Employee turnover rate is calculated as which of the following formulas?

Employee turnover rate is calculated as which of the following formulas?

• A. (Average number of employees / persons hired per year) x 100
• B. (Persons hired per year / average number of employees) x 100
• C. Persons hired per year divided by average number of employees
• D. Average number of employees divided by turnover rate percent

Answer: (B)

Turnover rate measures how much of the workforce is being replaced in a given period by looking at how many new hires occur relative to the size of the existing staff. The best formula expresses the number of hires during the period as a percentage of the average number of employees, by dividing hires by the average headcount and multiplying by 100. This shows what portion of the workforce is brought in during the period, giving a clear sense of replacement activity. Other approaches don’t fit this goal. Using the average number of employees in the numerator changes the meaning to something like the inverse of turnover, not the rate of new entrants. Omitting the multiplication by 100 stops us from expressing the figure as a percent. And a formula that would divide the average by turnover rate would be circular—relying on the very metric you’re trying to calculate.

Turnover rate measures how much of the workforce is being replaced in a given period by looking at how many new hires occur relative to the size of the existing staff. The best formula expresses the number of hires during the period as a percentage of the average number of employees, by dividing hires by the average headcount and multiplying by 100. This shows what portion of the workforce is brought in during the period, giving a clear sense of replacement activity.

Other approaches don’t fit this goal. Using the average number of employees in the numerator changes the meaning to something like the inverse of turnover, not the rate of new entrants. Omitting the multiplication by 100 stops us from expressing the figure as a percent. And a formula that would divide the average by turnover rate would be circular—relying on the very metric you’re trying to calculate.