─ What Is Attrition Rate?
─ Attrition Rate Meaning and Why it Matters
─ How to Calculate Attrition Rate
─ 6 Factors Influencing Attrition Rate
─ Reducing Attrition: 5 Best Practices
─ Employee Attrition Rate: Frequently Asked Questions
─ Forge Connections to Reduce Employee Attrition Rates
Your workforce attrition rate is an important metric for understanding changes in your organization’s employee retention. When you understand attrition and analyze the data, you’ll uncover truths about your workforce and employee experience that can improve your retention strategy.
Discover what employee attrition rate is, why it matters, and what steps you can take to minimize attrition and improve the employee experience.
Attrition is the gradual decrease in an organization’s workforce due to employees leaving their jobs voluntarily or involuntarily. Attrition can result from employees retiring, resigning, or being fired or laid off. In some cases, businesses may use attrition as an opportunity to restructure job roles or reduce headcount, and they won’t replace some departing employees.
Attrition can have a significant impact on business outcomes, including a shortage of essential skills and experience. It can also be costly for your business in terms of recruiting, onboarding, and training new employees. Additionally, a high attrition rate can contribute to lower employee morale and productivity, as well as negatively affect customer service and loyalty.
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Use the following attrition rate formula to calculate attrition in your workforce:
For example, if an organization had an average of 10 employees during April, but three employees left during that month, the attrition rate for April would be 30%.
HR leaders should assess attrition regularly to help understand employee turnover. A monthly calculation can provide actionable insights and allow for timely interventions. When you know attrition is occurring or likely, you can investigate the causes and track high-risk situations.
Coming off a company merger, for example, you’ll expect a certain amount of attrition as roles are merged or eliminated. Even though this is a planned event, you should expect a spike in your monthly and annual attrition rates while the merger process is worked through.
As you track your attrition rate, examine it over different timespans. A monthly reading can give insights into near-term conditions, while a longer-term comparison against previous time periods helps you see past fluctuations. The key is to use attrition rate data to improve your understand of the workforce and your resulting HR decisions
Employees leave jobs for a variety of reasons, and understanding them can help you better manage talent. Check out some common factors that could be influencing attrition in your organization.
Compensation and benefits are key factors that can influence employee attrition. When employees feel that their compensation and benefits aren’t competitive, they may be more likely to search for outside job opportunities.
By contrast, paying competitive wages, offering bonuses, and providing strong benefits can help employees feel valued and encourage them to stay.
Employees who are satisfied with their job are less likely to leave, as they feel appreciated, supported, and valued. Job satisfaction often correlates with better performance, helping your organization reduce attrition and improve the bottom line simultaneously. An employee engagement survey is one way to measure your workforce’s job satisfaction and the overall company culture.
Employees who feel they have an appropriate balance between their work and life tend to feel more engaged and productive. Having work-life balance can give employees a sense of control and ownership over their lives and careers, which can further motivate them to stay with the organization.
Without a positive work-life balance, though, employees are more likely to burn out, which can lead to poor performance and a higher risk of departure.
When managers have positive relationships with their employees, it can lead to increased job satisfaction, engagement, and motivation. Employees will be more likely to stay and be productive when they feel respected and appreciated by their managers. On the other hand, when managerial relationships are strained or adversarial, employees may become disenchanted and less productive. This could hurt business outcomes, possibly to the point where these employees leave and aren’t replaced.
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Job market conditions are a significant factor in determining how much employee attrition a business will experience. Labor shortages, for example, can make it extremely difficult for employers to hire qualified workers. In some cases, employers might resort to attrition rather than risk a bad hire.
A strong company reputation can attract and retain talented employees who believe in the company’s mission and want to be part of the working environment. Companies that have strong brands are likely to acquire and retain great talent, reducing the need for attrition.
While attrition can be a deliberate choice, too much of it can harm employee morale, make future hiring more difficult, exacerbate skills shortages, and impact business performance. Discover five ways to lower attrition and turnover rates.
Surveys can provide insight into how employees feel about their job, work environment, compensation, and other factors that can lead to employee dissatisfaction. By regularly surveying team members, HR leaders can gain a better understanding of what motivates them and what they need to stay engaged and satisfied in their role.
A competitive salary and benefits package is a powerful way for HR leaders to retain talent, drive engagement, and encourage top performance. Properly compensated employees are likely to have greater loyalty to their employer, which can reduce attrition rates.
Employees who feel supported and challenged in their roles are more likely to stay with your organization. Robust career development programs help employees become more effective in their current roles and build their skills and readiness for greater responsibility. When you’re able to develop employees from within, you’re less likely to suffer from attrition caused by outdated job roles.
Strengthening onboarding processes can help HR leaders set clear expectations for new employees, thereby reducing the likelihood of them leaving the company. Additionally, providing access to a mentor or support system can help new employees adjust more quickly.
Giving employees the opportunity to move between departments or roles can increase their job satisfaction and motivation. HIgh internal mobility gives employees more options — and prevents them from being stuck in roles that you don’t plan on replacing.
Before tackling employee attrition in your workforce, make sure you have the answers to these frequently asked questions.
Attrition rate is a measure of how many employees leave the organization over a given period, whereas retention rate is a measure of how many employees remain with the organization over a given period.
Industry-standard attrition rates refer to the average percentage of employees that leave an organization in a specific industry over a time. Industries with historically high attrition rates include foodservice, hospitality, and retail.
Attrition and turnover are often used interchangeably, but they aren’t the same. Attrition is usually defined as an employee departure where the organization doesn’t plan to replace the person.
Employee turnover, on the other hand, reflects departures where the organization must hire to replace them. High staff turnover is usually seen as a negative, whereas attrition can be something that an organization does deliberately — choosing not to fill vacancies instead of making layoffs, for example.
HR analytics software can provide valuable insights into employee behavior and performance, including high-level data on employee departures, whether those positions were replaced, and why.
Voluntary attrition is when an employee decides to quit or resign, while involuntary attrition is when the employee is forced to leave, such as through redundancy or dismissal. The underlying causes of the two types of attrition are often different, so make sure you measure each separately.
Tracking attrition rates of all workers can help HR leaders identify and address any potential problems that may be causing staff to leave. However, seasonal and contract workers aren’t long-term employees, so break out those groups when looking at attrition. The decisions you make about your full-time workforce could differ greatly, especially regarding attrition rates.
Developing strong connections between employees can help create an engaged and supportive workplace, which can lead to lower employee attrition. Build an interconnected workforce of happy, engaged employees to maintain your workforce, and your edge.
Want to see the link between connection and retention? Check out Enboarder’s 2023 global survey: The Future of Connection at Work.
