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Measuring labour turnover

Author: Rachel Suff


  • Labour turnover is the outflow of people from an organisation. It is usually expressed as the proportion of people who leave the business over a specific timescale, typically during a 12-month period. It is for each organisation to decide what its optimum level of labour turnover is and this will depend on a range of factors, for example sector, size and location. (See What is labour turnover?)
  • If labour turnover is too high, the organisation can suffer a range of negative impacts including the financial cost of recruiting replacement staff and the loss of corporate knowledge and skills. (See The business case for monitoring and managing labour turnover)
  • "Total labour turnover" covers all types of employee departures, including resignations and dismissals. "Voluntary labour turnover" refers to those employees who resign from the organisation. (See Distinguishing between voluntary and involuntary labour turnover)
  • There are several methods for analysing labour turnover, for example the wastage index or standard formula, the resignation rate, the stability rate and the survival rate, but an organisation also needs to analyse the underlying reasons for staff departures. (See Calculating labour turnover to manage staff retention)
  • The "crude wastage" index calculates the percentage of the workforce leaving the organisation within a specified period. It is a blunt tool for measuring turnover, because it does not differentiate between the different categories of leavers. (See Using the wastage index to calculate labour turnover)
  • The resignation rate distinguishes between voluntary and involuntary departures and can be applied to groups of employees, for example on the basis of location or department, to identify where there are particular retention problems. (See Using the resignation index to calculate labour turnover)
  • The stability rate calculates the proportion of the workforce employed for a specified period and measures how effectively the organisation is retaining experienced staff, typically those with at least one year's service. (See Using the stability rate to calculate labour turnover)
  • The survival rate calculates the proportion of staff recruited in one year that remain in post after a specific number of years. (See Using the survival rate to calculate labour turnover)
  • It is only by comparing the organisation's labour turnover rate with that of other similar organisations that an employer can decide whether it is acceptable, too high or too low. (See Benchmarking labour turnover rates)
  • The cost of labour turnover includes a range of obvious costs, for example the cost of replacing leavers, as well as "hidden" costs, for example missed business opportunities. (See Calculating the cost of labour turnover)
  • Separation questionnaires gather information about employees' reasons for leaving and can provide an employer with invaluable data to develop a staff retention strategy. (See Designing separation questionnaires)
  • Exit interviews can be a powerful management tool to determine why people are leaving and what changes would have encouraged them to stay. (See Conducting exit interviews)
  • Conducting an employee engagement survey enables organisations to identify about which aspects of work employees feel positive and about which aspects of work they feel negative about, before employees have made a decision to leave the organisation. (See Employee engagement surveys)


This section of the XpertHR good practice manual identifies the steps that employers can take to monitor and manage labour turnover. It covers how to measure and analyse labour turnover patterns to identify the range of initiatives that can be developed to address staff retention problems.