Understanding Employee Turnover: What is a Good Turnover Rate?

A good employee turnover rate is generally 10% or lower annually, though acceptable rates vary significantly by industry. As of 2025, the average U.S. employee turnover rate stands at 3.3% monthly according to the U.S. Bureau of Labor Statistics Job Openings and Labor Turnover Survey (JOLTS), with voluntary resignations continuing to decline from pandemic-era highs. Companies aiming for sustainable growth should benchmark their turnover against industry standards while understanding that 75% of employee departures are preventable through strategic retention initiatives.

Employee turnover directly impacts your bottom line, organizational culture, and operational efficiency. Understanding what constitutes healthy turnover for your industry—and more importantly, how to improve it—can transform your workforce stability and business performance.

What is Employee Turnover?

Employee turnover is the rate at which employees leave an organization and are replaced by new workers. This metric encompasses both voluntary departures (resignations, retirements) and involuntary separations (terminations, layoffs). Tracking turnover provides critical insights into workforce stability, employee satisfaction, and the effectiveness of your retention strategies.

How to Calculate Your Employee Turnover Rate

To calculate your organization's turnover rate, use this formula:

(Number of Separations ÷ Average Number of Employees) × 100 = Turnover Rate %

Example: If 15 employees left your company over one year and you averaged 150 employees during that period:

• (15 ÷ 150) × 100 = 10% annual turnover rate

For more precise tracking, calculate your average employee count by adding your headcount at the beginning and end of the period, then dividing by two. Many organizations use HR Cloud's turnover analytics to automatically track these metrics across departments, locations, and time periods.

Voluntary vs. Involuntary Turnover

Understanding the distinction between turnover types helps identify root causes:

Voluntary Turnover: Employees choose to leave for better opportunities, career advancement, compensation, work-life balance, or workplace culture issues. According to Mercer's 2025 Workforce Turnover Survey, voluntary turnover has declined to 13.5% in 2025, down from 17.3% in 2023.

Involuntary Turnover: The organization initiates separation through terminations, layoffs, or performance-based dismissals. BLS data shows involuntary turnover averaged 1% monthly across industries in late 2024.

The key insight? Research from SHRM's talent retention research reveals that 75% of voluntary turnover is preventable, representing a massive opportunity for organizations that invest in employee experience.

What is a Good Turnover Rate in 2025?

As a general benchmark, companies should aim to keep annual turnover below 10% to maintain healthy employee retention rates. This target indicates solid employee retention strategies, stable workforce planning, and positive workplace culture.

However, "good" turnover rates depend heavily on industry context, company size, and workforce composition. Organizations in industries traditionally experiencing higher churn—such as retail, hospitality, and food services—may consider rates in the 15-20% range acceptable, though still working to improve retention where possible.

The 10% Benchmark Explained

Why is 10% considered the gold standard? This threshold represents a balance between:

• Natural workforce movement: Some turnover is healthy and expected (retirements, relocations, career changes)

• Cost containment: Replacement costs average 33-200% of an employee's salary according to research from Work Institute

• Organizational stability: Teams maintain continuity and institutional knowledge

• Culture sustainability: Remaining employees experience minimal disruption

Organizations consistently maintaining turnover below 10% typically demonstrate strong employee engagement, competitive compensation, clear career pathways, and cultures where employees feel valued and recognized.

Want to learn how Workmates can transform your organization today?

Book Your Free Demo

Industry-Specific Acceptable Ranges

While 10% serves as an ideal target, realistic benchmarks vary by sector:

• Technology & Professional Services: 13-15% (knowledge workers have high mobility)

• Healthcare (Hospitals): 18-21% (high-stress environments drive turnover)

• Manufacturing: 15-18% (physical demands and shift work impact retention)

• Construction: 20-25% (project-based work creates natural turnover)

• Retail & Wholesale: 20-25% (part-time workforce, seasonal employment)

• Hospitality: 60-75% (industry-wide retention challenge)

• Government & Public Sector: 8-12% (strong benefits drive stability)

Understanding your industry's norms helps set realistic improvement goals while identifying whether your organization is an outlier requiring immediate intervention.

Turnover Rate Benchmarks by Industry

According to the U.S. Bureau of Labor Statistics, the overall monthly turnover rate across all industries was 3.3% as of November 2024. However, this aggregate figure masks significant industry variation driven by compensation levels, job demands, work environments, and career development opportunities.

Healthcare Turnover Rates

The healthcare sector faces persistent retention challenges driven by burnout, staffing shortages, and demanding schedules. Current industry benchmarks show:

• Hospitals: 20.7% annual turnover (down 2% from 2022 peaks)

• Registered Nurses: 16.4% turnover in 2025

• Physicians: 13% turnover

• Nursing Homes: 65-94% in some facilities

• Home Health Care: 60-70% average

Nearly half of U.S. healthcare workers report burnout—characterized by emotional exhaustion, fatigue, and decreased effectiveness. The World Health Organization forecasts an 11 million healthcare worker shortage by 2030, intensifying competition for talent. Organizations succeeding in healthcare retention focus on workload management, mental health support, flexible scheduling, and recognition programs that acknowledge the demanding nature of caregiving roles.

Retail and Hospitality Turnover

These customer-facing industries consistently experience the highest turnover rates in the U.S. economy:

Retail:

• Front-line employees: 60%+ annually (McKinsey research)

• Store management: 35-40%

• Overall retail/wholesale: 24.9% (highest among tracked industries)

Hospitality:

• Accommodation and food services: 74% annual turnover

• Hotel staff: 60-75% depending on property type

• Restaurant workers: 70-80% industry standard

Contributing factors include limited career advancement, inconsistent scheduling, customer-facing stress, and compensation that often lags other industries. Organizations making progress in hospitality retention invest in skills development, create advancement pathways, offer scheduling flexibility, and implement recognition programs that boost morale among frontline teams.

Construction and Manufacturing

Construction:

• Annual turnover: 20-25% industry average

• Seasonal variations: December peaks due to project completions and weather

• Skilled trades: Lower turnover due to specialized skills

Manufacturing:

• Annual turnover: 15-20% average

• Skilled positions: 12-15%

• Entry-level production: 25-30%

• Replacement cost: $10,000-$40,000 per skilled worker 

Both industries face physical demands, safety concerns, and in construction's case, project-based employment that creates natural workforce movement. Successful retention strategies include safety culture investments, skills training programs, clear wage progression, and structured onboarding programs that reduce early-tenure departures.

The True Cost of High Employee Turnover

High employee turnover doesn't just disrupt operations—it delivers a devastating financial blow that many organizations drastically underestimate. According to Work Institute's research, U.S. businesses lose approximately $2.9 trillion annually to voluntary turnover. Understanding both direct and hidden costs is essential for building the business case for retention investments.

Direct Replacement Costs

The most visible expenses associated with turnover include:

Separation Costs:

• Exit interviews and processing

• Severance packages

• Administrative paperwork

• COBRA and benefits continuation

• Knowledge transfer time

Recruitment Costs:

• Job posting fees

• Recruiter time or agency fees

• Applicant tracking system costs

• Background checks and assessments

• Interview time (multiple team members)

Onboarding and Training Costs:

• New hire orientation programs

• Role-specific training

• Mentor/buddy time investment

• Reduced productivity during ramp-up

• Technology and equipment setup

Work Institute's conservative estimate suggests calculating replacement costs at 33.3% of an employee's base salary. Gallup research estimates a broader range of 0.5 to 2 times annual salary depending on role complexity and seniority.

Example: Replacing an employee earning $50,000 annually costs $16,650 to $100,000 depending on position level.

Hidden Productivity Losses

Beyond direct costs, organizations face substantial indirect impacts:

Decreased Team Productivity:

• Remaining employees absorb departed workers' responsibilities

• 73% of hiring managers report employee turnover heavily burdens remaining staff

• 61% of employees experiencing workload increases due to understaffing also report burnout

Customer Experience Degradation:

• Service quality suffers during staffing gaps

• Relationship continuity breaks with key clients

• Product and service quality declines during transition periods

Cultural and Morale Damage:

• High turnover creates anxiety among remaining employees

• "Turnover contagion" where departures trigger additional resignations

• Reduced organizational commitment and engagement

• Decline in discretionary effort

Lost Institutional Knowledge:

• Departing employees take years of experience and relationships

• Undocumented processes and insights disappear

• Historical context for decision-making lost

Many organizations using a centralized HRIS can track these metrics systematically, revealing the full scope of turnover's impact on business performance.

Proven Strategies to Reduce Employee Turnover

Since 75% of voluntary turnover is preventable, organizations that implement comprehensive retention strategies gain significant competitive advantages. Based on research from SHRM, Gallup, and Mercer, here are evidence-based approaches that deliver measurable results:

1. Competitive Compensation and Benefits

While salary isn't the primary driver of turnover (ranking sixth in employee departure reasons), inadequate compensation removes employees from your workforce. Effective strategies include:

• Regular market benchmarking: Review compensation against industry standards annually

• Transparency in pay structures: Clear frameworks reduce perceived inequity

• Total rewards positioning: Emphasize complete package (base pay + benefits + perks)

• Financial wellness programs: Tools addressing employee money stress

• Pay flexibility options: On-demand pay access for hourly workers

Research shows that addressing compensation concerns, when combined with other retention initiatives, creates a foundation for workforce stability.

2. Employee Recognition Programs That Drive Retention

Recognition directly impacts turnover rates. Research from multiple sources reveals:

• Great managers reduce turnover by 40% through regular acknowledgment and appreciation

• Organizations with strong recognition and rewards programs see 31% lower voluntary turnover

• 34% of U.S. workers report lack of recognition as a workplace issue

• Highly engaged employees show 84% retention rates

Effective recognition programs include:

• Peer-to-peer appreciation platforms: Tools like HR Cloud's Workmates enable company-wide recognition

• Values-based awards: Tie recognition to organizational principles

• Milestone celebrations: Automate birthday, anniversary, and achievement recognition

• Manager training: Develop leaders' skills in delivering meaningful, timely feedback

• Point-based rewards: Allow employees to choose rewards that matter to them

Recognition works because it addresses fundamental human needs for appreciation and belonging—drivers that often outweigh purely financial considerations. Effective employee recognition creates cultures where people feel valued and choose to stay.

Want to learn how Workmates can transform your organization today?

Book Your Free Demo

3. Career Development Opportunities

Lack of growth opportunities ranks among the top reasons employees leave. According to talent retention research:

• 45% of employees would stay longer for career advancement opportunities

• 36% value professional training and skills development

• 32% of departing employees cite roles better aligned with career goals

Organizations reducing turnover through development focus on:

• Clear career pathways: Document advancement possibilities within each department

• Skills development programs: Offer tuition assistance, certifications, workshop access

• Internal mobility: Promote from within before external recruiting

• Mentorship initiatives: Connect junior employees with senior leaders

• Succession planning: Prepare high-performers for future roles

Using performance management software helps track development goals, document growth conversations, and ensure employees see concrete paths forward.

4. Creating a Positive Work Environment

Toxic or negative work environment is the #1 reason employees quit (32.4% of departures), followed by poor company leadership (30.3%) and dissatisfaction with managers (27.7%). Addressing culture drives retention:

• Work-life balance: 68.1% of employees prioritize this factor

• Flexible work arrangements: 54.7% more likely to stay with flextime options

• Remote work advantage: Fully remote workers show 94.2% retention vs 81.6% office-based

• Inclusive culture: Diversity, equity, and inclusion initiatives reduce turnover

• Psychological safety: Employees feel comfortable expressing concerns

Organizations using employee engagement platforms can measure culture through pulse surveys, track engagement trends, and address issues before they trigger departures. Platforms with mobile-first design ensure frontline and distributed workers stay connected regardless of location. Learning to boost employee morale creates environments where people want to remain.

5. Manager Effectiveness and Leadership Development

Since 71% of voluntary turnover stems from poor management, investing in leadership development delivers exceptional retention ROI. Focus areas include:

• Manager training programs: Communication, feedback delivery, conflict resolution

• Regular manager-employee check-ins: Weekly or bi-weekly touchpoints

• 360-degree feedback: Help managers understand their impact

• Span of control optimization: Ensure managers can effectively support their teams

• Manager recognition: Acknowledge leaders who excel at retention

Research consistently shows that great managers reduce the likelihood of employee departure by 40%, making leadership development one of the highest-impact retention investments available.

6. Strategic Onboarding That Builds Commitment

A staggering 61% of employees who leave do so within their first 12 months, with 54% departing in the first six months. Strong onboarding reduces this early-tenure turnover:

• Structured 90-day programs: Clear expectations, milestones, and support

• Buddy systems: Pair new hires with experienced employees

• Cultural immersion: Help employees connect with organizational values

• Technology enablement: Ensure systems access from day one

• Regular check-ins: Weekly manager touchpoints during first quarter

Organizations using employee onboarding software automate workflows, ensure consistent experiences, and reduce time-to-productivity while building early engagement that drives long-term retention.

How HR Cloud Helps Organizations Improve Retention

HR Cloud's unified platform addresses the core drivers of employee turnover through integrated solutions designed for mid-market to enterprise organizations:

Workmates Employee Engagement Platform: Create a connected culture through recognition, communication channels, pulse surveys, and mobile accessibility that keeps frontline and remote workers engaged. With features like peer-to-peer kudos, company announcements, and customizable rewards, Workmates builds the positive workplace environment that research shows is the #1 retention driver.

Performance Management: Set clear goals, conduct structured reviews, document development conversations, and track career progression through our performance management platform. Address the career development gaps that drive 45% of employee departures.

Onboard Automation: Reduce first-year turnover (61% of all departures) through structured, automated onboarding that ensures consistent new hire experiences, accelerates time-to-productivity, and builds early engagement.

People HRIS: Centralize employee data, automate workflows, and gain visibility into turnover trends across departments, locations, and demographics. Track the metrics that matter and identify patterns before they become problems.

Analytics & Reporting: Access real-time turnover analytics, benchmark against industry standards, and measure the ROI of your retention initiatives through comprehensive dashboards.

Seamless Integrations: Connect with ADP, Workday, UKG, SAP, and other payroll/HRIS systems to eliminate double data entry and ensure accuracy across your HR technology stack.

HR Cloud's mobile-first design ensures frontline workers in healthcare, manufacturing, construction, retail, and hospitality—industries with the highest turnover challenges—stay connected, recognized, and engaged regardless of location. Calculate your potential savings using our Employee Turnover Calculator.

Take the Right Steps to Minimize Turnover

While there's no one-size-fits-all answer to what constitutes a good turnover rate, organizations should benchmark against their industry average while implementing comprehensive retention strategies. By monitoring turnover patterns, understanding root causes (remember: 75% is preventable), and investing in proven solutions like competitive compensation, recognition programs, career development, and positive workplace culture, you can build a more stable, productive, and engaged workforce.

The data is clear: organizations that prioritize retention see measurable improvements in productivity, profitability, and employee satisfaction. In 2025's competitive talent landscape, reducing turnover isn't just an HR initiative—it's a business imperative that directly impacts your bottom line and long-term success.

Ready to transform your employee retention? See how Workmates creates workplace cultures where employees choose to stay and thrive.

Experience how Workmates can transform communication and strengthen culture—all in one powerful platform

Book Your Free Demo

Frequently Asked Questions

What is employee turnover? How is it defined?

Employee turnover is the rate at which employees leave a company and are replaced by new hires. Turnover includes resignations and other voluntary departures as well as involuntary events such as employee terminations or layoffs. To calculate turnover, divide the total number of departures in a specific period by the average number of employees.

What is considered a good employee turnover rate?

A good employee turnover rate is generally 10% or lower annually. This benchmark indicates healthy retention and effective HR practices. However, acceptable rates vary by industry: retail and hospitality may see 15-20% as normal, while healthcare averages 18-21%, and professional services aim for under 13%. The key is benchmarking against your specific industry while working to continuously improve.

How do you calculate employee turnover rate?

Use this formula: (Number of Separations ÷ Average Number of Employees) × 100

For example, if 15 employees left and you averaged 150 employees over the year, your turnover rate is (15 ÷ 150) × 100 = 10%. Calculate your average employee count by adding headcount at the start and end of your measurement period, then dividing by two.

Why is high employee turnover so bad?

High turnover increases hiring and training costs (averaging 33-200% of an employee's salary according to Work Institute), disrupts daily operations, and reduces employee engagement, morale, and productivity. Research shows 75% of turnover is preventable, representing $2.9 trillion in annual costs to U.S. businesses. Beyond financial impact, high turnover damages customer relationships, erodes institutional knowledge, and creates anxiety among remaining employees.

What industries face the highest turnover rates?

According to 2024-2025 data, retail and wholesale lead with 24.9% annual turnover, followed by hospitality at 74%, accommodation and food services, construction (20-25%), and healthcare hospitals (20.7%). These industries face challenges including demanding schedules, customer-facing stress, physical requirements, and in some cases, compensation that lags other sectors.

What's the difference between voluntary and involuntary turnover?

Voluntary turnover occurs when employees choose to leave for reasons like better opportunities, compensation, work-life balance, or workplace culture issues. Mercer's 2025 data shows voluntary turnover at 13.5%, down from pandemic peaks. Involuntary turnover happens when the organization initiates separation through terminations, layoffs, or performance-based dismissals, averaging about 1% monthly. The distinction matters because voluntary turnover is largely preventable (75% according to research), while involuntary turnover may indicate performance management effectiveness.

What are examples of best practices for minimizing high turnover rates?

Effective turnover reduction strategies include: offering competitive compensation packages, implementing employee recognition and rewards programs, providing clear career development paths and training opportunities, fostering positive workplace culture and work-life balance, offering flexible work arrangements (remote workers show 94.2% retention vs 81.6% office-based), strengthening manager effectiveness (great managers reduce turnover by 40%), and using engagement platforms to maintain connection with all employees including frontline workers.

How much does it cost to replace an employee?

Replacement costs vary by role complexity and level. Work Institute estimates a conservative 33.3% of the employee's base salary, while Gallup research suggests 0.5 to 2 times annual salary. This means replacing a $50,000/year employee costs $16,650 to $100,000 when accounting for separation expenses, recruitment, hiring, training, lost productivity during ramp-up, and the burden placed on remaining staff. These costs add up quickly—U.S. businesses lose $2.9 trillion annually to voluntary turnover.

What percentage of employee turnover is preventable?

Research consistently shows that approximately 75% of voluntary employee turnover is preventable. The top preventable reasons include lack of career development (45% would stay for advancement opportunities), insufficient recognition (34% report lack of acknowledgment), poor management (71% of departures linked to bad managers), negative workplace culture (32.4% cite toxic environments), and inadequate work-life balance (20.8% of departures). This means organizations have tremendous opportunity to reduce turnover through strategic investments in employee experience.

When does most employee turnover occur?

The highest turnover risk occurs during employees' first year, with 61% of departures happening within 12 months of hire and 54% within the first six months. This highlights the critical importance of effective onboarding programs. Additionally, turnover shows seasonal patterns in some industries (construction peaks in December; hospitality sees variations around holidays), and engagement surveys reveal that employees who feel unrecognized or see no growth opportunities typically decide to leave long before they announce their departure.