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attrition rate blog

Your company’s success is dependent on the retention of its workers, and the attrition rate is the HR metric that gives you insight into how well you are doing in this regard.

Understanding and measuring your business’s attrition rate can enable you to identify how many workers left your company over a certain time, as well as the reasons for their resignation. Afterward, you may create appropriate and effective retention tactics to help your company decrease attrition and save money on employee turnover.

In this article, we want to understand better what attrition is and why it varies from other types of employee turnover. The method by which you may determine the staff attrition rate, the most frequent reasons for employee turnover, and how to avoid it will all be discussed.

Related articles:
HR Measurement: Everything You Need To Know About HR Metrics
Employee Experience: Everything you Need to Know

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Attrition Rate: What Does it Mean?

A definition of employee attrition is the unexpected and uncontrolled, but natural, decrease in the workforce as a result of resignations, retirement, illness, or death. A staff attrition rate is a measure of the number of individuals who leave a business and are not replaced by other employees.

Attrition vs. Turnover: Which is More Common?

Attrition and turnover are two terms that are often used to mean the same thing. There’s a significant distinction between attrition and turnover, even though both occur whenever an employee quits a business. The business takes every attempt to replace a lost employee in turnover situations. Still, in attrition situations, the vacancy is left vacant, or the company eliminates the job.

Attrition rates provide insight into the effectiveness with which you are keeping your talent pool. Having a high attrition rate, for example, suggests that your workers are often departing; conversely, having a low attrition rate suggests that your staff are staying for longer durations.

Employers often strive for a low attrition rate because it indicates that their employees are happy and that they do not have to spend time and money on recruiting and training new workers.

Why Is Employee Attrition Important?

It is critical to have a complete understanding of your staff attrition rate in order to determine where your business is in terms of applicant retention. For example, suppose you discover that your employee turnover rate is high. In that case, it may indicate that you are not offering enough perks or the best possible work environment to retain your top-performing workers.

It is possible to discover the issues that need to be addressed in order to prevent your workers from leaving your company by studying and evaluating your attrition rate.

The failure to handle a high attrition rate will have a detrimental effect on your company’s bottom line. Consider the following:

  • Profit loss – losing an employee may be costly financially and emotionally, especially if your best performer decides to quit. Experts estimate that in terms of turnover and retention that it costs 150 percent of the employee’s basic pay to replace an employee.
  • Productivity loss – take this example: On average, it takes 43 days to recruit a software engineer, resulting in a productivity loss of almost a month and a half. That doesn’t even take into account the time spent onboarding. If you do not act quickly, it may cost you up to $33,251. Better yet, you can act proactively instead of reactively in order avoid these costs.
  • Creating bottlenecks – when an employee leaves, they take all of their expertise with them, and you can’t place a financial value on what they left behind. Bringing new employees up to speed takes between one and two months on average. Therefore, this gap must be closed. It’s unavoidable that this will result in bottlenecks unless you urge your top workers to take on more responsibilities and go above their normal capabilities.

How to Calculate Attrition Rate of an Employee

Calculating attrition rate is simple. Attrition is defined as a reduction in the size of a workforce as a consequence of workers leaving or retiring from their positions within the company. You calculate it by dividing the number of full-time workers who have left the company each month by the average number of total employees and multiplying the result by 100 to get a percentage.

Different Types of Attrition

There are many kinds of employee attrition. Identifying and analyzing them may give you some idea why you are losing workers and whether or not you need to take steps to increase engagement in your organization. Several types of attrition rates include but are not limited to:

  • Voluntary: The term “voluntary” refers to when an employee decides to quit a business of their own will. Employees may leave for personal issues, such as caring for a family member or any other cause.
  • Involuntary: When a business decides to terminate the employment of one of their employees, this is called involuntary This often occurs when companies remove jobs to cut personnel expenses or because the role is no longer required. For many businesses, labor cost management is a typical method of keeping expenses under control.

  • External: An employee’s departure from one business to work for another constitutes as an “external” termination of employment. Ordinarily, this occurs if an employee is presented with the option of accepting a job that better matches their professional goals, financial needs, or a shorter commute time.
  • Internal: If an employee accepts another job inside the same business, whether to work in a different department or has earned a promotion, this is internal attrition.

What Causes High Attrition Rates?

Every time a firm replaces an employee, the Society for Human Resource Management (SHRM) estimates that the company will incur a cost of between 6 and 9 months of pay. So, businesses strive to reduce their attrition rates to a minimum.

Identifying the factors that are driving your workers away from your business is critical in this process. The following factors, when lacking, can contribute to unwanted employee attrition:

  • Employee Compensation: Workers who believe they are not being compensated fairly are more likely to quit your business if they get a better salary offer from a competing organization. To improve employee retention, a program of annual salary raises may be implemented.
  • Recognition: Employee recognition, according to Gallup, is a “low-cost, high-impact exercise.” However, only a small number of employers consider this, and the vast majority of workers do not feel valued at their places of employment. Employee morale and retention are undoubtedly affected as a result.
  • Career Advancement: When it comes to keeping excellent workers, the ability to advance in their careers is critical to their retention. If high-potential workers feel trapped in their present position, they are more inclined to seek career development possibilities in other organizations.
  • Good company culture: Creating a positive, people-centered company culture is critical to keeping your most qualified workers. It’s also critical to employ for cultural fit and bring in the right individuals from the start.
  • Stress Management: Employees who are often overwhelmed by their tasks or subjected to high-stress levels at work are more likely to leave their jobs than others.

How to Minimize Attrition Rates?

Here are a few important measures to follow in order to increase employee retention and lower the attrition rate at your company:

Recruit and Employ the Best Candidates

It is possible to improve employee retention and reduce attrition rates by hiring the best individuals for your organization. In order to evaluate whether or not a candidate is an appropriate match for your business and for the position to which they are applying, evaluate their skill set as well as their core values. They should align with the position you are looking to fill as well as the company’s values.

Competitive Benefits & Pay

Employees consider being properly compensated as being one of the most important elements of their work. Consider providing a competitive pay strategy as well as attractive perks to attract and retain top-performing employees. Offering your workers the ability to be flexible is one of the most valuable perks you can provide. Allow them to choose their hours and work from home a couple of days a week or once a month if they want to.

Boost Staff Morale

The level of employee happiness is also critical for long-term employee retention. Remember to maintain employee engagement. About a frequent basis, ask them for their thoughts about their management team or the workplace. It is important to establish a pleasant atmosphere where they feel appreciated and listened to.

Employees Should be Recognized

Ensure your employees know when they are performing well and express your appreciation for their efforts whenever feasible. They will be more driven and dedicated to their jobs if they feel valued.

Possibilities for Professional Advancement

Seeing that their employer is interested in their development and offers them the chance to achieve personal, professional objectives while also contributing to the company’s purpose will help your workers feel more motivated and confident. Implementing clear and appealing career paths may also directly affect the whole organization, as it can improve morale, career satisfaction, motivation, while simultaneously increasing productivity.


A high attrition rate is an issue that many companies deal with at some point or another. Before bringing on new employees, it is necessary to address the root causes of the attrition to prevent high recruiting and training costs.

The most effective approach for controlling attrition is to fine-tune your HR practices such as confirming cultural fit, empower employees in the workplace, offer competitive perks and recognize good performance and employee strengths.

Why wait to customize your HR ecosystem?

There’s no better time to explore the PeopleSpheres platform. Zero obligations.

Free trial

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