High Turnover Rate: Benchmarks, Causes, and How to Fix It

At one of my early companies, we had a revolving door. Someone would leave every other month. We told ourselves it was the market, the industry, the economy. Then I sat down and actually calculated the number. We were at 35% annual turnover. We were not losing people to competitors. We were losing them to anywhere else.

The number itself was not the problem. The problem was that we had no idea what a normal number was, no idea what was causing it, and no system to fix it. That is the situation most small business owners find themselves in: aware that turnover is high, unsure where "high" actually starts, and uncertain which change to make first.

This guide answers all three with specifics: what rate counts as high in your industry, what is most likely causing yours, and which fixes return the most on the time and money you put in. It also shows what turnover costs a small company, and why there is no clean benchmark by company size to measure yourself against.

What Is a High Turnover Rate?

A high turnover rate is one that sits above the benchmark for your industry, and above 20% a year is where most owners start calling it high. That 20% line is a practitioner rule of thumb rather than a published figure.

The published figures come from the Bureau of Labor Statistics (BLS) Job Openings and Labor Turnover Survey (JOLTS). Across the 2025 annual averages the economy ran total separations of 3.3% of employment a month, about 40% annualized, and voluntary turnover of 2.0% a month, about 24% annualized.

Those two figures are the honest national reference points. For your own company's voluntary rate in a lower-churn industry, where 2025 quits annualized to roughly 10 to 17% (government, finance and insurance, information, manufacturing, private education), the bands below are a practitioner's working scale: under 10% healthy, 10 to 20% ordinary, 20 to 30% worth investigating, above 30% urgent.

Nobody publishes those bands, and they do not travel. The ordinary band brackets the quits rates of those industries, while the national quits rate of about 24% would already read as worth investigating on this scale. In higher-churn industries such as retail or leisure and hospitality the whole scale shifts up, so judge your rate against your industry row instead.

At 20% turnover in a 15-person company, you are replacing three people a year, and on Gallup's estimate each replacement costs one-half to two times the departing employee's annual salary. The math becomes uncomfortable quickly.

Industry context changes everything. In the same JOLTS data, leisure and hospitality annualizes to about 67% total separations, while finance and insurance sits at about 25% and government at about 18%.

Comparing your rate to a national average without accounting for your industry is like comparing the food cost percentage of a restaurant to the one a software company reports. The benchmarks section below breaks it down industry by industry.

How to Calculate Your Turnover Rate

The standard formula is straightforward. Divide your total employee separations over a period by your average headcount for that period, then multiply by 100 to get a percentage.

Track voluntary and involuntary departures separately. Voluntary turnover is the more actionable number because it reflects what employees are choosing to do. Involuntary turnover reflects your hiring and performance management decisions. Mixing them obscures both signals.

The 90-day turnover rate deserves special attention. It isolates the onboarding window, where the losses concentrate: Gallup finds about a third of new employees gone before day 90. If your 90-day rate is elevated, the problem is almost certainly in the hiring and onboarding process, not compensation or culture, since new hires have had minimal exposure to either.

A single company-wide percentage almost never answers the question this article is about, because "high" is a comparison and one number has nothing to compare itself to. The worksheet below runs the same five rates against last year and against the published benchmark for your industry, then repeats the arithmetic by department, by manager and by the role that keeps coming back. Fill it from whatever record you already keep of who left; the point of the sheet is the comparison columns, not the counting.

The last five lines matter more than the percentages above them. A rate you cannot trace back to a list of names, worked out one way this year and another way last year, will not survive the first person who asks where the number came from.

Industry Benchmarks: Is Your Rate Actually High?

Industry benchmarks are the only meaningful reference point for judging your own rate. A 25% voluntary rate is ordinary in retail trade, where quits annualize near 31%, and a serious problem in finance and insurance, where they annualize near 16%.

The table below annualizes the 2025 average monthly rates that BLS publishes in JOLTS. That survey is the closest thing this country has to an official turnover benchmark.

One caveat before you use it. JOLTS counts separations at individual workplaces, not across a worker's career, and both columns are monthly rates multiplied by twelve. Compare the quits column against your voluntary rate and the separations column against your total, or the comparison tells you nothing.

Notice which comparison is missing from that table: company size. JOLTS does publish rates by establishment size class, but an establishment is a single location, so the small branch of a national chain lands in the same size class as an independent shop.

The Census Bureau's Quarterly Workforce Indicators (QWI) do sort private employers by national firm size (the whole firm, not one location), starting with a 0 to 19 band.

The QWI turnover measure is a different formula from the annual one above, though. It is computed each quarter from stable hires and separations, meaning jobs that lasted at least a full quarter. Neither source gives you a clean small-business benchmark to hold yourself against.

Which Jobs and Companies Have the Highest Turnover

High turnover jobs share a profile rather than an industry. The roles that churn fastest are hourly, customer-facing, physically demanding, or scheduled unpredictably, and usually more than one of those at once. The shape of the job predicts the rate better than the name on the door does.

That is why two restaurants on the same street can sit a long way apart on this number. Same labor market, same wage band, same work. The difference shows up in how far ahead the schedule goes out, what the first two weeks look like, and who runs the shift.

What high turnover says about a company

Published lists of companies with high turnover rates are mostly lists of industries wearing a different label. A business staffed almost entirely with frontline hourly roles will post a higher number than a professional services firm even if it treats people better, because role mix moves the rate more than culture does.

The comparison that carries information is against the same role mix. If your rate sits well above the benchmark for your industry, something inside the business is producing it, and the usual suspects are the first ninety days, one specific manager, or a schedule nobody can plan a life around. Run the rate by manager and by role before concluding that the market is to blame.

Candidates read this number without ever seeing it. They see the same role advertised three times in a year and draw the obvious conclusion. Experienced applicants in hourly work watch repeat postings closely, which is one more reason the cost of turnover is higher than the replacement math suggests.

Six Causes of High Employee Turnover

High turnover is a symptom. The causes beneath it are specific and diagnosable. In a Gallup survey of voluntary leavers fielded in November 2023, 42% said their manager or their organization could have done something to prevent them from leaving. Here are the six causes that come up most often at small companies, weighted for what an owner can realistically change.

Why poor onboarding sits near the top

Most turnover conversations start at compensation and culture. Both matter. Onboarding is the more actionable fix at a small company, because it asks for a process rather than a budget increase or a change of leadership.

Gallup reports that about a third of all new employees do not last 90 days on the job, and that organizations lose between one-third and two-thirds of new hires within the first 12 months.

Unclear expectations, thin training, and social isolation in the first weeks produce the same pattern every time: the new hire disengages before the job has really started. The ramp that follows is long: about eight months to full productivity in the Harvard Business Review research SHRM cites, and 12 months or more to get fully up to speed in most jobs on Gallup's longer estimate. That is why a bad first week is never only a bad first week.

Manager quality drives most of the variation between teams

The direct manager is where the research concentrates. Gallup puts at least 70% of the variance in engagement scores across business units on the manager, and in a survey of 7,272 US adults one in two said they had left a job at some point in their career to get away from theirs.

At a small business this is both the hardest thing to get right and the most important. Founders promote their strongest individual contributors into management without training them, and end up with technically excellent managers who were never taught to set expectations, give feedback, or develop anyone.

Investing in manager effectiveness returns more in retention than most other interventions, even when the investment is just one structured monthly 1:1 cadence with a clear feedback framework.

Is High Turnover Always Bad?

High turnover is generally harmful, but context matters. Several specific scenarios produce elevated turnover rates that are structurally normal or even strategically intentional.

Seasonal work carries a baseline that has nothing to do with organizational failure. In the JOLTS 2025 averages, total separations annualize to about 67% in leisure and hospitality and 46% in retail trade.

Startups in rapid scaling phases produce hiring mismatches, because roles evolve faster than the job descriptions they were written against. Performance-managed departures, deliberately exiting people who were never going to work out, can strengthen a team even as they raise the turnover number.

Short tenure is not a verdict either. BLS reports that median tenure with a current employer was 4.1 years in January 2026 across all wage and salary workers, and 3.9 years in the private sector. A team whose people move on after about four years is sitting at the national median, not failing at retention.

The useful distinction is between regrettable turnover (losing employees you wanted to keep) and non-regrettable turnover (performance exits, role mismatches, or structural seasonality). Track both separately. If your total turnover is 25% but 10 percentage points of that is deliberate performance management, your actual retention problem is 15%, not 25%.

What High Turnover Actually Costs Small Businesses

Replacement cost estimates vary widely because companies rarely track the full picture. According to Gallup (2019), replacing one employee costs one-half to two times that employee's annual salary, and Gallup calls the range a conservative estimate. Across the whole US economy, it puts the price of voluntary turnover at about $1 trillion a year.

Gallup does not break the range down by role, and in my experience the split is the obvious one. A frontline replacement lands near the bottom of it, a technical hire lands in the middle, and a manager who spent two years learning the business lands at the top or past it.

These figures include direct costs (job posting, recruiter time, background checks, onboarding expenses) and indirect ones: manager hours diverted into hiring, work redistributed across everyone who stayed, and output lost while the replacement ramps. SHRM, citing Harvard Business Review research, puts the time for a new hire to reach full productivity at about eight months.

Run the same arithmetic on your own payroll: average salary times last year's departures, then times one-half and times two. That range is roughly what turnover costs you in a year, and it is the number to keep in view while you decide which retention problem to fix first.

How to Reduce High Employee Turnover

Reducing high turnover requires diagnosing the root cause first. The strategies below are ordered by return on investment for small businesses, not by how frequently they are recommended in generic HR content.

1. Fix the onboarding process first

If your 90-day turnover rate is elevated, start here before anything else. According to a 2007 study reported by SHRM, a new hire who completed a structured onboarding process is 58% more likely to still be with the company three years later.

That 58% is the whole case for treating onboarding as retention work rather than a paperwork exercise. At a small business it is also the highest-leverage change available, since the cost is a process you build once, not a raise you pay every month.

The minimum viable onboarding process for a small business has four parts: a pre-boarding sequence before Day 1, a structured first week with daily check-ins, a written 30-60-90 day plan with measurable goals, and formal reviews at Day 30, 60, and 90.

That list is why I built FirstHR the way I did. An owner running onboarding without a dedicated HR person needs the sequence to run itself, not another checklist to remember.

2. Conduct structured exit interviews

Exit interview data is the most reliable signal available for diagnosing turnover causes. The problem is that most small businesses either skip them entirely or run them so informally that the answers cannot be used.

A structured exit interview with five consistent questions, asked by someone other than the direct manager, produces patterns over time that reveal whether turnover is driven by management, compensation, role fit, or culture.

Log the answers in a spreadsheet, and after ten exits the root cause will be obvious. Put the exit reasons next to your onboarding metrics as well, so you can see whether people leave in the first 90 days or later on.

3. Conduct stay interviews before exits happen

Stay interviews ask current employees what keeps them and what might cause them to leave. Unlike exit interviews, they provide data while you can still act on it.

The format is a 30-minute quarterly conversation between each manager and each direct report, built on four questions: what do you look forward to each day, what are you learning, what could make you leave, and what would make this a better place to work? The answers are almost always more actionable than any annual engagement survey.

4. Audit manager effectiveness

If voluntary turnover is concentrated in specific teams or departments, the manager is the most likely variable. A simple audit: compare turnover rates by manager over a rolling 12-month period. If one manager's team shows 30% turnover while another's shows 8%, the problem is not compensation or culture. It is management practice. Address this directly with coaching, clear expectations, and if necessary, a management transition.

5. Map compensation to market data annually

Pay that has quietly fallen behind the market surfaces in exit conversations long after it started slipping. A small business that cannot match large-company salaries across the board can still make targeted market-rate adjustments for the roles most at risk, alongside honesty about the rest of the package: flexibility, growth, and equity where it applies.

The benchmark itself is free. The Bureau of Labor Statistics Occupational Employment and Wage Statistics survey publishes wage estimates for roughly 830 occupations nationally, by state, and by metropolitan area. The current release covers May 2025.

6. Build visible career paths

Advancement matters more to people than most owners assume. According to SHRM, 72% of workers call career advancement very or extremely important while only 43% are very or extremely satisfied with what their employer offers. That gap is where people start looking.

A small business with a flat structure cannot manufacture promotion ladders, so the substitute is explicit skill development conversations: quarterly discussions about what someone wants to learn, what they could take on next, and what the step after this role actually looks like. Those conversations cost nothing, and they blunt the belief that development requires leaving.

Whichever of these six you tackle, start from the numbers. Fill in the worksheet above and look first at your 90-day rate and your rate by manager: those two cuts tell you whether the fix is onboarding or one specific team.

Frequently Asked Questions

What is considered a high turnover rate?

Above 20% a year is the rule of thumb, and no published source sets a threshold. The figures that are published come from BLS JOLTS: 3.3% of employment a month in total separations across 2025 and 2.0% in quits, which annualize to roughly 40% and 24%. For a voluntary rate in a lower-churn industry such as finance or information, under 10% is healthy and above 30% is urgent. In retail or hospitality every one of those lines moves up.

What is a high turnover rate for a small business?

There is no clean small-business figure. JOLTS sizes by location, not by company, and the Census firm-size series uses its own quarterly formula, so use your industry row and your own prior year instead. What changes at this size is the arithmetic: losing two people out of ten removes a fifth of your capacity for the year, and Gallup prices each replacement at one-half to two times the salary that walked out the door.

How do you calculate employee turnover rate?

Divide total departures by average headcount, then multiply by 100. Annual example: 5 departures at a 25-person company = (5 ÷ 25) × 100 = 20% turnover rate. Work out the average headcount as (beginning headcount + ending headcount) ÷ 2. Track voluntary and involuntary departures separately, so you can tell employee satisfaction issues apart from performance management decisions.

What causes high employee turnover?

Six causes come up over and over: weak management, no visible growth path, poor onboarding, pay below market, schedules people cannot plan a life around, and a culture nobody recognizes. Gallup puts at least 70% of the variance in engagement scores on the manager. SHRM reports 72% of workers calling advancement important against 43% who are satisfied with what they get. Gallup puts about a third of new hires out the door before day 90. Onboarding is the one to fix first at a small company.

Is high turnover always bad?

No. In the JOLTS 2025 data, total separations in leisure and hospitality annualize to about 67%, and that is the industry running normally rather than failing. Performance-managed exits strengthen a team while raising the number. Short tenure proves nothing on its own either: BLS put median tenure with a current employer at 4.1 years in January 2026, and 3.9 years in the private sector. The distinction worth tracking is regrettable against non-regrettable.

How much does high employee turnover cost?

Gallup puts replacement at one-half to two times annual salary and calls that conservative. A 25-person company paying $55,000 on average with 20% turnover loses five people, a departing payroll of $275,000, and a replacement bill of $137,500 to $550,000. Gallup prices US voluntary turnover at about $1 trillion a year. Running the same numbers on your own payroll takes about five minutes.

Why is high turnover bad for a company?

Five effects compound: replacement cost, output lost while someone ramps, institutional knowledge leaving, the doubt it plants in everyone who stayed, and customer relationships that go with the person who held them. SHRM, citing Harvard Business Review research, puts full productivity for a new hire at about eight months. At a small company each of those lands harder, because every departure is a bigger share of both capacity and memory.

Is 20% turnover rate high?

It depends on the industry. The JOLTS quits rate ran 2.0% a month across 2025, about 24% annualized, so 20% voluntary sits under national churn before you adjust for anything else. In leisure and hospitality, where quits annualize near 47%, it would be excellent. In finance and insurance, around 16%, the same number is a problem. At 20% a 20-person company replaces four people a year at one-half to two times salary each.

What is the difference between voluntary and involuntary turnover?

Voluntary means the employee decided: resignations and retirements. Involuntary means the company did: terminations and layoffs. Preventability sits almost entirely on the voluntary side: in a Gallup survey fielded in November 2023, 42% of voluntary leavers said their manager or their organization could have prevented their exit. Nationally JOLTS reports both: 3.3% of employment a month in total separations against 2.0% in quits. Track them apart.

How does onboarding affect employee turnover?

Onboarding decides most early-tenure turnover. Gallup reports about a third of new employees gone before day 90 and one-third to two-thirds gone inside a year, with only 12% of employees strongly agreeing that their organization does a great job of onboarding. A 2007 study reported by SHRM found that a structured process leaves a new hire 58% more likely to still be there after three years. It is the highest-return retention work a small business can do.