Your employees are the heart of your organization.But what happens when employees start leaving your company? That’s where the concept of attrition rate becomes very important.
In this blog, we’ll explain what attrition rate means, why it matters, how to calculate it, and how you can manage it better.
What is Attrition
The word attrition means a gradual reduction or loss. In the business world, attrition usually refers to employees leaving a company over time. These employees may leave for various reasons like:
- Getting a better job
- Relocation
- Retirement
- Personal or health issues
- Not feeling happy at work
So, employee attrition simply means people leaving your company. The rate at which they leave is called the attrition rate.
What is Attrition Rate
The attrition rate is the percentage of employees who leave the company over a period of time. It helps employer to understand how fast or how often employees are leaving.
It is also called
- Employee turnover rate
- Staff attrition rate
- Employee Churn
Types of Attrition
Types of Attrition
1.Voluntary Attrition:- When employee leave the company on their own choice the reason may be he got better job or relocating in the new city or etc.
2.Involuntary Attrition :- When Company ask employee to leave the organisation for example if employee is not performing well then company ask to leave the employee or due to any structural change of layoff or company downsizing, company ask employee to leave.
3.Retirement Attrition :- There is certain age where employees are not allowed to work in the organisation that is retirement age.
4.Internal Attrition :- When employee leave the one department and join to another department within the company is called Internal Attrition.
5.Desirable vs. Undesirable Attrition :- Below tow category under this
- Desirable attrition is when underperformers leave.
- Undesirable attrition is when your top performers quit. This can hurt the company.
How to Calculate Attrition Rate
Attrition Rate (%) = (Number of Employees Left / Average Number of Employees) × 100
This is the annual rate or you can take for a specific period of time let understand with an example.
Total Number of Employee at start of month => 100
Employee at the end of the month => 90
Employee left during the month => 10
So the average number of employee => (100 + 90) / 2 = 95
Now we will apply the formula.
Attrition Rate = (10 / 95) × 100 = 10.52%
It may be calculate monthly quarterly or annually as per the requirement
Now the question arise that how we can justify that how much attrition rate is good for organisation or can stop the grow of the organisation.
So there is no such fix attrition rate where we can say this is good or bad for organisation however by analysing the data there has been categorized but again it depend on the industry for example, call centres and retail jobs usually have higher attrition compared to IT companies or government jobs
- Below 10% – Very Good
- 10% to 20% – Normal or Okay
- Above 20% – Needs Attention
- Above 30% – Very High and Problematic
Causes of High Attrition Rate
- Low Salary or Benefits
- Lack of Career Growth
- Poor Leadership
- No Work-Life Balance
- Toxic Work Culture
- Boring or Repetitive Work
- Lack of Appreciation
Effects of High Attrition Rate
- A high attrition rate can hit your business in many ways:
- Increases recruitment and training costs
- Delays in projects or services
- Loss of experienced staff
- Lower employee morale
- Affects company reputation
How to Reduce Attrition Rate
1.Offer Competitive Salaries-Make sure your pay matches or is better than the industry average.
2.Improve Work Culture– Create a respectful, positive, and inclusive environment.
3.Provide Growth Opportunities- Help employees grow with training, promotions, and career plans.
4.Give Work-Life Balance -Allow flexible hours, remote work, or enough holidays to reduce stress.
5.Listen to Employees -Take regular feedback and act on it. Make them feel heard.
6.Recognize and Reward -Appreciate hard work publicly. Give bonuses or small gifts to motivate.
7.Hire the Right People -Use strong hiring processes so you find people who are a good fit.
What to Do If Attrition Is Already High
Do Exit Interviews – Find out why people are leaving.
Improve Onboarding – Make the new employee experience better.
Train Managers – Most people leave managers, not jobs.
Fix Problems Quickly – If you find an issue, take quick action.
Invest in People – Treat employees like assets, not expense
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