Turnover rate measures how often employees leave a company within a given period, offering insight into organizational stability. While some level of turnover is expected, consistently high rates can signal deeper workforce challenges.
This article explains what turnover rate really measures, what counts as an unhealthy level, and how it affects business operations. It also outlines key causes of elevated turnover and how to determine if your organization’s rate is a concern.
What Does Turnover Rate Measure?
Turnover rate is a metric used to track the percentage of employees who leave an organization over a specific time frame, typically monthly or annually. It includes both voluntary departures, like resignations, and involuntary ones, such as layoffs or terminations. The rate is often calculated by dividing the number of separations during a period by the average number of employees, then multiplying by 100.
This figure helps employers understand patterns in workforce movement and signals how stable their staffing levels are. A moderate turnover rate can be healthy, reflecting natural career changes and internal mobility. However, a persistently high rate may indicate internal issues like low job satisfaction, weak leadership, or misaligned roles.
What’s Considered a Normal vs. Unhealthy Turnover Rate?
Turnover rates vary by industry, job type, and region, so there’s no universal benchmark for what’s considered “normal.” However, comparing your rate to well-documented averages can help determine whether there’s cause for concern.
Overall (All Industries)
In most industries, a turnover rate between 10% and 15% annually is considered standard. This reflects a healthy mix of natural attrition and new hiring. Companies within this range are typically not facing urgent workforce stability issues.
When the turnover rate climbs beyond 18%, it may indicate deeper problems such as poor management, low engagement, or misalignment between roles and expectations. Rates approaching or exceeding 20% across diverse job types can strain operations and morale. Businesses should closely monitor patterns when overall turnover consistently exceeds these benchmarks.
Retail & Hospitality
Retail and hospitality commonly experience higher turnover due to seasonal work and entry-level staffing. A rate between 30% and 60% annually is typical, especially in food service and retail chains. In these sectors, this level is often accepted as a normal part of the business model.
However, rates that exceed 70% may signal ongoing problems like undertraining, low pay, or weak employee support systems. Constant rehiring at this level reduces service quality and raises labor costs. Unhealthy turnover in these industries often reflects systemic operational issues.
Healthcare
In healthcare, especially in hospitals and elder care, normal turnover ranges from 15% to 25% per year. This includes roles like nurses, technicians, and support staff. These figures reflect the demanding nature of the work, but are manageable with strong staffing support.
If turnover rises above 30%, it’s often tied to burnout, heavy workloads, or limited career development. Staff shortages caused by high exit rates can impact patient safety and increase risks. At this level, turnover becomes a threat to both care quality and operational continuity.
Technology
Technology companies usually see annual turnover between 13% and 20%. This reflects healthy job mobility and talent shifts in a competitive market. Within this range, it’s generally manageable and expected in growth-driven environments.
Turnover exceeding 25% may indicate poor retention strategies, misaligned roles, or lack of professional growth. High attrition can delay projects, increase onboarding costs, and disrupt innovation cycles. In tech, where knowledge retention is critical, unhealthy turnover can be especially damaging.
Call Centers / BPO
In call centers and business process outsourcing (BPO), normal turnover is typically between 30% and 40%. This is driven by shift work, high stress, and minimal long-term career pathways. Within this range, turnover is common but manageable with consistent training.
Rates above 50% suggest persistent problems such as burnout, poor scheduling, or a lack of employee support. These levels often lead to service disruptions and higher recruitment costs. When turnover crosses this threshold, it usually signals a need for operational and cultural changes.
5 Common Causes of High Turnover
High turnover doesn’t happen at random – it’s usually linked to recurring organizational or role-specific issues. Identifying these patterns is key to reducing unwanted exits and improving workplace stability.
Poor Leadership and Management
Leadership quality is one of the strongest predictors of whether employees stay or leave. Managers who fail to provide clear direction, feedback, or support often contribute to disengagement. A Gallup study found that 70% of the variance in team engagement is tied directly to the manager. Inconsistent communication or lack of recognition from leadership can quickly lead to dissatisfaction and resignations.
Limited Career Growth Opportunities
Employees are more likely to stay when they see a future within the organization. When promotions, learning programs, or skill development paths are absent, motivation tends to drop. Workers, especially younger professionals, often cite stagnation as a primary reason for leaving. A lack of advancement sends a message that the organization does not invest in long-term talent.
Inadequate Compensation and Benefits
If employees feel their pay doesn’t match the effort or stress of the role, turnover risk increases. Competitive wages and benefits are critical, especially in high-demand sectors where options are abundant. Underpaying can also affect morale and create friction among teams doing similar work. Benefits like healthcare, time off, and retirement plans contribute to how employees assess job value.
Burnout and Workload Stress
Overworked employees are significantly more likely to quit, particularly in healthcare, education, and customer service roles. Chronic stress from tight deadlines, long hours, or emotional demands leads to mental and physical exhaustion. Without adequate recovery time or support, burnout often becomes a tipping point for resignation. Even high performers are at risk if workload expectations remain unbalanced over time.
Weak Onboarding and Role Fit
The first few weeks on the job play a major role in long-term retention. If onboarding is rushed or unclear, new hires may feel unsupported and unsure about their responsibilities. Poor job fit – when an employee’s skills or expectations don’t match the role – also leads to early exits. A structured onboarding process and clear job scope can reduce confusion and turnover during the critical early phase.
Business Impacts of an Unhealthy Turnover Rate
High turnover isn’t just a staffing issue – it affects nearly every part of a business. When too many employees leave too often, the consequences can be both immediate and long term.
Rising Recruitment and Training Costs
Replacing employees comes with direct financial costs, including job ads, recruiter fees, and interview time. Once hired, new employees must be onboarded and trained, which consumes internal resources and slows productivity. Research shows that replacing a single employee can cost up to twice their annual salary. These expenses add up quickly in high-turnover environments and strain budgets over time.
Loss of Institutional Knowledge
When experienced employees leave, they take valuable know-how and organizational memory with them. This can disrupt ongoing projects, weaken client relationships, and force teams to relearn established processes. Unlike technical skills, institutional knowledge is hard to document and even harder to replace. Its absence can reduce overall efficiency and decision-making quality.
Disrupted Team Dynamics and Morale
Frequent turnover can hurt employee morale and make teams feel unstable or unsupported. When team members regularly leave, remaining staff may feel overburdened or anxious about their own job security. Trust and cohesion take time to build, and constant departures reset that process. The result is often lower engagement, strained collaboration, and reduced workplace satisfaction.
Delayed or Inconsistent Output
New hires often need weeks or months to reach full productivity, which can slow down project timelines. If multiple roles remain vacant or in transition, service quality or customer response times may suffer. In industries like healthcare, tech, or logistics, these delays can have serious operational consequences. Inconsistent staffing also forces teams to prioritize urgent tasks over strategic goals.
Reputational Damage
Companies with high turnover can develop a negative reputation among job seekers and clients alike. Word spreads quickly through reviews, social media, and professional networks, making it harder to attract qualified talent. Internally, employees may view high turnover as a sign of deeper management or culture problems. Over time, reputational harm can limit growth and competitive edge.
Recognizing and Responding to Turnover Patterns
Understanding turnover rate helps businesses identify whether employee exits are part of natural workforce movement or a sign of deeper organizational issues. While some level of turnover is expected, consistently high rates can disrupt operations, morale, and long-term growth. By tracking patterns and comparing rates to industry benchmarks, leaders can spot risks early.
Addressing turnover starts with identifying its root causes – whether it’s leadership gaps, unclear roles, or compensation concerns. Small improvements in onboarding, development, or communication can lead to meaningful retention gains over time. For support in reviewing your turnover data or improving team stability, contact Refered today.
