We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.
Finance

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

What Is a Turnover Percentage?

By Ray Hawk
Updated: May 17, 2024
Views: 10,244
References
Share

A turnover percentage is a calculation for a rate or quantity of change, and is usually applied to changing staff levels in an organization, but types of turnover can also include how often the portfolio in a mutual fund changes or the rate of change in a chemical reaction. The numbers arrived at in calculating turnover percentage are somewhat subjective. In its simplest form, it is a representation of how much of a new element reflects upon the volume of the whole.

Human resources departments in businesses will calculate an employee turnover percentage by dividing the number of lost employees by the ideal number of employees that the company expects to have during a fixed period of time. An example of this would be a firm employing 100 people that, in the course of a year, lost 12 individuals to various factors. In this case, 12 employees divided by 100 equals a 12% turnover. This percentage is used to quantify the rate of change in the labor force, but it only provides a basic understanding of the process of staff turnover.

The calculations for employee turnover become more complex when the total number of employees is not consistently maintained over time. Other factors mitigate the raw value of the numbers as well, such as subcategories of employees who are either full or part-time, management or labor, or contract versus permanent employment. Protracted degrees of absenteeism due to sick leave, paid time off, or leaves of absence due to personal issues of staff can also make it difficult to gain a true perspective on what the underlying cause is for a relatively high employee turnover rate.

Some high turnover industries include fast food production and retail sales, where the environment is fast-paced, pays relatively low wages, and commonly employs young people who may not be dependent on the job for their survival. Low turnover industries include manufacturing and utilities workers, who often represent demographics of families, where the workers have good pay and benefits, and relatively stable positions in the company. A 2007 survey of United States employment found that the average turnover in business was 12.3%, with the highest rate in hospitality at 21.3%, and the lowest in utilities at 6.5%.

Comparable calculations in other business arenas are also frequently done for turnover percentages. Mutual or bond fund stock investments are rated by calculating turnover percentage in terms of how holdings in the fund have changed in the last year. The turnover rate is calculated by first determining the lesser of two factors: assets sold or assets bought within a year. The lower value is divided by the value of the entire fund portfolio on a monthly basis to get a turnover percentage. As in employee turnover, however, the percentages can be misleading, and an investment fund that shows a turnover rate in excess of 100% does not necessarily reflect the fact that the fund manager is intricately involved in the management of its assets on a day-to-day basis.

Share
WiseGeek is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Link to Sources

Editors' Picks

Discussion Comments
Share
https://www.wisegeek.net/what-is-a-turnover-percentage.htm
Copy this link
WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.

WiseGeek, in your inbox

Our latest articles, guides, and more, delivered daily.