Employee Turnover Calculation and Management: Practical Advice

What Does Turnover Tell Us?

Turnover is a natural part of an organization’s lifecycle, but its level is a critical factor that cannot be overlooked.

What is Workplace Turnover?

Workplace turnover (also called staff turnover) shows the ratio of workforce fluctuation relative to the average number of employees, typically calculated over the past 12 months.

The employee exits category includes all individuals who leave the organization voluntarily or involuntarily, whether during their probation period or due to retirement. The average number of employees for a given period is calculated by adding the workforce at the beginning (e.g., January) and at the end (e.g., December) and dividing by two. New hires include employees still in their probation period. Multiple methods exist for turnover calculation—let’s review the most important ones.

How to Calculate Turnover?

Exit turnover rate reflects the proportion of employees leaving during a given period:

Exit Turnover (%) = (Number of exits ÷ Average workforce) × 100

For instance, if a company with 150 employees sees 35 exits in a year, the exit turnover rate is 23.3%.

Entry turnover rate similarly measures the proportion of new hires relative to the workforce.

Entry Turnover (%) = (Number of new hires ÷ Average workforce) × 100

Overall turnover indicates the total fluctuation in workforce relative to the average workforce.

Overall Turnover (%) = (Number of new hires + Number of exits) ÷ Average workforce × 100

For a company with 150 employees, if 35 leave and 22 are hired in a year, the overall turnover rate is 38%.

What Constitutes Healthy vs. High Turnover?

A turnover rate of 7–15% is considered optimal, balancing fresh talent with experienced staff and fostering innovation while maintaining stability. A rate of 15–30% warrants consideration for improvements, while rates above 30% often require immediate action.

While high turnover can sometimes be beneficial—such as when underperformers are replaced by motivated, skilled workers—it typically poses challenges. High turnover is costly, burdens management, adds administrative tasks, and increases workload for remaining employees, all while potentially damaging the company’s reputation for stability

The Cost of High Turnover

Research indicates that replacing an employee can cost up to 50% of their annual salary, with total turnover-related expenses running into millions. Highly skilled employees not only take valuable knowledge with them but may also strengthen a competitor in the future.

From job postings and headhunter fees to conducting interviews and filling roles (often taking at least two months), turnover strains company resources. Additionally, onboarding and training new hires often require 6–9 months before they can contribute meaningfully.

Turnover Among Students

According to 2023 statistics from Hungary’s Central Statistical Office (KSH), employment among 15–24-year-olds has significantly increased, with 269,000 employed and an employment rate of 27.2%—up from just 18.7% fifteen years ago. Young workers are taking on more hours due to rising living costs and rent increases, and this trend is expected to continue.

Among student workers, turnover averages around 30% annually. Summer jobs remain the most popular, with students often seeking seasonal opportunities in vacation destinations, festivals, or beach areas.

For students balancing work and studies, long-term potential lies in their employment. Approximately one-third of student workers are invited back by their previous employers. However, their higher turnover rates can be attributed to factors like studying abroad or completing their education.

Tips to Reduce Workplace Turnover

Understanding the reasons for high turnover allows companies to implement effective solutions. Here are some tips to retain valuable employees:

1. Assess and Improve Employee Satisfaction

Regular surveys and feedback sessions provide valuable insights into employee dissatisfaction, enabling timely interventions. A strong performance evaluation system is a great tool for setting shared goals and providing regular feedback.

2. Create a Positive Work Environment

Fostering a supportive workplace atmosphere, coupled with shared experiences like team-building activities, boosts employee satisfaction. Such initiatives improve internal communication and enhance employees' sense of belonging.

3. Enhance Onboarding and Training

Statistics show that most resignations occur within the first three months, with one in five employees leaving during their probation period. Structured onboarding programs and mentoring help employees integrate quickly.

4. Offer Competitive Pay and Benefits

While not always the primary factor, below-average wages and limited advancement opportunities can demotivate employees. Monitor competitors’ pay levels and invest in an attractive benefits system to keep employees motivated.

5. Set Clear Expectations

Employees are more loyal to employers who deliver on promises. Clear, transparent goals and expectations, as well as consistency from employers, are particularly important for young workers.

6. Provide Leadership Support

Direct supervisors interact with employees daily, making their role crucial. Leaders should communicate goals effectively, resolve conflicts, and foster a supportive environment. Inadequate leadership skills can lead to higher turnover, so regular leadership training and evaluation are essential.

Motivating Student Employees

Gen Y and Z workers are digital natives with strong technological skills. They value performance recognition, challenges, and visible personal and company growth. Flexibility—such as remote work, adjustable hours, and work-life balance—is key to motivating them.

Young workers voice their opinions and needs more openly and are quicker to change jobs than previous generations. Adopting progressive solutions like remote work, flexible schedules, training, career development opportunities, and modern work environments can help retain them.

Leverage Y Diák Iskolaszövetkezet’s Quality Services

Effective recruitment is vital to preventing unwanted turnover. At Y Diák, we ensure that the most suitable candidates are selected for each position. Whether it’s for summer, temporary, or long-term roles, the workforce we provide is reliable and efficient, meeting the needs of our clients. From interviews to onboarding, and even payroll management, we handle all administrative burdens so that our clients can focus on organizing work. Contact us today for a personalized offer!