September 12, 2023

Attrition Rate

Attrition Rate Meaning

Attrition rate is a measure of the number of employees that have voluntarily or involuntarily left an organization within a specific period but are yet to be replaced. The employees may have departed through retirement, resignation, termination, promotion or personal reasons. Human resource experts use the attrition rate to identify the number of eliminated or vacant positions.

The attrition rate is often expressed as a percentage. It is calculated by dividing the number of workers that have exited the business by the total workforce and multiplying by 100.

The attrition rate differs from the turnover rate in that it is focused on tracking the semi permanent or permanent loss of positions and employees over time and how this loss affects the company’s performance.

A high attrition rate is not an entirely negative metric. Each time a worker leaves, the company saves on employment costs. However, this may come with increased workload as the job function is distributed to remaining employees. It may also indicate weakness in the business’ people strategy. That is in addition to the high cost associated with recruitment if the organization decides to hire a replacement.

There is no universal standard for an acceptable attrition rate. Also, it may vary by industry. Still, anything above 20 percent should warrant investigation. High attrition rates may be caused by low pay, quest for career growth, toxic company culture and a stressful work environment.

The attrition rate can help companies identify ways to keep productive employees, track employment longevity and hiring costs. It may be calculated monthly, quarterly or annually. Businesses can manage their attrition rate by:

  • Allowing different forms of employment such as full time employees, part time workers and independent contractors.
  • Focus on keeping the most essential and influential employees.
  • Keep the door open for high quality workers to return.

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