Calculate employee turnover rate and estimate the true cost of employee turnover. Track retention performance and identify workforce challenges.
Calculate employee turnover rate and estimate the true cost of employee turnover. Track retention performance and identify workforce challenges.
Generated: 1/13/2026, 5:13:21 AM | AskSMB.io
Headcount at the beginning of the period
Headcount at the end of the period
Total employees who left during the period
Hiring, onboarding, training, lost productivity
Average Number of Employees
Average workforce size during the period
Employee Turnover Rate
Primary turnover metric
Employees Lost
Total employees who left
Employee turnover is the rate at which employees leave an organization and must be replaced. It's calculated by dividing the number of departures by the average number of employees during a period, expressed as a percentage. For example, if you started the year with 50 employees, ended with 45, and 10 left, your average workforce was 47.5 employees and your turnover rate was 21.05%. Turnover can be voluntary (employee-initiated resignations) or involuntary (terminations, layoffs). High turnover signals retention problems, while some turnover is natural and even healthy for organizational renewal.
Employee turnover disproportionately impacts small businesses because each employee represents a larger percentage of the workforce and often holds critical institutional knowledge. High turnover: (1) Drains financial resources through recruitment, onboarding, and lost productivity. (2) Disrupts operations and customer relationships when key employees leave. (3) Decreases team morale and can trigger additional departures. (4) Reduces competitive advantage as expertise walks out the door. (5) Consumes management time that could be spent growing the business. For small businesses, replacing an employee typically costs 50-200% of their annual salary when accounting for all direct and indirect costs. Reducing turnover by even a few percentage points can significantly improve profitability and stability.
Understanding the full cost of turnover requires considering both direct and indirect expenses:
Direct costs include:
Indirect costs include:
Combined, these costs typically range from $3,000-$10,000 for hourly workers and $10,000-$50,000+ for professional roles.
These are industry averages—high-performing companies in every sector maintain turnover well below these benchmarks through strong culture and retention practices.
Inputs:
Results:
This company experienced high turnover (21.05%), losing 10 employees from an average workforce of 47.5. At a conservative $6,000 per replacement, the total cost was $60,000—representing significant financial drain and operational disruption. Reducing turnover by just 5 percentage points would save approximately $15,000 annually.