It’s no secret that losing employees and seeking new hires is a costly and time-consuming endeavor. But do you know just how much a high turnover rate is actually costing you? 



If a company experiences repeated changes in personnel, they have to continually budget for the high costs of recruiting and training new team members. While new hires can bring fresh ideas with them, constant reshuffling leads to lack of team cohesion and lower productivity. 

If you feel like you’re constantly losing employees, it’s in your best interest to identify the root cause of the issue and do something about it. 

Calculate turnover and attrition

The first task in front of you is to calculate your rate of turnover. You should know that some companies equate turnover with attrition, while others differentiate between the two. 

Turnover refers to employees who leave and are replaced by new hires. In contrast, some companies define attrition as employees who leave and are not replaced. In this article, the terms will be used interchangeably.

Turnover and attrition are measured as a percentage of the total employees on a team or in a company. Therefore, divide the number of lost employees by the number of total employees, then multiply by 100 to get your attrition rate. 

You may also want to differentiate by type of employee loss for more granular data: voluntary (quitting), involuntary (layoffs/fires), and internal (moved to another role in the same organization).

Compare with your competitors

Once you have a good handle on your attrition or turnover rate, it’s time to compare your rate with similar teams and companies.

If you’re measuring the turnover rate of your own team or department within a larger organization, first compare that rate with the rates of other teams at your company. This will help you identify if your department in particular could be struggling with team dynamics issues that are driving people away. Alternatively, if your rate is lower than most teams at your organization, you might have some strengths in your department that you can seek out and nurture.

Before you decide you don’t have a problem, though, compare your attrition rate with that of other companies. If possible, know the attrition rate of both your team and your company as a whole and try to get your hands on those rates at similar organizations in your industry. Networking with human resources (HR) professionals can be helpful in this pursuit. 

Count the cost

Now that you have good data on your turnover rate you can decide whether or not action is called for.

If you’re losing a lot of team members to promotions within your organization but your overall attrition rate is comparable to that of others in your industry, your current status quo may be sustainable. People may see your team as a great stepping stone in their careers at your company.

Alternatively, if you are losing team members to other companies and struggling to fill their positions, you may need to adjust your current management strategy. This truth is heightened if your turnover rate is higher than that of your competitors.

Consider solutions

If it does appear that your attrition rate is too high, it’s time to take further steps to determine the monetary annual expense of this issue. You might be shocked to learn just how much high turnover costs. 

For example, general manager Dick Schilhab of Transit Mix reports, “Our [truck driver] attrition rate of 72% every six months was costing us more than $6 million a year… Within just 24 months [of human capital investment], our attrition had dropped from 72% to an industry-leading 14%!”

Here at Teamalytics, we guide leaders through a team development program that cultivates a cohesive culture team members won’t want to leave. One of the positive outcomes of this type of human capital investment is often a lowered attrition rate. Sometimes these results are drastic, as experienced by Transit Mix.

A high attrition rate often signals a need for change. If you’ve ever considered investing in a leadership and team development program, this metric might be the push you need to take the plunge. For help determining your next right step, download our free guide “Calculating ROI: A Practical Guide for Measuring Return on Human Capital Investments” today.