Employee Attrition Rate: Meaning, Formula & How to Calculate

What is attrition rate?

Attrition rate measures how many employees leave a company over a period of time. It gives a glimpse into your company’s overall health, such as the strength of your hiring and retention efforts. It also aids in strategic human resources (HR) processes, such as workplace planning, succession planning, labor cost management, employee engagement, and recruitment.

How do you calculate attrition rate?

You can calculate your attrition and turnover rates by dividing the total number of employee departures by your average employee headcount and multiplying that by 100. Make sure both numbers encompass the same timeframe. Your answer will be a percentage.

For the more nuanced version of attrition, only consider the number of employees who left and were not replaced before dividing that by your average headcount.

Adjusting the formula allows you to examine attrition from various angles. For example, you can determine your annual attrition rate by examining employee departures over a 12-month timeframe.

Alternatively, you can modify where you pull your employee headcount numbers to glimpse early attrition following a company initiative. For example, you can monitor the attrition rate of a new employee cohort by focusing only on the new hires you hired versus how many left after a certain time.

Types of attrition

There are four types of attrition: voluntary, involuntary, internal, and demographic-specific. These categorizations give a more granular look into the causes of attrition, allowing you to craft targeted approaches to improve the company culture and workplace.

Voluntary

Voluntary attrition is the result of employee-initiated separation due to:

• Resignation.
• Retirement.
• Relocation.
• Personal reasons.

Voluntary attrition is one of the most important categories to monitor since it can indicate more serious problems within your company. For example, high voluntary attrition rates could point to issues like:

• Negative company culture.
• Lack of career development or advancement opportunities.
• Unsafe work environment or practices.
• Unclear work expectations.
• Poor compensation and benefits.

Read more: The 7 Warning Signs of an Unhappy Employee

Conducting exit interviews when employees leave is one way to gain insight into the reasons behind voluntary attrition and build plans to address it. HR systems can also help you develop a proactive strategy. Bob, for instance, uses predictive analytics to pinpoint employees at risk for attrition so you can take steps to retain them.

Involuntary

Involuntary attrition is attrition from employer-initiated separation, including:

• Discharges.
• Layoffs.
• Eliminated positions.

Outside of dismissals for cause, involuntary attrition can result from changes to your business, industry, or market that lead to downsizing or cost-cutting measures.

Internal

Internal attrition occurs when you don’t backfill a position following promotions, demotions, and role or departmental changes. High internal employee attrition is a concern if it causes inequitable work distribution or production bottlenecks from a lack of talent in the roles employees left.

Demographic-specific

Demographic-specific attrition occurs when employees from a particular group leave your organization. Gender-based attrition, for example, looks at attrition based on gender groups. If your attrition rate is higher for folks who identify as female or non-binary, that could indicate a problem with diversity, equity, and inclusion (DEI) in your company.

You can track similar rates for other employee demographics, like race, age, ethnicity, geography, or employment information, to understand how your business practices affect various groups. Layering your attrition data with performance data can also provide a look into attrition causes.

HR software simplifies this process by combining employee demographic information with your separation data for more granular insights. BambooHR, for example, has a separation dashboard that looks at departments and managers that experience the most employee departures for more targeted corrective actions.

What are the causes of attrition?

There are several causes of attrition, many of which are natural and not necessarily negative. For example, employee retirement and relocation are examples of attrition beyond your control. 

Attrition due to layoffs or company restructuring could also be natural as companies learn to be more productive with fewer staff. One example is using machine automation to handle repetitive tasks previously managed by a human being.

However, you should still examine the voluntary reasons for employee departures, especially if high voluntary attrition is affecting your company’s success. The table below highlights some of the most common reasons for voluntary attrition and possible solutions.

Attrition vs. turnover

Many companies use the terms attrition and turnover interchangeably. Although both concepts and formulas are essentially the same, two factors distinguish them: time and replacement.

Attrition rate is a more strategic metric since it looks at whether employees are replaced after departing over longer periods. It helps track structural issues within your organization, such as the impact wide-scale company changes have on employee separation. Another way to think of attrition rate is your erosion rate.

By comparison, turnover rate measures employees who leave within a short time. It’s also possible to have a high turnover rate but a low attrition rate. For example, retail and fast food industries can have high turnover rates but stable attrition rates because positions are immediately filled after the employee leaves. Another term for turnover rate is churn rate.

Attrition vs. retention

Attrition and retention are two sides of the same coin. Attrition monitors the number of employees who leave, while retention looks at the number who stay over a set period.

Attrition and retention usually reflect the same data in different ways. For example, if you have a high attrition rate from many people leaving, you might have a proportionally low employee retention rate.

The intent of each data point is also different. For example, your executive team might be interested in your attrition rate to understand your company’s readiness for growth. However, your HR teams might be more interested in retention rates as a reflection of your people strategy and how they can improve the employee experience.

Attrition rate FAQs

What is a high attrition rate?

A high attrition rate indicates employees are leaving faster than you replace them. While attrition is normal, an abnormally high number of employees leaving could indicate something more serious, like stagnating growth. Too many employees departing could also result in a loss of institutional knowledge. 

High attrition is usually anything over 20%. However, because this is an industry average, a high attrition rate for your company could be very different. If your attrition rate is over 20%, research what is considered high for your industry and company size before spending time and energy on ways to lower it.

You can check out the U.S. Bureau of Labor Statistics’ quit rates for nationwide industry averages.

How do you reduce a high attrition rate?

To reduce employee attrition, first collect data from multiple channels and let that knowledge determine priorities. For example, you can use performance management and engagement software like Lattice to survey employees and gather insight into the areas causing dissatisfaction.

You can also reduce attrition by optimizing the stages of the employee life cycle. For example, you can minimize the risk of attrition by:

• Offering the right compensation, benefits, and support in onboarding.
• Training managers to be effective leaders and mentors in development.
• Fostering employee engagement activities in retention.

These can all improve employee morale and job satisfaction, increasing the likelihood that they will stay with the company longer.

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Why is attrition rate important?

• Provides insights into where to improve your people engagement strategies.
• Points to areas of increasing or decreasing company productivity and efficiency.
• Monitors company potential for reduction or expansion.
• Indicates the success of your recruitment and employee retention initiatives.
• Compares you to your peers to remain competitive.

How do you prevent employee attrition?

There are several ways to reduce the chance of employee attrition, including:

• Running frequent employee engagement surveys to track employee satisfaction.
• Conducting exit interviews to understand the reasons behind employee departures.
• Hosting stay interviews to improve the employee experience for your talent.
• Administering regular performance reviews to ensure employee role clarity and growth opportunities.
• Offering top-tier compensation, benefits, and perks that rival your competitors.

Remember, though, a little attrition is expected. In some cases, you may even want it.

For example, let’s say you’re a small company that retains the same employees year after year. With a healthy dose of attrition and an influx of new talent, you can:

• Change your company culture for the better.
• Satisfy DEI goals.
• Decrease labor costs.
• Provide new opportunities for existing talent to grow.
• Develop new and innovative ideas to improve your company processes, products, or services.
• Adapt to changing economic, political, technological, and social trends.

So, instead of entirely preventing attrition, use it to your advantage. With it, you can scale your company and prepare it for future changes in your industry or market.