Fast Facts About Employee Turnover and Employee Retention
- Turnover remains a challenge: Since the peak of the Great Resignation that started in 2021, voluntary quits have decreased. However, turnover of employees who leave an organization and are replaced voluntarily or involuntarily, is still a major concern.
- It’s expensive and disruptive: Turnover drives up recruitment and training costs, lowers productivity, and puts pressure on remaining team members.
- Engaged employees stay longer: When people feel connected to their work and valued by their organization, they’re more likely to stay.
- Turnover has many forms: Whether turnover is voluntary or involuntary, functional or dysfunctional, understanding the different types helps to tailor retention strategies.
- Retention requires strategy: Reducing turnover means addressing internal communication, management quality, and evolving workplace trends like AI. Strong communication, clear career paths, supportive leadership, and a positive employee experience all help to retain top talent.
Table of contents
- Fast Facts About Employee Turnover and Employee Retention
- What is Employee Turnover?
- Effects of Employee Engagement on Turnover
- Types of Turnover
- Causes of High or Low Staff Turnover
- Effect of High Employee Turnover
- Examples of Staff Turnover
- How Do I Calculate the Cost of Employee Turnover?
- How to Reduce Employee Turnover
- How Cerkl Helps Reduce Employee Turnover
- What’s Next?
- FAQ
The term Great Resignation, coined by organizational psychologist Anthony Klotz in 2021, captured a wave of voluntary resignations that reshaped the workforce during 2022 and 2023. At its peak, more than 4 million U.S. employees were quitting their jobs each month, forcing employers across industries to rethink retention strategies.
Today, the situation has begun to stabilize. Recent data from the U.S. Bureau of Labor Statistics shows that by April 2025, quits had declined to 3.2 million. Yet turnover remains a critical concern, especially in sectors like leisure and hospitality, which were initially the hardest hit due to COVID-19. At the same time, industries such as finance and insurance continue to experience relatively low exit rates.
Reducing employee turnover now requires more than just filling vacancies. It demands a strategic focus on employee experience (EX), communication, and career development.
But what is employee turnover, and what are its effects?
An understanding of what employee turnover is, as well as the various types and causes, its effects, and how to calculate its cost, is crucial for any business. Furthermore, having tools and strategies to effectively reduce it becomes imperative to maintaining a healthy and productive work environment.
What is Employee Turnover?
Staff or employee turnover refers to the number or percentage of employees who leave an organization and are replaced by new employees during a defined period. High turnover can harm an organization’s productivity if skilled workers leave often and the organization is left with a workforce that needs to be trained frequently.
- A June 2025 Express Employment Professionals–Harris Poll reports that employee turnover is “costing companies big in 2025.” It states that U.S. companies lose an average of $36,723 per year due to turnover, with 20% of firms saying costs exceed $100,000 annually.
- The Work Institute’s 2024 Retention Report estimates that U.S. companies spent nearly $900 billion to replace employees who quit in 2023. Each departure costs roughly 33% of the employee’s annual salary, accounting for recruitment, training, lost productivity, and team disruption.
These numbers show turnover isn’t just an HR statistic. It’s a major financial and cultural consideration. That makes investing in engagement programs, internal career paths, and supportive management systems critical to organizational success.
Effects of Employee Engagement on Turnover
As Gallup has pointed out for many years, employee engagement is a critical key to reducing turnover in the workplace. Employees establish a more profound connection with their organization’s mission and purpose, enhancing their effectiveness as brand ambassadors. This heightened sense of purpose enables them to cultivate stronger relationships with customers, ultimately contributing to the company’s growth in sales and profitability.
Gallup’s State of the Global Workplace 2025 Report states that in 2024, decreasing global employee engagement cost the world economy US$438 billion in lost productivity. The primary cause was reduced manager engagement, which fell from 30% to 27%. The report warns that if managers are disengaged their teams will be too. The relevance is that it is managers who engage work teams the most.
On the other hand, when employees are engaged, they are more productive and both absenteeism and turnover are lower.
“If manager engagement continues to decline, it won’t stop with managers, and it won’t stop with engagement. The productivity of the world’s workplace is at risk.”
Gallup
Unfortunately, data collected by Gallup shows that the global workplace is not headed in the right direction. However, it highlights a “productivity boom opportunity if executive leaders seize the moment.” They estimate that if the world’s workplace was fully engaged, this could add US$9.6 trillion in productivity to the global economy — the equivalent of 9% of global GDP.
Clearly, turnover and its related costs would also reduce.
Types of Turnover
You may be surprised to find that there are several types of employee turnover in an organization, including voluntary and involuntary turnover, functional and dysfunctional turnover, avoidable and unavoidable turnover, and internal and external turnover. Recognizing the different types can help human resources (HR) departments devise more precise strategies to tackle employee turnover.
Voluntary vs Involuntary Turnover
Voluntary turnover occurs when employees willingly decide to leave the organization. These may be high performers who have found better opportunities elsewhere or maybe dissatisfied employees who are unhappy with the organizational commitment, career path, or employee experience offered by the company.
The Work Institute’s 2023 Retention Report stated that nearly 51 million people voluntarily quit their jobs in 2022 – breaking the 2021 record of 47 million quits. As mentioned above, the quit rate has come down, and the Work Institute’s 2024 Retention Report confirms this, stating that last year 45 million workers in the U.S. chose to quit their jobs. Nevertheless, an alarming issue is that the quit rate has increased by 37% since 2014.
In contrast, involuntary turnover involves scenarios in which the organization decides to terminate the employment relationship due to poor performance, restructuring, or layoffs. However, the number of employees affected is very low, representing less than 5% of the total.
Functional vs Dysfunctional turnover
Functional turnover occurs when a low-performing employee leaves, making room for a potentially more competent hire. This can boost the overall productivity of an organization. On the other hand, dysfunctional turnover happens when skilled and productive employees leave, forcing the company to replace them with new employees who may not be as effective or skilled.
Avoidable vs Unavoidable turnover
Avoidable turnover happens when employees resign due to reasons that could have been controlled by the organization. These include a negative work environment, lack of growth, or poor management. On the other hand, unavoidable turnover refers to situations outside the control of the organization, like an employee retiring, relocating, or facing health issues.
Internal vs External turnover
Internal turnover refers to within-company movements of employees, like interdepartmental transfers or promotions. This type of turnover doesn’t reduce the total number of employees but it does disrupt the staff structure. External turnover happens when employees leave the organization altogether.
Causes of High or Low Staff Turnover
A primary factor affecting an organization’s employee turnover rate is employee satisfaction. When an organization pays attention to employee experience, providing clear career paths, opportunities for professional development, and adequate health benefits, it generally witnesses lower turnover. Another contributing factor to voluntary turnover is the lack of clear objectives for employees. People leave organizations when they feel lost and unproductive because their roles aren’t clearly defined. Involuntary turnover also contributes to the overall employee turnover rate.
Reasons for Leaving… or Staying
According to the 2024 Work Institute retention report mentioned above, the 10 top reasons for leaving jobs in 2023 were:
The report analyzes the changes in reasons for leaving, highlighting that:
- Health and Family reasons have become a big issue, increasing by nearly 20% since 2019.
- Retirement skyrocketed in the wake of the pandemic, normalized, but then increased by more than 20% after 2022.
- Management reasons for leaving have increased by nearly 14% since 2019.
- Total Rewards spiked in 2022 because wages were negatively affected by the pandemic, but these pay reasons have declined by nearly 21% since 2022.
Ultimately, the reasons for leaving an organization reflect the continued evolution of an emerging workforce.
However, since these are averages, the Work Institute emphasizes the importance of organizations collecting high-quality data to understand and diagnose issues in the workforce. Then it is possible to use the data to drive decisions and create solutions within the organization.
Effect of High Employee Turnover
High turnover can obstruct and block operational efficiency and put a strain on an organization’s human resources. This not only disrupts workflow but also adds a financial burden to the organization.
High employee turnover results in:
- Increased costs: Recruitment and training new employees is expensive
- Disrupted workflow: Existing employees must cover the work of colleagues who have quit and left
- Employee burnout: Remaining staff tend to experience more stress because they are having to undertake extra work
- Loss of morale: Remaining staff often experience fear of the uncertainty of their positions
- Poor customer service: Customers lose consistency without staff retention
Examples of Staff Turnover
The terminology “staff turnover” or “employee turnover” encapsulates various scenarios that relate to employees leaving a company. The most commonly recognized are voluntary and involuntary turnover. However, understanding staff turnover goes beyond these basic instances.
Two concepts that are being quoted increasingly more frequently are quiet quitting and quiet cutting.
Quiet Quitting
Quiet quitting is an intriguing example of employee turnover. Employees disengage from their work or organization without overtly expressing dissatisfaction or actually resigning. So, the employee remains part of the organization but emotionally or mentally disengages from their duties. Generally, this disengagement is a result of dissatisfaction, lack of an acceptable career path, or insufficient professional development opportunities.
While the concept itself is not entirely new, the terminology may have gained prominence in recent years as organizations and researchers focus more on understanding subtle forms of employee disengagement.
A 2024 McKinsey blog post, The hidden costs of quiet quitting, quantified, maintains that the term resulted from a more uncertain outlook for jobs during COVID-19. While it reduces the costs of high staff turnover, it “introduces new, hidden costs.” Furthermore, the post warns that as real resignations declined, quiet quitting could become a bigger challenge. This is because quiet quitters are much more dissatisfied than other employees. They want to quit, but they don’t.
Quiet Cutting
Quiet cutting is a completely different issue. It is when employers reassign employees to different roles, hoping they will quit voluntarily, in this way saving the company the cost of severance. It’s an old, established practice with a new name, aligning with what is more commonly known as “constructive dismissal” or “constructive discharge.”
An article by Bryan Robinson in Forbes, 4 Reasons Employers Can’t Seem To Shake The ‘Quiet Quitting’ Career Trend blames quiet culture workplace trends including quiet cutting, quiet hiring, and quiet firing for quiet quitting. “These actions and reactions symbolize the great divide between companies (and) the workforce, creating suspicion, mistrust, and low morale,” he says.
A post in Fortune magazine maintains that 77% of employees say they have witnessed quiet cutting. Their simple definition is that it involves “diminishing someone’s role so they quit on their own.”
How Do I Calculate the Cost of Employee Turnover?
According to the Bureau of Labor Statistics, the average monthly turnover rate (“separations”) for the private sector in April 2025 was 3.3% (compared to 3.4% in April 2024). As for the governmental sector, the rates are lower at 1.4% compared to 1.6% last year. But how do you calculate the employee turnover rate and its cost for your organization?
To calculate employee turnover, you’ll first need to understand the annual turnover rate and monthly turnover rate of your business. The employee turnover rate percentage is calculated by dividing the total number of employees who left during a specific period by the total number of employees during the same period multiplied by 100.
Turnover = (Employees who left ÷ Average number of employees) x 100
Direct costs comprise severance pay, recruitment costs, and training costs for the new employee. Indirect costs are associated with reduced productivity, overworking of remaining staff, and potential customer dissatisfaction due to service disruption. It’s also crucial to take into account the cost of losing high performers to other companies.
Employee Turnover Rate Per Industry
Employee turnover rates tend to vary significantly across different industries, as the labor statistics show. While some sectors, like hospitality, traditionally exhibit high turnover, others like finance and government organizations, generally display a lower rate. According to the latest labor statistics figures from April 2025, the hospitality industry has the highest monthly staff turnover rate 5.8% followed by professional and business services at 4.6%. The government sector has the lowest overall turnover rate at 1.4%.
How to Reduce Employee Turnover
The overarching goal of most organizations is to increase retention. High turnover rates can disrupt the organizational rhythm, affect employee morale, and increase recruitment costs. Therefore, implementing employee retention strategies designed to improve EX should be a priority.
Gallup’s State of the Global Workplace 2025 Report has some invaluable tips on how to reduce employee turnover. Their survey showed:
- Engaged employees are highly involved and enthusiastic about their work and workplace.
- Those who aren’t engaged are quietly quitting. They act out their unhappiness, putting time rather than energy or passion into their work.
- Actively disengaged employees are loudly quitting. They aren’t just unhappy, they are resentful that their needs aren’t met, potentially undermining the work of engaged employees. This behavior contributes directly to increased turnover.
The report emphasizes the importance of understanding employee perceptions of the job climate and why employees choose to join or leave an organization. For this reason, employers are encouraged to evaluate these factors to create strategies for retaining top talent and reducing turnover.
“Employers can evaluate how these topics relate to their own organizational culture to create strategies for attracting top talent and keeping their star employees from being wooed away.”
Overall, the report offers what CEO Jon Clifton says “what may be our last snapshot of a workforce on the cusp of seismic change.” Engagement, he says, is faltering while artificial intelligence (AI) is transforming every industry.
He confirms that the data shows employees (particularly managers) feel disconnected, “which does not bode well for their preparedness for a future shaped by AI.” However, ironically, these tools might well be the answer to boosting engagement and performance.
“We stand at the edge of a new era of work. With thoughtful leadership and strong, empowered managers, AI can elevate human potential rather than diminish it.”
Jon Clifton
How Cerkl Helps Reduce Employee Turnover
We know that great employees are difficult to find. It can also be a challenge to keep talented employees in an organization long term. But the good news is that Cerkl Broadcast can help you decrease employee turnover and maximize employee retention.
We’ve talked about ways that you can reduce turnover and shown how important it is to engage employees and have an effective internal communication system. Broadcast can help you take your communications to the next level, making sure your people not only feel informed, but truly connected to your organization.
Features the Cerkl Broadcast platform offers include an invaluable and highly effective omnichannel and a centralized hub that simplifies and enhances management strategies. There are great content scheduling features, customizable templates for surveys and email blasts, as well as an easy process to segment audiences for precise targeting. Whether you’re addressing frontline teams or remote knowledge workers, Broadcast ensures your message reaches the right people at the right time.
No more wondering if your communications system is working. Broadcast’s feedback and analytics tools give you the power to measure impact and see what’s being read or, conversely, ignored. These actionable insights allow you to refine your strategy continuously, creating a workplace where employees feel seen, heard, and valued.
What’s Next?
So, how can you use Cerkl Broadcast to maximize engagement and employee retention and minimize employee turnover in your organization?
For starters, why not take advantage of our free employee engagement survey template? It’s been designed to help you gather crucial feedback and insights from your employees. Then you can analyze them and decide what kind of action you need to take.
FAQ
Employee turnover refers to the rate at which employees leave a company and are replaced by new hires. It is the opposite of employee retention.
The main causes of employee turnover include factors such as dissatisfaction with work, lack of career growth opportunities, and poor organizational culture.
A 10% employee turnover rate means that, within a specific period, 10% of the workforce has left the company and has been replaced by new hires.
A good staff or employee turnover rate varies by industry, but generally, a lower turnover rate is considered favorable, indicating a stable and satisfied workforce. It’s common for businesses to aim for turnover rates below 10%. However, as you will see from this post, turnover rates are commonly much higher than this.
An example of employee turnover is when an employee resigns from their position, and the company hires a new person to fill the vacated role.
