Attrition Rate Formula
15 minutes read

Attrition Rate Formula

In this blog, we will discuss the following topics on the attrition rate formula. 

What is the Attrition Rate?

The attrition rate is the rate of employees leaving the company over a period of time due to various reasons such as resignation, termination or others. That is also known as the ‘Employee Churn Rate’ or ‘Employee turnover’.

What is Attrition Rate Formula?

The formula to calculate attrition rate is: Average number of employees (manpower) who left the organisation divided by the average number of employees multiplied by 100.                                  

 

                                 Average Rate (%) = No. of employees who left the organisation * 100

                                                                      Average No. of employees                    

                                                             

Note: Calculation of Attrition will not measure the retention or turnover rate — it only measures how quickly and efficiently an organisation can replace the employee who has left the organisation.

How to Calculate Attrition Rate?

To calculate the attrition rate, measure the rate at which employees are left over a specific period of time, involuntary or voluntary.

Then count and calculate the number of churned employees divided by the average number of employees, multiplied by 100.

 

For example – At the beginning of the year, you had 100 employees. But over time, your number of employees has increased by 50. Then the total number of employees will be 150. But in total, 15 employees left the organisation.

The number of employees who left the organisation will be divided by the average number of employees for the period.

Average Rate (%) = No. of employees who left the organisation * 100

                                                         Average No. of employees                    

              = 15/150* 100

     = 0.1*100

        Attrition Rate = 10%

Difference between Attrition Rate, Retention Rate and Employee Turnover

The following are the differences between attrition rate and retention rate.

Attrition Rate

Retention Rate

Attrition measures the percentage of left employees.It measures the percentage of remaining employees who are employed over a specific period.
Attrition shows the actual percent of people who have left the organisations.Retention is complex metrics, on its own, but it doesn’t show all data of the organisation.

Attrition shows what the actual means for the company because attrition measures the strengths of the employees. But, retention shows how many employees are leaving.

 

The following are the differences between attrition rate and employee turnover.

Attrition 

Employee Turnover

Attrition is a long term issue.Turnover is a short term issue.
It focuses on how many employees are leaving over a period of time and try to analyse with strategic thinking and then solve the problems.It focuses on quick solutions that try to hire new employees and fill the gap temporarily or permanently.

Types of Attrition

There are five types of attritions –

  • Voluntary attrition

Voluntary attrition is when an employee leaves the organisation of their own wish due to various reasons, such as personal reasons, lack of benefits or any other reason. Also, when an employee takes voluntary retirement, that is called natural attrition. Usually, every organisation has to face a high rate of early retirement.

For example – An employee may be moving from one place to another place which could be difficult to communicate or contact the employer or have physical issues and other reasons.

  • Involuntary attrition

Involuntary attrition is when an employer fires an employee from their current position in the organisation because of their poor performance, violation of workplace policy, dispute with another employee etc.

  • Demographic attrition

Demographic attrition is when an employee leaves the organisation due to several reasons, such as harassment and racism at the workplace, where an employee gets a certain demographic group of people marginalised because of lack of involvement. These sorts of periods of time affect the organisation more.

  • Internal attrition

Internal attrition is when an employer transfers the employee from the employee’s current position to another position within the organisation. But, not firing from the company or employee is not leaving permanently. This transfer can be a promotion or demotion and transfer to a different department. Importance of attrition rate.

When Should You Focus On Employee Attrition?

There are the following points where You should focus on employee attrition when –

  • Increase in lack of performance – where you can create a framework to develop the employee’s performance and with a footprint of the organisation.
  • Poor company culture – Here, you can focus on upgrading your cultural value.
  • Productivity issues – Are there any tools that you can help employees to focus on their work?

What is a high attrition rate and causes?

As per the average rate, if the rate is more than 20 percent,  then it will be considered a high attrition rate. And it is different from the industries that try to make effective and productive research to observe and compare the companies’ attrition rate to similar companies. So, if the rate is over 20 percent in any given year, then it is the induction that you need to observe what improvement you need. And what’s wrong you are doing? It is a good rule to measure the productivity of your company.

There are several factors that measure the causes of high attrition.

  • Stress

Nowadays, work stress is a big issue for individuals as well as for organisations, which affects the health and wealth of the employees and increases the risk of turnover of the organisation.

  • Work and company culture

A toxic work and company culture badly affect, and there will be a higher chance of attrition than compensation.

  • Pay

Paying fair wages to the employees for their work is one of the essential things that keep your employees with your organisation. That prevents you from high attrition.

  • Appreciation

Timely appreciation, motivation and recognition for their work when they don’t get timely then employees can not stay in one place and start to look elsewhere. So, it is necessary to motivate and appreciate your employees. This recognition and apparition can help you to prevent the organisation from high attrition.

  • Development and growth

Usually, people don’t want to be stuck in one place (one position), and they give more priority to development. If an employee is in the same position, then they start to look elsewhere. So, if you invest in employees’ careers, then they can stay longer in the company.

How can you reduce high attrition rates?

There are the following practices, that will help you to reduce the high attrition rate –

  • Be proactive and plan accordingly

A better plan and timely implementation that considers employer and employee needs and can prevent attrition. But, before that, you need to adopt the nature of market research and collect the data to plan and implement accordingly for every type of employment in the organisation so that other members can work independently. Also, be proactive with employees to know where people are. Because regular conversation will help you to reach and identify the real issues of the organisation and employees.

  • Prepare accurate data

From time to time, try to figure out your attrition rate and check if it is too high or low and then prepare your accurate data accordingly. Due to a lack of engagement with employees, interaction and customer difficulties connected with products can increase your turnover or attrition. You see the data to the stakeholder in those departments and start conversations and figure out how we can improve and remove the barriers and roadblocks and others.

  • Retain people talent with learning

You can focus on influential and essential employees and engage with them for your organisational growth. You can increase the value of employees by giving them good opportunities, benefits, good packages, and professional & personal growth. Also, you can establish your organisation based on trust, opportunity and respect for the employees.

  • Focus on communication

Regular communication can build your trust with employees, open the doors to getting information when they are facing issues and what kinds of, and helps you to focus on solutions and increase the regular interaction with your team.

  • Warm offboarding

It is one of the essential points where you send off departing to the employee with gratitude and wishes for the next step of professional life. This offboarding program allows employees to leave at a good term. This way, you can keep the door open for the employees to return back.

This brings us to the end of our discussion on the attrition rate formula. Let us know if you have  any other questions and opinions on this topic. Mention the comment box below.

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