High Employee Turnover: Causes, Costs & Fixes

High Employee Turnover and What You Can Do About It

This post offers tips and insights to help small business owners and managers understand and deal with high employee turnover. It’s organized into sections to keep things easy to follow.

We’ll start with a few terms and definitions. Then we’ll look at the turnover formula and how to use it, followed by the real causes of turnover and practical ways to reduce it and improve employee retention.

Key Points and Facts About Employee Turnover

What it measures:
- Employee turnover is the percentage of your workforce that leaves during a set period.
- Turnover splits into two types: voluntary (employee choice) and involuntary (termination).
Why it matters:
- The national quits rate (a measure of voluntary turnover) stood at 1.9% in February 2026, per the U.S. Bureau of Labor Statistics — a useful benchmark to compare your own rate against.
- SHRM estimates that replacing an employee costs 90% to 200% of their annual salary once recruiting, onboarding, training, and lost productivity are counted.
What drives it:
- Common causes include a bad boss, feeling undervalued, lack of growth, overwork, and poor work-life balance.
- Some turnover is external — a new employer in the area, a low unemployment rate, or local relocation.

Employee Turnover Meaning:

Employee turnover is a term related to the number of employees that leave your workforce during a set period.

A higher than average employee turnover rate can indicate you have a problem with your company, management, or other contributors.

A low employee turnover rate could indicate you are doing a good job and people like working for you. It could also be due to a small, dedicated staff. A low rate is an opportunity to hire new talent and bring in new ideas and improved ways of doing things.

Types of Employee Turnover:

Voluntary Turnover:

Voluntary turnover is when an employee leaves your company by choice. It may include relocation, personal reasons, a better opportunity, etc. When your voluntary turnover rate is high, it’s something you need to look into, and we’ll get to the details further in this post.

Involuntary Turnover:

Involuntary turnover refers to people that are terminated. It may be behavior or performance-related, cutbacks, policy violations, etc. A high rate of people being terminated means something is wrong, and you need to investigate the root cause. We’ll also focus on this area in the upcoming sections.

Interpreting Results:

Employee Turnover Industry Reports:

You can find reports for turnover rates by industry. What you want to look for are specific reports.

For example, if you own a fast-food restaurant, looking at the turnover rate for the hospitality industry would be too general. Instead, look for the fast-food industry turnover rate. It’s even more effective to get the turnover rate for your region, because rates differ by area.

Instead of using the country’s overall rate, try to find a rate for your state or province. Also see if you can find information for your city, which would indicate whether you have a problem or your turnover rate is within normal limits. As a starting benchmark, the U.S. Bureau of Labor Statistics tracks a national “quits rate” — a measure of voluntary separations — each month through its JOLTS report; that rate stood at 1.9% in February 2026, giving you a national baseline before you narrow down to your industry and region.

Data Accuracy:

You’ll want to start by obtaining accurate turnover rates for your company. Suppose your method of obtaining the numbers offers only an overall turnover rate — you won’t be able to pinpoint the problems or create an effective solution.

Accurate data will allow you to find any underlying problems with your business. Inaccurate data will throw you off and can result in bad decisions.

In the formula section next, we’ll use the formula in multiple ways to pinpoint the problem.

Employee Turnover Formula:

The formula isn’t difficult, but there are a few ways to use it. Before we get to the formula, you need three pieces of information.

1. Determine the Time Frame:

You need a specified period to create an accurate report. You can calculate your employee turnover rate over a few years, the previous year, by quarter, or monthly.

2. The Average Number of Employees:

To get this figure, add the number of employees at the beginning and the end of the period and divide by two.

For example:

1st Quarter Beginning — 103 employees
1st Quarter Ending — 95 employees
103 + 95 = 198
198 / 2 = 99
Average employees = 99

3. The Number of Employees That Left the Company During the Time Frame You’re Using

Now for the Simple Formula:

Take the number of employees that left the company and divide that number by the average number of employees remaining in the company, then multiply by 100. This gives you the percentage of turnover.

For Example:

Last year you had an average of 65 employees and 12 left the company. Let’s do the math:
(12 employees gone ÷ an average of 65 remaining employees × 100) = 18.46%
Or: 12 / 65 × 100 = 18.46%

In the above example, your turnover rate would be 18.46%.

You may be thinking, is that good or bad? That’s a good question. As mentioned earlier, get a benchmark rate for your industry and your area to compare against.

Digging Deeper Into Your Data:

Let’s look at some important issues to consider when digging into your employee turnover rates to pinpoint problems.

1. Define the timeframe you want to study — for example, the past month, quarter, or year. If you know there’s a problem, get the numbers by month as well as the overall rate for the year. This lets you identify the times your employee turnover rate was highest.

2. Using the formula above, get the overall employee turnover rate, including voluntary and involuntary turnover, and record the number as a starting benchmark for your company.

Now you should have your data, and you can start to pinpoint areas of concern.

Identifying Problem Areas for Your Employee Turnover:

Is Your High Employee Turnover Internal or External?

In the step above, you gathered turnover rates by month for the past year. Identify if any spikes are present in the data. If you have spikes, research the dates to determine if any external events were present.

For example, suppose there was a spike in employees leaving the company in a particular month. Research what happened in your location around that time.

Let’s look at some examples:

Non-Competitive New Company in the Area:

Did any new companies come to the area that attracted part of your workforce? It could be you were unaware of a nearby non-competitive company that was hiring at that time.

Low Unemployment Rate:

Was the unemployment rate low? With low unemployment rates, job offers become more competitive, and employees can more easily find better jobs.

Relocation:

Were there any issues that affected the local population — for example, a natural disaster where many people relocated to a different area? Were there any circumstances where people left the area for a booming industry elsewhere?

Voluntary vs. Involuntary:

Check the rate of terminated employees vs. the employees who resigned. If you have a lot of employees who were fired, look at the cause.

Some example questions to ask are as follows:

Were the wrong people hired?
Was the job description miscommunicated?
Are you doing a poor job of training?
Was your company restructuring and cutting jobs?

The same would apply if the majority of your turnover was voluntary. Look into issues such as:

Is your company paying low wages?
Is your management team doing a poor job?
Is there a problem with the company culture?
Are there rumors causing a sense of company instability?
Are working conditions poor?

Employee Turnover Rates by Department:

Determine the turnover rates per department. Any department with a higher than average turnover rate is something you’ll want to investigate to determine if there’s a problem within that department.

For example, are there problems with specific jobs in a certain department? Are working conditions harsh — too cold, too hot, labor-intensive? Is a manager to blame? Once you have accurate data, you’ll be able to find the main issue or a combination of problems.

Employee Turnover Rate by Manager:

Now it’s time to pull the turnover rates per manager. A manager with a higher than average turnover rate is something you want to look at closely. It could be a management style that’s driving away your employees. The manager might be treating staff poorly, and that’s something you’ll want to investigate and correct promptly. The last thing you want is a boss who isn’t managing your employees fairly.

Employee Turnover Cost Calculator:

Using a turnover cost calculator may seem like an easy way to come up with a figure, but is that figure correct? Unless you know your actual cost to rehire for a given role, a generic calculator won’t give you an accurate number. It’s better to work out your real cost to hire, then multiply that by the number of people you had to rehire to get an accurate estimate of costs.

Cost of High Employee Turnover:

Naturally, high turnover carries a real cost. SHRM estimates that replacing an employee runs somewhere between 90% and 200% of that employee’s annual salary once you account for recruiting, hiring, training, and lost productivity — and separately, SHRM data cited by CareerBuilder puts the average direct hiring expense at almost $4,700 per new employee. Let’s look at each area below so you can estimate what turnover is running you.

Agency Fees:

If you depend on job recruitment agencies to find employees, consider the fees involved. Some agencies charge a flat rate, while others work off a percentage of the employee’s first-year salary — typically in the 15% to 30% range.

Job Posting Fees:

If you do your own hiring and post to popular job boards, pricing has largely shifted away from flat per-posting fees. Indeed, for example, offers up to three free postings per month, with paid “Sponsored” postings billed per click (roughly $0.10 to $5 or more per click) or per started application; a flat-rate unlimited-posting plan runs around $400 a month. ZipRecruiter and similar boards now mostly price through monthly subscriptions, generally starting around $250 to $300 a month rather than a flat one-time fee. Check current pricing directly with the board you’re using, since these plans change.

Background Checks:

Background check costs vary by depth of screening. Basic reports from screening vendors can start around $30, while more thorough packages (criminal record checks, ID verification, employment and education verification) commonly run from roughly $20 up to $150 or more per candidate, depending on what’s included.

Hiring Process:

Whether you use an agency or do the hiring yourself, you need to consider the cost. If you have an HR manager, an HR generalist, or an assistant handling the hiring process, they’ll need to put in many hours while you’re hiring. They need to post the job, take calls, collect and sort through resumes, set up and conduct interviews, and so on. All these tasks are part of the cost of hiring.

Onboarding and Training:

Onboarding and training is an area where a lot of your hiring expenses can go, especially if the position has a long learning curve before an employee becomes productive.

If it takes a few months to train someone for a job, you have to consider the costs involved. Let’s take a closer look.

1. The Cost of the Trainer:

Whether you employ a full-time trainer or have a coworker perform the training, it costs the company. If a coworker is training someone, their own work falls behind or goes uncompleted because of the training — that’s an indirect cost too.

2. The Cost of Lost Productivity:

When you’re training someone for a position, productivity suffers because the trainee isn’t fully productive during training.

3. The Cost of a Vacant Position:

When a position sits vacant, overall productivity suffers until it’s filled. Consider the cost when a position is vacant for 60 days — other people have to take on the extra workload, which threatens their quality of work and adds stress to their job.

Suppose it takes 30 days to hire someone new and 30 days to train them. That’s two months lost for that one role. Now imagine you had a high turnover rate and hired 10 new people in a year — those 10 hires would represent a combined productivity loss of 20 months. That’s a high cost to absorb, and worth thinking about when it comes to high turnover rates.

Employee Turnover Statistics:

Statistics are an important part of understanding this topic. They can help you develop a stronger strategy once you understand what’s typical for your situation.

Statistics change often, so you want the most up-to-date information when looking at your company’s turnover rates. You can use the following search query to find the latest figures for the employee turnover rate in your industry and area, and to search social platforms like Facebook, X, YouTube, and LinkedIn for recent discussion of the topic.

The query is:

[ INDUSTRY employee turnover statistics YOUR AREA ]

Companies and Industries with High Employee Turnover:

Many industries and companies have high employee turnover rates because of the way they operate. Let’s look at a few examples:

Labor-Intensive Jobs

Companies with unattractive or physically demanding jobs tend to see high employee turnover — for example, labor-intensive roles in the agriculture industry. Employees may take the job if they don’t have other options, but they’ll often leave once something better is available.

Restaurants:

Many people take a restaurant job as a stepping-stone, and once something better comes along, they move on.

Fast-Food:

The fast-food industry typically pays entry-level wages and is popular among students getting their first job. Students often use a fast-food job as a source of income while in school, then move on within a few months to a couple of years.

Retail

Many retail employers offer part-time work at entry-level wages, which helps them avoid overtime costs and benefits obligations. These jobs tend to be stepping-stones, and the people who stay longest are usually those specifically looking for part-time work.

What Causes Employee Turnover:

There are many reasons for high employee turnover. Let’s look at a few of them. As you read through, ask yourself if any of these apply to your workforce.

Lack of Purpose or Meaning:

Without purpose or meaning in their work, an employee gets tired of their job and finds no satisfaction. They may feel bored, or feel they’re not making an impact or providing value. A person in this position can seem lazy, when really they’re not being used to their full potential. As a business owner, it’s important to make sure you have the right people in the right jobs.

Overworked

Naturally, when an employee is overworked with no sign of relief, they’ll start looking for employment elsewhere. Many employees are genuinely dedicated to their job — but being overworked often means being underpaid for the effort and subjected to unnecessary stress.

As a manager or business owner, it’s up to you to make sure your employees aren’t overworked. Ignoring the issue will increase your turnover rate.

Look at the duties of employees with heavy workloads to see if you can simplify the job. Consider splitting the role and delegating part of the responsibilities to another employee with fewer duties — this reduces the load on the overworked employee while keeping an underworked employee more engaged.

Work-Life Balance

When an employee doesn’t have work-life balance, they become unhappy and can experience stress. It could be that their shift doesn’t work well with their personal life, and they feel deprived of time with family, especially on a night shift.

Another factor is being on call after work. Employees can feel like they’re always working, with no real break, which interferes with their personal life.

Lack of Growth and Progression

When an employee feels stuck in their current position — whether they’re being passed over or simply see no room for promotion — they’ll start looking for a job where there’s room to grow.

Whenever you’re hiring, it’s a good idea to look within the company first. When you promote from within, employees already know the company culture and adapt quickly. When you don’t find the talent you need internally, then hire externally.

Approached by a Company

Employees are sometimes approached by another company or a placement agency looking for candidates who match a job opening — this happens often with management-level roles.

Many employees will at least meet with the agency or company, out of curiosity if nothing else. Sometimes the offer is too good to pass up. Other times the current employer matches it, and other times the employee just moves on. If an employee is already unhappy in their current role, they’ll usually end up leaving whether or not their employer matches the new offer.

The Job Did Not Meet Expectations:

If your job description is inaccurate and you fill that position, the new employee may quit during or after training once they realize the job is different from what was presented. They may be unwilling to do the actual work, or find it overwhelming, and leave before getting too invested.

Bad Boss

When you have a bad boss, you have a bad job — you may dread every day you have to work. A bad manager is one of the main reasons people leave a good job even when they have nothing against the company itself; they simply can’t work with their boss, and that outweighs the good parts of the job.

As a business owner, keep an eye on your managers, since they’re the ones running the show day to day. If they’re treating their teams poorly, you’ll see increased voluntary turnover and declining productivity.

Organizational Instability:

When there are rumors or signs that a company is in trouble, people start putting their resumes out on the job market because they’re worried about being unemployed soon. Rather than wait to see what happens, they get ahead of it.

Your company’s reputation needs to be maintained. If rumors start circulating, address them right away, or you risk people making plans to leave.

Feeling Undervalued:

When employees do their best work but don’t receive recognition or opportunities for advancement, they start to feel undervalued. They may look for a way out, or do the bare minimum to stay under the radar. It’s important to recognize hard-working employees and keep them engaged.

Self-Employment

Sometimes people want to go into business for themselves. This has happened to me numerous times — when I lose a good employee to their own venture, I wish them the best and let them know the door is open if they ever want to return.

Time for Change

Sometimes employees leave simply because they want a change. It may have nothing to do with the company, the job, or the people — it’s just time for them to pursue something else. All you can do is wish them well.

How To Reduce Employee Turnover Rate:

Let’s go over a few ideas that can help reduce employee turnover. Not all these ideas fit every business model — some you’ll want to use, and some you’ll set aside. Think of them as options to consider and adapt, not a fixed to-do list.

Offer Flexible Work Hours if Appropriate:

Depending on the job, you may be able to allow flexible hours. It’s a meaningful benefit for many employees and can help reduce turnover.

Some roles can be done remotely, at least part of the time. Where that’s possible, letting people split their time between home and the office — as long as they’re getting their work done well — is one way to improve retention.

Allowing employees to work the hours when they’re most productive is another form of flexibility. Some people do their best work early in the morning, while others work best late at night; where the role allows it, this flexibility can benefit both the employee and the company.

Getting Feedback

Getting feedback from employees can help you understand what you’re doing right, what you could improve, and what you’re missing entirely.

To get honest answers and encourage openness, consider making the survey anonymous.

Take time to write specific questions that will actually help you. For example, if you’re planning to renovate the lunchroom, ask what employees value most in that space.

Comfortable seating
TVs
Microwaves
Toasters
Vending machines
Fridge and freezer
Catered breakfast
Catered lunch
Other, please specify

In the survey above, you’d list the options you’re willing to consider and let employees add their own ideas. Based on the results, you can implement what the majority of your team actually wants.

You could apply this same approach to other workplace issues, not just high-cost projects like a renovation — it could just as easily be a process change. When you involve employees and listen to their concerns, you build morale and end up with happier, more productive people. It shows them you care, and exercises like this help reduce employee turnover.

Update Your Benefits Plan:

If your company offers a benefits plan, look for ways to improve it. Consider surveying employees to find out which benefits they value most.

For example, your plan might offer $1,000 a year for dental and $300 a year for chiropractic care. After a survey, you might find employees would rather have $1,500 in dental coverage and less in the other categories. You can weigh these changes against the added cost and decide what’s realistic. Making adjustments based on real employee feedback shows you’re listening to what people actually value.

Offer a Decent Yearly Performance Raise:

Giving yearly raises to all employees — even a modest 1% to 2% — signals that you value their continued work. Employees who go the extra mile, who are dedicated and talented, can get an additional 2% to 3% on top of that.

A performance-based raise shows an employee you recognize their effort, and that the same effort will be rewarded again. An employee who expects a fair raise each year is more likely to stay and put in the extra effort.

Offer a Bonus When You Can

When employees go above and beyond, a bonus is a direct way to recognize that and keep them motivated. For example, if an employee proposes an idea that improves efficiency and takes charge of implementing it, a bonus for that initiative reinforces the behavior you want to see more of — and helps keep good people around.

Offer a Good Retirement Plan

Offering a retirement plan is another way to improve retention. Typically, money comes out of the employee’s wages, and the company matches a portion of that contribution — for example, if an employee contributes 4%, the company might match 50% of that, resulting in a 2% company contribution. Employees with a solid retirement plan are less likely to leave for a company without one.

Make Your Employees Feel Appreciated:

Appreciation goes a long way in the workplace. Many employees work hard and get frustrated when that effort goes unnoticed. Some managers hesitate to show appreciation out of concern that employees will expect more money as a result.

Even if that’s sometimes true, showing appreciation is still worth doing. If an employee who’s working hard asks for a raise, you can be honest — explain that the role’s pay is set for now, but that their effort will be kept in mind for the next performance review. When opportunities come up, dedicated employees have a better chance of moving into roles they’re qualified for.

For more ideas on this, see Employee Appreciation Ideas To Impress Your Staff.

Keep an Eye on Department Heads and Managers:

As mentioned earlier, many people quit because of the manager they’re dealing with. In larger companies especially, a department head can sometimes run their team however they want, as long as they hit their numbers.

Following up on employee satisfaction across departments helps keep managers accountable to your company’s values, not just their metrics. When workforce treatment is part of your core values, your department leaders are more likely to treat their teams well.

Perks at Work

Employee perks can help improve retention, even if they’re not the main reason someone stays. Google is a well-known example: current and recently reported perks include free meals and nap pods at many of its campuses, and — more unusually — a death benefit that pays a deceased employee’s spouse or partner 50% of their salary for 10 years, confirmed as still active as of 2025.

You’re not going to match Google’s budget, and you don’t need to. Rotating in something new every few months — even something modest — signals ongoing appreciation more effectively than a single big perk offered once and then forgotten.

Survey your employees on what perks they’d value most, let them add their own suggestions, and use that feedback to decide what’s realistic for your budget.

Ensure You Have the Right People in the Right Position:

If you have people in roles that aren’t right for them, productivity suffers. When a highly skilled person is in a mediocre job, they get bored, job satisfaction drops, and they can start to appear disengaged or lazy — when really they’re just not being challenged.

If an underqualified person is in a high-demand role, they’re stressed trying to keep up, productivity suffers, and mistakes happen. It’s worth periodically reviewing key roles to make sure you have the right person in the right position.

Respect and Building Relationships:

Your workforce is one of your most important assets. Without it, you can’t run your business — so it’s worth treating people with respect and genuinely valuing them.

Building working relationships with your employees creates loyalty and a stronger team. Taking time to talk with people during the workday, rather than avoiding interaction because it might invite complaints, is worth the small amount of friction it sometimes creates.

When an employee raises a concern during one of these conversations, take it seriously. If it’s a legitimate issue, address it directly. If a request needs to go through a formal process — a shift change, for example — explain that clearly rather than giving an on-the-spot yes or no; that keeps your policies and chain of command intact while still showing you listened.

Getting to know people by name, hearing their ideas, and taking time to coach your team builds loyalty and stronger relationships — and it helps reduce employee turnover. If you have a large workforce and can’t reach everyone yourself, a broadcast update plus coaching your managers to do their own regular check-ins accomplishes the same goal at scale.

Conclusion:

That’s an overview of high employee turnover — how to pinpoint the causes behind your numbers, and a few practical ways to bring your turnover rate down.

Improving retention is an ongoing effort, not a one-time fix. Your employees are a core part of your business, and the time you put into keeping good people tends to pay for itself.

Action Steps for Reducing Employee Turnover

Get an accurate baseline

Calculate your current turnover rate using the formula above, broken out by month.
Compare it against your industry, region, and the national quits rate (1.9% as of February 2026, per BLS).

Find where the problem is concentrated

Break turnover down by department and by manager to find hotspots.
Check whether turnover skews voluntary or involuntary, and investigate accordingly.

Talk to your people

Run an anonymous employee survey with specific, targeted questions.
Make time for regular, informal check-ins with staff.

Address the likely causes

Review workloads for signs of overwork or unclear job expectations.
Evaluate manager performance and treatment of staff directly.

Adjust pay, benefits, and recognition

Benchmark wages and consider a modest annual raise structure.
Review your benefits plan against what employees say they actually value.

Checklist for Reducing Employee Turnover

Calculate your turnover rate
- Pick a time frame (monthly, quarterly, or yearly)
- Get your average employee count and number of separations
Benchmark against outside data
- Compare to your industry and regional turnover rates
- Compare to the national quits rate
Segment the data
- By department
- By manager
- By voluntary vs. involuntary
Estimate the real cost
- Include recruiting, background checks, training, and lost productivity
- Use a sourced benchmark (90%–200% of salary) rather than guessing
Take targeted action
- Match the fix to the actual cause you found in the data
- Revisit the numbers after a quarter to see if it’s working

FAQ: Employee Turnover

What is a good employee turnover rate?

There’s no single “good” number — it depends heavily on industry and region. Comparing your rate to industry- and region-specific benchmarks, and to the national quits rate, gives you a more realistic target than a generic figure.

What’s the difference between voluntary and involuntary turnover?

Voluntary turnover is when an employee chooses to leave (relocation, a better offer, personal reasons). Involuntary turnover is when the company ends the employment (performance, cutbacks, policy violations). Each points to different problems and needs a different response.

How much does it really cost to replace an employee?

Estimates vary by role and industry, but SHRM puts the cost at roughly 90% to 200% of the employee’s annual salary once you count recruiting, hiring, training, and lost productivity — often higher than business owners expect.

What’s the fastest way to find out why people are leaving?

Break your turnover data down by department and manager, and run an anonymous employee survey. Together, these usually point to whether the problem is pay, management, workload, or something specific to one team.

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