Labour turnover rate
Labour turnover rate is the percentage of employees who leave during a period relative to the average number employed, used to estimate the cost of recruiting and training replacements.
See it move
A department starts the year with 80 employees and ends with 100, an average of 90. During the year 18 employees left and were replaced, giving a labour turnover rate of 18 divided by 90, times 100, or 20%. At an average replacement cost of €1,200 each, the estimated labour turnover cost for the year is 18 times €1,200, or €21,600.
The formula
Variables
- Labour turnover rate (%)
- Number of leavers replaced during the period (employees)
- Average number of employees over the period (employees)
Expresses staff churn during a period as a percentage of the typical workforce size, not the opening or closing headcount alone.
Check yourself
A department starts the quarter with 130 employees and ends with 110. During the quarter, 30 employees left and were replaced. What is the labour turnover rate for the quarter?