What is turnover

Last updated: April 1, 2026

Quick Answer: Turnover typically refers to the total revenue a business generates from sales within a specific period. In human resources, it describes the rate at which employees leave and are replaced by new staff.

Key Facts

Business Turnover

In business terminology, turnover refers to the total revenue or sales that a company generates during a specific period, typically measured annually. For example, if a company sells $5 million worth of products in a year, its annual turnover is $5 million. This metric is fundamental to understanding business performance and is commonly used by investors, analysts, and management to assess financial health.

Employee Turnover

Employee turnover measures the rate at which employees leave an organization and must be replaced. It's calculated as a percentage by dividing the number of employees who left during a period by the average number of total employees, then multiplying by 100. High turnover indicates that many workers are departing, which can signal workplace issues or competitive market conditions.

Costs of High Turnover

When employee turnover is high, organizations face significant expenses including:

Industry Variations

Turnover rates vary considerably across industries. Hospitality, retail, and food service typically experience turnover rates of 30-50% annually, while professional services and technology sectors average 10-20%. Understanding industry benchmarks helps organizations contextualize their own turnover rates and identify whether rates are typical or problematic.

Strategies to Reduce Turnover

Organizations can reduce employee turnover through competitive compensation, professional development opportunities, positive workplace culture, flexible work arrangements, and recognition programs. Identifying reasons why employees leave through exit interviews and surveys provides actionable insights for improvement.

Related Questions

How is turnover calculated?

Employee turnover is calculated by dividing the number of employees who left during a period by the average number of employees, multiplied by 100 to get a percentage. For business revenue turnover, simply sum all sales during the measurement period. Most organizations calculate these metrics quarterly or annually.

What is a good turnover rate?

A good employee turnover rate typically ranges from 10-15% annually, though this varies by industry. Hospitality and retail may have acceptable rates of 30-40%, while professional services may target 5-10%. Rates significantly above industry average suggest organizational challenges that need addressing.

Why is turnover important for businesses?

Turnover matters because high employee turnover increases costs, disrupts operations, and can reduce customer satisfaction. Meanwhile, monitoring business revenue turnover helps track financial performance and growth. Both metrics are essential for strategic decision-making and identifying areas needing management attention.

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Sources

  1. Wikipedia - Labour Turnover CC-BY-SA-4.0
  2. Investopedia - Turnover CC-BY-SA-4.0