What Is a Good Turnover Rate? Industry Benchmarks
A good employee turnover rate is 10% or below annually. See benchmarks by industry and company size, plus the calculation formula and strategies to reduce turnover.
What Is a Good Turnover Rate?
Industry benchmarks, how to calculate your rate, and what small businesses can do when turnover runs higher than average.
Benchmarks and Context
Whenever I look at a turnover figure, I want to know what it is being compared to, because one benchmark rarely settles the question. If you are running a small business and wondering whether your turnover is normal, here is the quick benchmark: a good employee turnover rate is 10% or below annually.
That number is a practitioner rule of thumb rather than a published statistic, and it hides enormous variation by industry and by whether you are measuring voluntary or total turnover.
The honest version of the answer has two halves. The rule of thumb tells you what a stable employer looks like, and the federal data tells you what your industry actually does. You need both before your own number means anything.
The national picture is much higher than the rule of thumb suggests. According to the Bureau of Labor Statistics Job Openings and Labor Turnover Survey (2025 annual averages), total separations ran 3.3% of employment every month and quits 2.0%, which annualizes to roughly 40% and 24% across the economy.
That gap is not a contradiction. The economy-wide number counts every separation at every employer, including the seasonal and hourly churn that dominates hospitality and retail. Your own rate is what matters, measured against your industry rather than against the country.
This guide breaks down turnover benchmarks by industry and establishment size, explains exactly how to calculate your rate, and focuses on the specific factors that small businesses can address to improve retention.
What a Low Turnover Rate Means
Low turnover means most of your people stay, which on the usual rule of thumb means an annual rate under 10%. It usually says that pay, management, and expectations are all in reasonable shape, because those three are what push people out first.
There is one caveat worth holding onto. A rate sitting near zero for several years in a row often means nobody is moving in either direction. Weak performers stay because nothing ever forces the question, and no new thinking arrives with new people. Healthy low turnover keeps the people you would fight to keep and still loses a few you would not.
Reading a low number at a small company takes care. At fifteen employees, one departure is nearly 7% on its own, so a quiet quarter proves very little. Look at a rolling twelve months, and look at who left, rather than at a quarterly rate that swings on a single person.
How to Calculate Your Turnover Rate
Before you can know if your rate is good or bad, you need to calculate it accurately. Many businesses get this wrong by using the wrong denominator or mixing up what counts as turnover.
Here is what to include. Count all permanent employee departures: resignations, terminations, layoffs, and retirements. Do not count internal transfers, promotions to different departments, or temporary leaves. For seasonal businesses, calculate turnover on an annualized basis or compare the same periods year over year. Track turnover monthly or quarterly to spot trends early, rather than waiting for annual reviews.
Average Turnover Rate by Industry
Industry context matters more than any single benchmark. A 25% annual separation rate is the norm in finance and insurance and would be remarkable in a restaurant, where the leisure and hospitality figure is 67%.
The rates below come from the Bureau of Labor Statistics Job Openings and Labor Turnover Survey, annualized from the 2025 annual average monthly rates for total separations and quits. Separations count every exit. Quits count only the people who chose to go, which is the half of the number you can actually influence.
| Industry | Total separations, 2025 | Quits, 2025 |
|---|---|---|
| Leisure and hospitality | 67% | 47% |
| Professional and business services | 55% | 28% |
| Construction | 48% | 22% |
| Retail trade | 46% | 31% |
| Health care and social assistance | 35% | 24% |
| Information | 34% | 16% |
| Manufacturing | 29% | 17% |
| Private educational services | 26% | 17% |
| Finance and insurance | 25% | 16% |
| Government | 18% | 10% |
Hospitality and retail top the quits column because they lean on hourly workers, run seasonal peaks, and carry low barriers to switching jobs. Finance, insurance, and government sit at the bottom, where roles are salaried, licensed, or tenured and leaving carries a real cost for the employee.
Turnover Rate by Company Size
Size does not work as neatly as the popular advice claims. The BLS breakdown by establishment size, JOLTS Table 7, puts the highest separation rates at establishments of 10 to 49 and 50 to 249 employees and among the lowest at the very smallest and the very largest.
These are monthly rates for the private sector, seasonally adjusted, for August 2026, the latest month published and still preliminary. Multiply by roughly 12 for an annual equivalent. The unit is the establishment, a single physical location, so a nine-person site can belong to a national chain.
| Establishment size | Monthly separations rate | Monthly quits rate |
|---|---|---|
| 10 to 49 employees | 3.9% | 2.5% |
| 50 to 249 employees | 3.9% | 2.3% |
| 250 to 999 employees | 3.4% | 1.9% |
| 1,000 to 4,999 employees | 3.0% | 1.5% |
| 1 to 9 employees | 2.9% | 1.8% |
| 5,000 or more employees | 1.6% | 0.9% |
What size changes most reliably is impact. Losing one person out of 12 removes 8% of your capacity and, usually, the only person who knows how one part of the business works. The same exit at a 1,200-person employer is a line in a report.
What About Startups?
Startups and high-growth companies live with more churn than their headcount suggests, because roles change under people faster than people change jobs. No survey publishes a startup turnover rate, so treat any figure you are quoted as a guess. The goal at this stage is to keep regrettable turnover low rather than total turnover.
Voluntary vs. Involuntary Turnover
Not all turnover is created equal. Breaking down your rate into voluntary and involuntary components tells you much more about your retention challenges than the total number alone.
Voluntary turnover is generally the more concerning category because it represents employees choosing to leave. High voluntary turnover signals problems with compensation, culture, management, or growth opportunities. Involuntary turnover, while costly, is often a sign that you are managing performance appropriately.
The two figures above come from the same 2025 JOLTS averages: quits ran 2.0% a month and layoffs and discharges 1.1%, which annualize to about 24% and 13%. Roughly three in five US separations are people choosing to go.
For small businesses, the voluntary vs. involuntary distinction helps focus your retention efforts. If most departures are voluntary, look at engagement, compensation relative to market, and manager relationships. If involuntary turnover is high, examine your hiring process and onboarding to ensure you are setting new hires up for success.
What Turnover Actually Costs Your Business
Turnover is expensive, and small businesses feel the cost more acutely because each departure represents a larger percentage of the team and institutional knowledge. No single authoritative number exists, so the honest approach is to look at what each credible source actually measures.
| Source | What it measures | Estimate | On a $50,000 salary |
|---|---|---|---|
| SHRM, 2025 benchmarking | Recruiting spend alone, average cost per nonexecutive hire | $5,475 | $5,475 |
| Work Institute | Total cost of one exit, direct and indirect | 33% of base salary | $16,500 |
| Gallup | Cost of replacing the employee, called a conservative estimate | One-half to two times annual salary | $25,000 to $100,000 |
| Consultant quoted by SHRM, 2022 | Total cost to hire, including soft costs such as managers’ time | Three to four times salary | $150,000 to $200,000 |
The spread is real, not sloppiness. Cost per hire is a recruiting invoice: SHRM's 2025 benchmarking puts the average at $5,475 for a nonexecutive hire, and nothing beyond recruiting spend is in it.
The three-to-four-times figure is a talent-management consultant's estimate quoted by SHRM in 2022. It adds soft costs such as the time managers spend on hiring, and the same consultant puts hard costs at only 30% to 40% of the total.
The multiple climbs with seniority. Gallup describes one-half to two times annual salary as a conservative estimate, and in a separate estimate it puts replacing a leader or manager at around 200% of salary, a professional in a technical role at 80%, and a frontline employee at 40%.
For a 20-person company on average $50,000 salaries losing four people a year, the Gallup range puts annual turnover cost between $100,000 and $400,000. Gallup does not itemize that range, but in practice the cost arrives as recruiting, interviewing time, training, lost output during the vacancy and ramp-up, and the knowledge that walks out with each person.
Hidden Costs Small Businesses Miss
The direct costs of recruiting and training are obvious. But small businesses often miss the hidden costs: remaining team members picking up extra work, customer relationships that weaken when their contact leaves, the time you personally spend interviewing instead of running the business, and the cultural impact of watching colleagues leave.
On a small team, losing two people in the same quarter is not just expensive. It changes the entire dynamic of your company.
The Contagion Effect
Turnover breeds turnover, and on a small team it is visible to everyone. When a respected colleague leaves, the people who stay start asking whether they should be looking too, and the extra work that lands on them while the seat is empty answers the question for them.
That is the argument for treating the first departure as the signal rather than the incident. Waiting to see whether the rate stabilizes hands the decision to everyone else on the team.
Why Turnover Hits Small Businesses Harder (And What to Do About It)
A small employer does not automatically lose people faster, but it feels every loss more. In the federal size-class data the smallest sites, 1 to 9 employees, post one of the lowest separation rates while sites of 10 to 249 run highest, so the disadvantage every small team shares is structural rather than statistical.
The Structural Challenges
Career ceiling effects hit small businesses hard. An ambitious employee at a small company has limited advancement options. Benefit gaps are real: competing with Fortune 500 health insurance and 401(k) matching is difficult on a small business budget.
Management bandwidth is limited, meaning problems that would get caught early at larger companies can fester. And every departure has outsized impact because there is no bench depth to absorb the loss.
The Small Business Advantages
Small businesses also have retention advantages that larger companies cannot replicate. Close-knit culture creates genuine relationships, not corporate anonymity. Direct impact visibility lets employees see how their work matters. Greater autonomy comes naturally when there are fewer layers of bureaucracy. Leadership accessibility means employees can talk to decision-makers directly. And flexible work arrangements are often easier to implement without enterprise-level policy constraints.
Practical Steps for Small Business Retention
Focus on what you can control. Partner with a PEO to buy benefits at a scale you could not reach alone. Implement structured onboarding, because even basic structure outperforms the typical "figure it out" approach. Benchmark pay against national compensation surveys and keep offers within striking distance of market.
Then treat every exit interview as data rather than a formality. At your size the sample is small enough that one honest answer changes what you do next, and flexible scheduling is far easier to grant here than at an employer with a policy manual to amend.
How to Reduce Turnover at Your Small Business
The single most cost-effective way to reduce turnover is not raising salaries. It is fixing your first 90 days.
According to research reported by SHRM, new hires who complete a structured onboarding process are 58% more likely to still be with the company three years later. A separate study SHRM reports found that new hires are 50% more productive when they go through standardized onboarding.
Most employers never get there. Gallup finds that only 12% of employees strongly agree their organization does a great job onboarding new employees, and in a survey of 350 US HR leaders that SHRM reported in 2018, 24% said they have no onboarding program at all. That gap is where small business turnover starts.
The First 90 Days Are Everything
According to research reported by SHRM, up to 20% of all turnover happens within the first 45 days, and in a 2009 Aberdeen Group study SHRM also cites, 86% of executives and HR staff surveyed felt new hires decide within six months whether to stay long term. Gallup puts it more bluntly: about a third of new employees do not last 90 days.
That split tells you where to look. If you lose people early, onboarding is the problem. If they stay past 90 days and then leave, the cause sits with management, compensation, or growth opportunities instead.
The upside is measurable rather than transformational. Gallup finds that employees who had exceptional onboarding experiences are 2.6 times as likely to be extremely satisfied with their workplace, and that employees are 3.4 times as likely to call their onboarding successful when their manager takes an active role in it.
High-Impact Retention Strategies
Notice that compensation is not at the top. Work Institute finds that more than a third of new hires quit within their first year, and the common reasons it lists are unclear job expectations, insufficient onboarding, lack of support from leadership, and mismatched role fit. Pay is not on that list.
That is good news for a small employer. Expectations are set in the job posting, the interview, and the first week, all of which cost nothing to fix and none of which require you to outbid a larger competitor.
The Manager Factor
In a Gallup survey of 7,272 US adults, one in two said they had left a job at some point to get away from their manager. Gallup separately attributes at least 70% of the variance in team engagement scores to the manager.
For a small business that is both a risk and an opportunity. You have few managers, so each one moves your whole number. Investing in manager development, specifically career conversations, feedback, and recognition, reduces turnover without touching the payroll budget.
Exit Interviews Reveal the Real Problems
Every departing employee is a source of valuable data. Ask exit interview questions that uncover systemic issues rather than just individual circumstances. In a small business, each departure is a larger percentage of your sample, so the information matters more. Look for patterns across multiple exits: if three people in a row mention the same manager or the same unclear expectations, you have found an actionable problem.
At FirstHR, we built our platform specifically to help small businesses create structured onboarding experiences that reduce first-90-day turnover. When your employees feel prepared, supported, and clear on expectations from day one, they stay longer.
Frequently Asked Questions
What is a good employee turnover rate?
A good employee turnover rate is generally 10% or below annually, though that is a practitioner rule of thumb rather than a published statistic. The bar moves with your sector: total separations ran 67% in leisure and hospitality in 2025 and 25% in finance and insurance, per BLS JOLTS. Compare against your industry, never against a national average.
Is 20% turnover rate high?
It depends on your industry. Against the 2025 JOLTS annual rates, 20% would be remarkably low for leisure and hospitality at 67%, retail at 46%, or construction at 48%, and on the high side for finance and insurance at 25% or government at 18%. Judge the number against your sector, not against a universal standard.
What is the average turnover rate in the US?
Across the whole economy in 2025, total separations averaged 3.3% of employment a month and quits 2.0%, which annualizes to roughly 40% and 24% (BLS JOLTS). That average is pulled up by high-churn hourly sectors and says very little about any individual employer, which is why the industry table above is the number to use.
How do I calculate my turnover rate?
Turnover Rate = (Number of Separations ÷ Average Number of Employees) × 100. Calculate average employees by adding headcount at start and end of period, then dividing by two. Include resignations, terminations, layoffs, and retirements. Exclude internal transfers and temporary leaves.
What is the difference between turnover and attrition?
Turnover measures all departures including those you backfill. Attrition specifically measures departures you do not replace, resulting in headcount reduction. A company with 15% turnover but 10% attrition is replacing some but not all departing employees.
What is the difference between voluntary and involuntary turnover?
Voluntary turnover is employee-initiated (resignations, retirements, career moves). Involuntary turnover is employer-initiated (terminations, layoffs, performance issues). In 2025 US quits annualized to about 24% of employment and layoffs and discharges to about 13%, so roughly three in five separations were people choosing to leave.
What causes high employee turnover?
Work Institute finds that more than a third of new hires leave inside their first year, and names unclear job expectations, insufficient onboarding, lack of support from leadership, and mismatched role fit among the common reasons. Gallup adds that 42% of people who quit say their manager or organization could have prevented it, and 45% say no manager or other leader proactively discussed their satisfaction, performance, or future with them in the three months before they left.
How much does employee turnover cost?
Estimates depend on what is counted. Work Institute puts the total at 33% of base salary and Gallup at one-half to two times annual salary, while a consultant quoted by SHRM in 2022 puts the full cost to hire at three to four times salary. SHRM's own 2025 benchmarking puts recruiting spend alone at an average of $5,475 per nonexecutive hire.
Why do small businesses have higher turnover?
Not at the smallest sizes. In the JOLTS establishment size breakdown the highest separation rates sit at sites of 10 to 249 employees, while sites of 1 to 9 employees are near the bottom. What changes at every small size is consequence: one exit from a 12-person team removes 8% of your capacity and usually the only person who knows a given process.
How does onboarding affect turnover?
Substantially. Research reported by SHRM finds new hires who complete structured onboarding 58% more likely to stay three years, and puts up to 20% of all turnover in the first 45 days. In a 2009 study, 86% of executives and HR staff felt new hires decide within six months whether to stay. Only 12% of employees strongly agree their employer does a great job onboarding new employees, so the first 90 days is where the return sits.
Is some turnover actually healthy?
Yes. A rate sitting near zero for several years usually means nobody is moving in either direction, so weak performers stay and no new thinking arrives. Functional turnover, where underperformers leave, benefits the organization. The goal is controlled, predictable turnover rather than none at all.
What is a good retention rate?
Retention rate is the inverse of turnover. If turnover is 15%, retention is 85%. On the same rule of thumb, a good retention rate is 90% or above annually. Track retention alongside turnover, and watch retention among the people you would fight to keep rather than the headline number.
Context Beats Benchmarks: What to Actually Track
A good turnover rate is 10% or below annually, but that rule of thumb only means something in context. Compare yourself to your industry column in JOLTS, watch your own trend across four quarters, and separate voluntary from involuntary turnover before you draw any conclusion.
For a small business running hot, the highest-impact investment is not higher salaries. It is structured onboarding. Research reported by SHRM finds people who complete a structured onboarding process 58% more likely to still be there three years later, yet nearly a quarter of HR leaders in a survey SHRM reported in 2018 said they had no onboarding program at all, which makes the first 90 days the cheapest turnover fix available to you.
Remember that some turnover is healthy. The goal is not zero turnover but controlled, manageable turnover where departures are mostly non-regrettable and timing is predictable. Track your rate quarterly, benchmark against your industry, and focus improvement efforts on the factors you can actually control: onboarding quality, manager effectiveness, clear expectations, and regular check-ins with your team.
When you are ready to build an onboarding process that actually reduces turnover, FirstHR can help. We built our platform specifically for small businesses that want enterprise-quality onboarding without an HR department.