetic and benchmark figures. Get the denominator right and memorize four numbers.
SHRM's turnover formula
Annual turnover rate = (employees who left during the year / average number of employees that year) × 100
The denominator is the average number of employees over the year, not year-end headcount. Year-end headcount distorts the rate whenever headcount changes during the year.
Worked example: an employer averaged 640 employees and recorded 96 separations. 96 / 640 = 0.15. 0.15 × 100 = 15.0%.
The wrong answers show the three standard errors: dividing by a year-end figure such as 512 gives 18.8%; inflating the denominator to 1,440 gives 6.7%; comparing separations to hires gives a replacement ratio, not turnover; and inverting the ratio entirely gives nonsense. 12.0% is not a computation error at all — it is the benchmark median for voluntary turnover slipped in as a distractor.
The 2022 SHRM benchmark medians
- Overall turnover: 15%
- Voluntary turnover: 12%
- Involuntary turnover: 4%
Order matters. Overall is the largest, voluntary next, involuntary smallest. A set giving 12% overall and 15% voluntary has swapped the first two, which is impossible since voluntary is a component of overall. A set giving 4% voluntary and 12% involuntary would imply most separations were employer-initiated.
BLS JOLTS separations
Total separations = quits + layoffs and discharges + other separations.
- Quits correspond to voluntary turnover and are usually the largest component.
- Layoffs and discharges correspond to involuntary turnover.
- Other separations is a real third category and dropping it is the common error.
Transfers are not separations. Furloughs and terminations for cause are not the JOLTS component names.
Carry this: average headcount in the denominator, and 15 / 12 / 4.