Turnover rate refers to the percentage of employees who leave a company within a certain time period. In other words, it is the rate at which a company must replace employees. Though employees leave a company for various reasons (e.g., bad manager, burnout, family reasons), a high turnover rate can reveal problem areas within an organization, and the resulting vacancies and search for replacements can prove costly.
For human resources departments and hiring managers, filling numerous open positions is expensive. A high turnover rate also slows productivity, increases costs associated with onboarding and training and lowers company morale. Companies with high turnover rates may also pay higher state unemployment taxes if they generate many unemployment claims.
To minimize turnover rates and determine the effectiveness of your people management strategies, employers should take a close look at their turnover data to understand who’s leaving and when.