How do I calculate retention and turnover?

Question: “I am trying to calculate our employee retention and turnover rate. I understand that these are two different things relating to: 1) how many employees we have, and 2) how many employees we lose, keep and hire. Does anyone have the equations for figuring out these two rates?”—Katie, Louisiana


Turnover Costs = Cost to terminate + Cost per hire + vacancy costs + Learning Curve Cost

The consulting firm Kepner-Tregoe Inc. and the Saratogo Institute provides this formula you can use to calculate.

The average cost of turnover is 25% of an employee’s annual salary (line 1) plus the cost of the benefits (line 2). Typical benefits amount to about 30% of wages. The total cost per employee (Line 3) is the total of Line 1 and Line 2.

1. Annual wage: _________ x .25 = ___________.
2. Annual wage: _________ x .30 = ___________ x .25 = _____________.
3. Total turnover cost per employee (add Lines 1 and 2):
4. Total number of employees who left: ___________.
5. Total cost of turnover (multiply Lines 3 and 4): _______.

Hope this helps.

We calculate Retention with the following formula:

(1)# employees at beginning of month –
(2)# voluntary terminations for the month /
(3…same as 1)# employees at beginning of month.

(1) minus (2) divided by (1)= retention rate

Slight correction to the instructions. Take the number of terminations and divide by the number of positions each month. Then at the end of the year, take an average of the months for a yearly average.
Ex: 2 people left in a company with 50 position.
2 / 50 = .04 = 4% for the month