Attrition Rate Formula
Attrition Rate Formula: Meaning, Calculation, and Examples
In this post, we will discuss what attrition rate means, how to calculate it using a simple formula, and why it is important for businesses. We will also look at different types of attrition, common reasons why employees leave, and practical ways to reduce high attrition in an organisation.
Let’s look at these sections in detail:Â
What is the attrition rate?
The attrition rate is the rate of employees leaving the company over a period of time for various reasons, such as resignation, termination, or others. That is also known as the ‘Employee Churn Rate’ or ‘Employee Turnover.’
What is the Attrition Rate Formula?
The formula to calculate attrition rate is: Total number of employees (manpower) who left the organisation divided by the average number of employees for the year multiplied by 100. Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â
 Attrition Rate (%) = No. of employees who left the organisation x 100
                                                         Total No. of employees                                 Â
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 total 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.
Attrition Rate (%) = No. of employees who left the organisation x 100
                                                         Total No. of employees                   Â
            = 15/150 x 100
     = 0.1 x 100
|
    Attrition Rate = 10% |
Attrition rate examples
Example 1: Annual attrition
This example shows how to calculate attrition for a full year.
Assume that in the last 12 months, 5 employees left the company and their positions were not filled. During the same period, the average employee strength was 75.
Attrition rate calculation:
(5 employees who left ÷ 75 average employees) × 100 = 6.67%
So, the annual attrition rate comes to 6.67%. This is not very high, but if the number keeps increasing or is higher in a particular department, it is better to review the situation closely.
Example 2: Early attrition
Early attrition helps you understand how many new employees leave within a short time after joining, usually within 30 to 90 days.
Suppose you hired 20 employees in the last 90 days. Out of these, 4 employees left during the same period and their roles were not replaced.
Attrition rate calculation:
(4 employees who left ÷ 20 new hires) × 100 = 20%
This means your early attrition rate is 20%. Tracking this is important because it shows whether your hiring and onboarding process is working well. Studies show that many employees leave within the first 90 days, which increases recruitment and training costs for the company.
Example 3: Attrition using manual average headcount
In some cases, you may not have the average employee count readily available. In such situations, you can calculate it using payroll data.
Assume you run payroll twice a month. Over the last three months, there were six payroll cycles. The employee count during each payroll was 21, 20, 21, 20, 20, and 18. During this quarter, 2 employees left and were not replaced.
First, calculate the average headcount:
(21 + 20 + 21 + 20 + 20 + 18) ÷ 6 = 20 employees
Now calculate attrition:
(2 employees who left ÷ 20 average employees) × 100 = 10%
So, the attrition rate for the quarter is 10%.
Types of attrition
There are four types of attrition:
1.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 make it difficult to communicate with or contact the employer or have physical issues and other reasons.
2.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.
3.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.
4.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.
What are the causes of attrition?
Employee attrition can happen for many reasons, and not all of them are bad. Some reasons, like retirement or employees moving to another city, are beyond the company’s control.
Attrition due to layoffs or company restructuring can also be normal, especially when organisations adopt new technology or automation to improve efficiency. For example, machines or software may take over repetitive work that was earlier done manually.
That said, companies should closely look at voluntary attrition. If many employees are leaving by choice, it can affect productivity, morale, and business growth. Understanding the reasons and taking timely action can help reduce such losses.
Below are some common causes of voluntary attrition and simple ways to address them:
|
Cause of Attrition |
Possible Solutions |
|
Inadequate pay or benefits |
Regularly compare salary and benefits with industry standards to stay competitive |
|
Limited growth and development opportunities |
Create clear career paths, provide upskilling opportunities, and encourage internal job movement. Use a learning management system to support training |
|
Lack of feedback, recognition, and rewards |
Ensure regular one-on-one meetings between managers and employees. Introduce peer recognition and structured reward programs |
|
Poor work-life balance or work overload |
Train managers to distribute work fairly. Review workloads regularly. Set clear working hours and offer flexible schedules and wellness initiatives |
|
Unsupportive workplace culture |
Conduct employee surveys frequently and act on feedback. Build initiatives like diversity groups or employee support committees |
|
Personal reasons |
Respect the employee’s decision and part on good terms, as personal life changes are often outside the employer’s control |
How can you reduce high attrition rates?
There are the following practices, that will help you to reduce the high attrition rate:
1.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.
2.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 for the stakeholder in those departments and start conversations and figure out how we can improve and remove the barriers and roadblocks and others.
3.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.
4.Focus on communication
Regular communication can build your trust with employees, open the doors to getting information about when they are facing issues and what kinds, and help you to focus on solutions and increase the regular interaction with your team.
5.Warm offboarding
It is one of the essential points where you send off the departing employee with gratitude and wishes for the next step of professional life. This offboarding program allows employees to leave on good terms. This way, you can keep the door open for the employees to return back.
Difference between Attrition Rate, Retention Rate and Employee Turnover
The following are the differences between attrition rate and retention rate:Â
|
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. |
That’s all about the attrition rate formula. If you have any questions or thoughts on this topic, feel free to share them in the comment box below.
FAQs
Q. Why is attrition rate important?
Attrition rate helps a company understand how often employees are leaving and whether there is a problem with retention. It gives early signs of issues like low job satisfaction or poor work culture. By checking attrition by department, role, or reason, companies can improve hiring, training, and employee engagement in a better way.
Q. What is a healthy attrition rate for businesses?
For most businesses, an attrition rate between 10% and 15% in a year is generally considered healthy. That said, the right number can change depending on the industry, location, and size of the company. To understand what works for your business, it is best to compare your attrition numbers with industry standards or official labour data.
Q. How often should HR calculate the attrition rate?
HR teams usually calculate attrition every quarter and once a year. Quarterly tracking helps catch early problems, such as issues in onboarding or team management. Annual attrition figures give a clear overall view and help in long-term planning.
Q. How do you stop employees from leaving?
Honestly, you can’t stop everyone from quitting, and you shouldn’t try to. A little bit of turnover is actually healthy. It keeps things from getting boring, brings in fresh ideas, and helps you hire more diverse people.
The real goal is to stop the good people from leaving unnecessarily. You do that by making sure they aren’t bored, showing them a clear way to move up in their career, and ensuring they have good managers. Little things like being flexible with timings and actually appreciating their hard work make a huge difference in keeping the team together.
