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How to Calculate Your Employee Turnover Rate

Child-care employee turnover has long-lasting, developmental consequences for children. In this blog post, Marnie Forestieri, author of The Basics of Leading a Child-Care Business, provides step-by-step instructions for how to calculate your employee turnover rate.

 

Turnover is a challenge faced by many organizations across all industries. In any industry, it is expensive to recruit, train, and onboard new employees, but in the child-care industry, employee turnover has long-lasting, developmental consequences for children.

In her article “Turning Around Employee Turnover” on Gallup.com, Jennifer Robison cites a Gallup poll that looked into the reasons employees leave their jobs. The poll found that managers can influence at least 75 percent of the reasons for voluntary turnover: leadership style or management approach, lack of opportunity for professional growth, pay and benefits, and lack of connection to the organization’s purpose or leadership.

Use the following steps to determine your turnover rate. If you find that you may have a problem—or if you already know that you do—read The Basics of Leading a Child-Care Business to learn strategies to improve your management skills, recruit and retain high-quality employees, and build a positive work culture where educators and children can thrive.

 

Step-by-Step Instructions

The employee turnover rate is the percentage of employees who left a company within a certain period of time. The following steps outline how to calculate your monthly and annual employee turnover rates.

STEP 1: Calculate your total number of employees. This headcount should include all employees on the payroll. Do not include independent contractors or temporary workers who are on an agency’s payroll. Let’s use the number of employees of ABC Learning Center as an example.

ABC Learning Center runs a headcount report monthly. The headcount on January 1 is 30 employees, on February 1 is 28 employees, and on March 1 is 30 employees.

 

STEP 2: Calculate the average number of employees. To calculate a monthly average, the next step is to add the total headcounts from each report together and then divide by the number of reports used to obtain the average number of employees on a payroll that period.

Add the three headcount totals: 30 + 28 + 30 = 88

Divide this sum to find the average headcount: 88 / 3 = 29.3

 

STEP 3: Calculate the number of employees who left the company. Make a list of the individuals with termination dates within the time period you are looking at. This list should include those who have left both voluntarily and involuntarily. Employees who are temporarily laid off, on furloughs, or have taken a leave of absence are not included, as they have not been terminated.

In late January, ABC Learning Center terminated 2 employees for cause.

 

STEP 4: Divide the number of separations by the average number of employees. Divide the number of separations in the time period by the average number of employees on the payroll in that time period.

ABC Learning Center had two separations and an average of 29.3 employees on the payroll: 2 / 29.3 = 0.068

 

STEP 5: Calculate the monthly turnover rate. Most employers report turnover rates as a percentage; therefore, you should multiply your answer from step 4 by 100.

0.068 x 100 = 6.8

ABC Learning Center’s turnover rate for the period is 6.8 percent.

 

STEP 6: Calculate the annual turnover rate. Most employers want to report an annual turnover rate. To determine this, add the monthly turnover rates for the past twelve months together, then divide by twelve.

ABC Learning Center’s average number of employees per month is the total number of employees divided by twelve: 351 / 12 = 29.25.

Divide the number of separations by the average number of employees: 14 / 29.25 = 0.479.

Multiply 0.479 by 100 to get the annual turnover rate of 48 percent.

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