Employee Turnover Rate: definition, measurement, and impact on the organization

Employee turnover rate is a key metric showing how many people leave a company within a given period. It stands as one of the most critical indicators of an organization's health and the effectiveness of its human resources management. In Poland, annual employee turnover averages between 12-18%. However, the Labor Market Monitor study from Q1 2025 revealed that 19% of employees changed employers in the last six months—a result slightly below the nearly 10-year average.

What is Employee Turnover Rate?

Definition and Significance

The employee turnover rate measures the percentage of employees who leave an organization during a specific time frame relative to the average number of employed staff in that same period. It is defined as the number of employees who ended their employment divided by the average employment level, multiplied by 100% to express the result as a percentage.

This metric allows employers to monitor employment stability, identify workforce management issues, and evaluate the effectiveness of HR policies. According to the Polish Economic Institute, on average, one in ten employees in Poland ends their cooperation with a company annually, with 4.1% changing jobs and 3.4% leaving the labor market entirely.

The Difference Between Turnover and Fluctuation

Although the terms "turnover" (rotacja) and "fluctuation" (fluktuacja) are often used interchangeably, there is a subtle semantic difference. Staff fluctuation is a broader concept covering all changes in team composition, including internal transfers, promotions, and departures. Turnover, on the other hand, focuses primarily on employees leaving the organization, regardless of the reason. In HR practice, these terms function in parallel, and the choice of terminology often depends on the analytical context.

Why You Should Monitor Employee Turnover

Regular monitoring of the turnover rate allows you to detect potential problems before they become serious threats to employment stability. Studies show that organizations that properly utilize data from offboarding interviews and analyze reasons for departures can reduce turnover by as much as 20-30%. This indicator provides insights into employee satisfaction, recruitment process efficiency, and the company's attractiveness as an employer. Companies that systematically analyze turnover can react faster to warning signs, such as growing dissatisfaction with working conditions or a lack of professional development opportunities.

Types of Employee Turnover

Voluntary vs. Involuntary Turnover

Voluntary turnover occurs when an employee decides to leave the company driven by their own motivations, such as better employment conditions elsewhere, lack of development, or job dissatisfaction. According to the 2025 Randstad Labor Market Monitor, the percentage of people actively looking for work or browsing for opportunities is breaking records, which may forecast increased turnover in the coming months.

Involuntary turnover results from the employer's initiative and includes layoffs due to economic reasons, company reorganization, or termination due to insufficient employee competence. In the USA, the average voluntary turnover rate is currently 13.5%, continuing a downward trend from 17.3% in 2023 and 24.7% in 2022.

Desirable vs. Undesirable Turnover

Desirable turnover happens when an employee's departure benefits the organization—for example, when a low-performing individual who disrupts team culture or lacks engagement leaves. Conversely, undesirable turnover concerns the loss of valuable, highly competent employees. Losing such talent incurs significant recruitment and onboarding costs and leads to a loss of organizational knowledge. Research shows that employees often leave due to a lack of professional development opportunities—a key factor in the loss of top talent.

Avoidable vs. Unavoidable Turnover

Some departures are unavoidable and result from natural factors like retirement, relocation for personal reasons, career path changes, or health issues. Avoidable turnover, however, covers cases where the company could have retained the employee through better management, improved working conditions, development offers, or more competitive pay. In Poland, only 10% of employees declare high engagement at work, one of the lowest rates in Europe, suggesting significant room for retention activities.

Internal vs. External Turnover

External turnover refers to the complete termination of the relationship between the employee and the organization. Internal turnover involves position changes, inter-departmental transfers, or promotions within the same company without reducing the total headcount. According to the Labor Market Monitor (Q1 2025), 18% of employees in Poland changed positions within their company in the last six months (up from 17% the previous quarter). This confirms the correlation that internal mobility reduces external turnover.

How to Calculate Employee Turnover Rate

General Turnover Formula

The basic formula for employee turnover rate is:Turnover Rate = (Number of employees who left / Average number of employees) × 100%

The average number of employees is calculated as: (Number of employees at start of period + Number of employees at end of period) / 2. This provides a representative value accounting for employment changes during the analyzed period.

Modified Turnover Indicators

A modified turnover rate considers additional variables such as contract type, tenure, or reason for leaving. For instance, you can calculate turnover separately for fixed-term and indefinite-term contracts. The Rookie Ratio is a variant measuring the ratio of employees who have worked less than 2 years to the total workforce. A Rookie Ratio above 50% indicates a lack of structural stability and potential errors in recruitment and onboarding.

Monthly Turnover and Seasonality

Monthly turnover is calculated similarly to the annual rate but for a shorter period to track seasonal trends. To annualize a monthly rate, use the scaling formula:

Annual Turnover = [(Departures in period / Avg employment in period) × (12 / Months in period)] × 100%.

Seasonality is particularly important in industries like construction, gastronomy, and hospitality, which rely on seasonal workers.

Calculation Example

Consider Company XYZ, which employed 240 people at the start of the year and 255 at the end, with 28 employees leaving during the year.

1. Average employees: (240 + 255) / 2 = 247.5
2. Turnover Rate: (28 / 247.5) × 100% = 11.31%This result is slightly below the national average and falls within the typical range for well-functioning Polish enterprises.

Interpreting the Turnover Rate

High vs. Low Turnover

A high turnover rate (exceeding 20-25%) may signal serious organizational problems like ineffective management, low job satisfaction, or uncompetitive salaries. On the other hand, a very low rate (below 5%) might indicate stagnation and a lack of fresh ideas, which hinders dynamic growth. The average turnover in Polish companies is around 12.5-15%, which is considered acceptable.

Acceptable Norms

Acceptable norms depend on the industry and company size. In the public sector, where stability is standard, turnover of 5-8% is typical. In IT, turnover stabilizes around 12-13%. Retail and hospitality expect higher turnover due to seasonality. Organizations should compare their results against industry-specific benchmarks rather than general averages.

Industry Context

According to the 2025 Randstad Labor Market Monitor, the highest turnover (changing employers within 6 months) affects engineers (68%), hospitality and gastronomy workers (54%), foremen (47%), specialists (45%), and construction workers (43%). In IT and telecom, turnover is around 38%, but only 17% changed jobs recently, indicating stabilization.

Related HR Metrics

• Resignation Rate vs. Termination Rate: The resignation rate tracks voluntary departures, while the termination rate tracks employer-initiated exits. In the US, the voluntary turnover rate is 13.5%.

• Stability Index & Rookie Ratio: The Stability Index (employees with >1 year tenure / total employees) complements turnover analysis. A high Rookie Ratio (>50%) warns of retention issues among new hires.

• Recruitment Efficiency & Promotion Rate: High turnover among new hires suggests recruitment errors. The Promotion Rate shows if the company invests in internal growth, which reduces external turnover.

• Positive Rotation Index (PRI): Calculates new hires divided by total employees to measure growth dynamics.
• Boomerang Employee Rate: Measures how many former employees return. A high rate indicates effective offboarding and a positive employer brand.

Causes of Employee Turnover

Most Common Reasons

Gallup studies show managers account for ~70% of the variance in employee engagement. Key drivers for leaving include insufficient pay, lack of development, poor work-life balance, and toxic culture. In Q1 2025, only 71% of Polish employees declared satisfaction with their job, down from 75% in 2023.

The Role of Development and Satisfaction

Lack of professional development is a top reason for voluntary departures. Employees who feel appreciated and see clear career paths are far less likely to leave.

Compensation and Culture

While salary matters, culture often plays an equal role. Toxic environments or unclear bonus rules drive people away even if they like their leader. Only 10% of Polish employees report high engagement, pointing to cultural issues.

Effects of Turnover on the Organization

Costs: Recruitment, Onboarding, Knowledge Loss

Turnover generates direct costs (recruitment fees, time) and indirect costs. Hiring a new office worker in Warsaw can cost 5,000–15,000 PLN. For a production worker, the total cost (including lost productivity) can reach 15,000 PLN per departure.

Impact on Morale and Efficiency

Frequent departures lower team morale and burden remaining staff, potentially leading to burnout. Productivity loss during a new hire's ramp-up period can be 20% for the first 3 months.

When is Turnover Beneficial?

Moderate turnover (10-15%) can be optimal if it involves low performers leaving or brings in fresh perspectives and skills.

Turnover Prevention Strategies

Retention Strategies

Effective retention relies on understanding why people leave. Key actions include: offering clear career paths, building a positive culture, ensuring competitive pay, and promoting work-life balance. Internal mobility is crucial—18% of Polish workers changed positions internally rather than leaving.

Onboarding and Offboarding

Effective onboarding can boost retention by 82% and productivity by 70%. Professional offboarding maintains relationships, increasing the chance of "boomerang employees" returning later.

Exit Interviews

Exit interviews are vital for identifying systemic issues. Companies acting on exit interview data can reduce turnover by 20-30%.

FAQ

How often should turnover be calculated?At least quarterly to spot trends, though monthly is better for high-turnover industries like gastronomy.

Does high turnover always mean trouble?Not always. If it involves low performers, it may be beneficial. However, losing top talent due to management issues is a serious problem.

What are the best methods to reduce turnover?Effective onboarding, clear career paths, positive culture, and acting on exit interview feedback.

How much does one employee's turnover cost?Costs vary but can range from 5,000 to 15,000 PLN for office or production roles, covering recruitment, training, and lost productivity.

Summary

The employee turnover rate is a vital metric of organizational health. While the recent 19% turnover rate in Poland is below the long-term average, declining job satisfaction suggests potential increases ahead. Effective management requires regular monitoring of turnover alongside metrics like the Rookie Ratio and Stability Index. By implementing retention strategies based on exit interview data and investing in onboarding, companies can reduce turnover by 20-30% and significantly cut costs.

For enterprises seeking support in HR management and process optimization, Nais offers comprehensive technological and consulting solutions to help monitor key metrics, automate processes, and build effective retention strategies.

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