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I am a long term employee (read 5+ years) at a smaller software startup company and have been with them from the start. Currently, the company has between 40 and 50 employees.

I am aware that a high turn over rate is an indicator of a problem with the (management of the) company; I have also been with this company since the start so I am afraid I might be the proverbial boiling frog. In its early days, the company has enjoyed a very low turn over rate (possibly due to its small size,) but in the last couple years there has almost been as many employees that have left, a lot of which are the new hires, but some of them are key members that have established much of the ecosystem of tools that we currently use.

To give numbers, there have probably been 10-15 hires in the past two years with almost as many people leaving. Is this considered normal for a company this size, or is this a red flag I should be concerned about?

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    Turnover rate is dependent on so many factors, it absolutely cannot be used as an indicator of "problems" - at least not in a vacuum. I've been at companies with 90%+ 6 month turnover rates that were great places to work, and other companies that were terrible yet hadn't lost a single person in two years. If you're concerned about issues, look for the actual root issues, don't just look at possible symptoms and then decide there must be an issue. – dwizum Mar 6 at 14:07
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    @dwizum you should post this as an answer. I 100% agree with you. – Dustybin80 Mar 6 at 14:18
  • @dwizum I'm not simply interested in whether my company is a great place to work for new hires as well as myself, although this is important to obviously have good retention. I have a vested interest in the company succeeding (read I have stock,) and people with a lot of domain knowledge leaving takes away from the productivity of the company, slowing us in comparison to competitors. Also with every new hire there is a massive onboarding cost due to the cost of learning our technology. This is what concerns me more. – tripletriple Mar 6 at 14:42
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    @tripletriple have you tried contacting former colleagues and directly asked why they left? Would definitely lead to a concrete answer. – user1666620 Mar 6 at 15:01
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    tripletriple - I still contend that turnover itself is not a good indicator of a company's health, and I think you're making a pessimistic conclusion. An optimistic conclusion in your situation might be, "we are going to suddenly have fresh eyes on old problems, we should experience a period of creativity and growth now that we've had some turnover." – dwizum Mar 7 at 18:46
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Average lifetime of an employee in a company in the IT sector is about 18 months to 2 years.

It's a mobile jobs industry, and the best way to increase your pay, particularly in the first 10 years, is to change jobs. I've almost tripled my pay over the last 6 years by doing just that.

Not only that, changing companies also leads to exposure to new technologies, which is a great way to build career security. Job security is dead.

So you need to look at the people who have left and see if they were in the company for more than a year before leaving for greener pastures. Also check if the departures were clustered, as that could indicate a toxic work environment.

However, the only way to go down out why your former colleagues left the company is to actually ask them, otherwise you are just playing the guessing game.

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    Do you know if there is finer granularity data out there on types of employees in the IT sector? I'm curious as gaming development companies are notorious for "burn and churn" philosophy whereas I've known whole IT departments in non-IT companies that are 10 year+ employees. It's a pretty diverse group to lump together. – Myles Mar 7 at 15:10
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Peopleware, a great book on software team management make the case that high turn-over is absolutely terrible and it's, broadly speaking, a function of corporate culture. It basically comes down to building a culture of "modularity" where management operates on the assumption that developers are interchangeable. The idea you could lose a dev who knows all your systems and has a deep working understanding of the business and somehow there'd be no loss.

This is folly. In short, organizations have key people. When you replace them you lose value because what is valuable is the knowledge and with the people, you lose the knowledge and expertise when they leave. Some industries, can take as much as TWO YEARS to onboard a developer fully.

People will say that high turn over is "normal" the authors of Peopleware would likely argue it's symptomatic of an issue of poorly trained managers who see developer salaries as an expense, rather than an investment.

You definitely want to keep turnover low, because then you can also, get teams to gel. When teams gel, they tend to be extraordinarily productive.

One of the examples they give for a perfectly gelled team, is the Black Team QA from IBM.

So the answer to op's question:

What turn over rate is acceptable...

The lowest you can get while also rewarding and investing in your team.

EDIT: Grammar and spelling

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