How to Calculate Employee Turnover and Productivity
Learn how to calculate employee turnover and employee productivity in A Level Business, with clear formulas, a worked example and a common exam mistake to avoid.
Employee turnover is the percentage of employees who leave a business during a period. Employee productivity is the amount of output produced per employee during a period. Both measures need a stated time period so the results can be interpreted correctly.
Employee turnover
Calculate turnover by dividing the number of employees who left by the average number employed, then multiplying by 100100100:
Employee turnover (%)=Number of employees who leftAverage number of employees×100\text{Employee turnover (\%)}=\frac{\text{Number of employees who left}}{\text{Average number of employees}}\times 100Employee turnover (%)=Average number of employeesNumber of employees who left×100If you are given employee numbers at the start and end of the period, you can calculate their average by adding them and dividing by 222. If a question specifies a different workforce figure to use, follow the figure given. The number who left is not the same as the change in employee numbers: a business can recruit replacements and still have a high turnover rate. Count leavers over the whole stated period, even if the workforce grew overall.
Employee productivity
Divide total output by the number of employees who produced it:
Employee productivity=Total outputNumber of employees\text{Employee productivity}=\frac{\text{Total output}}{\text{Number of employees}}Employee productivity=Number of employeesTotal outputState the units and period in your answer, such as units per employee per month. Where employee numbers change during the period, use an average if the question asks you to or provides enough information to calculate one.
Worked example
Suppose a business starts the year with 909090 employees, ends with 110110110, and 121212 employees leave during the year. It produces 5,0005{,}0005,000 units in that year. Its average number of employees is (90+110)÷2=100(90+110)\div 2=100(90+110)÷2=100.
Employee turnover is (12÷100)×100=12%(12\div 100)\times 100=12\%(12÷100)×100=12%. Employee productivity is 5,000÷100=505{,}000\div 100=505,000÷100=50 units per employee for the year. Here, using the average workforce for productivity assumes it reasonably represents staffing throughout the year. If the question gives a specific number of employees for the output figure, use that number instead and make your basis clear.
Common mistake: Do not divide the number who left by output when calculating turnover. Turnover concerns employees leaving; productivity concerns output per employee. A higher turnover percentage also does not, by itself, tell you why employees left.
