Employee attrition may be tied to staff turnover, but the two are quite different in how they work, how they’re measured, and what they say about the health of an organization. From a basic definition to the types of employee departures that impact the measurement, find out what you need to know about employee attrition.
Employee attrition is a staffing metric that determines the natural rate of team member departure within a given organization. In these cases, when an employee leaves the company, their position isn’t filled or replaced by a new hire.
A good attrition rate is typically low, as it indicates that the company is growing by adding new positions or filling vacancies instead of eliminating a position altogether. Meanwhile, a bad attrition rate is typically high.
However, according to Continu, it’s more important to understand the underlying trends associated with attrition than the rate itself. For example, if a company had a very low attrition rate in the first quarter of the year but a much higher rate in the middle two quarters, this could be cause for concern.
Attrition calculates the rate of employee departures that aren’t replaced by new hires. It’s typically used to measure a staff’s growth over time.
On the other hand, staff turnover calculates a company’s rate of replacement when employees depart the organization. Employers use turnover to measure how well they can retain team members over time.
To calculate employee attrition rate, take the total number of employees who departed in a specified time frame and divide it by the average staff size throughout that same time frame.
For example, if your company had 26 people leave in 2020, began the year with 238 employees, and ended the year with 214 employees, the employee attrition rate would be calculated as follows:
In this example, the employee attrition rate would be 11.5%.
There are several different types of departures that impact an organization’s attrition rate. These can include:
Attrition can be voluntary and involuntary. For example, an employee who decides to retire would be considered voluntary while layoffs would be considered involuntary.
In many ways, employee attrition is a measure of the growth of an organization. As a result, there’s no single solution that will “fix” a high attrition rate. In fact, a higher attrition rate may mean that the company is able to remain financially solvent—e.g., if an employer must downsize to stay in business.
With this said, employers can streamline certain processes that make their operations more efficient—and possibly improve the growth of their company. These can include: