What is Attrition? Meaning.
Attrition is in Human Resources management and in employee retention the rate at which a workforce is gradually reduced due to employees leaving a firm. It is a measurement of how many employees leave a company and are not replaced within a given period.
The rate of attrition is also referred to as the "Churn Rate".
Employee Turnover is also a very similar term, but it has a slightly different feeling associated with it. See below.
Types of Attrition/Turnover
One can distinguish different kinds of attrition and/or turnover:
- Voluntary Attrition - When employees voluntarily choose to resign through normal means (a more appealing job offer, lack of advancement opportunities, a staff conflict, retirement, resignation). It may or may not also include employees permanently incapacitated for work and deceased persons. This category can be further split up into:
- Functional Attrition - When low-performing employees leave the organization. The company just respects the decision by the employee to leave, rather than having to go through the paperwork and potentially difficult process of proving that an employee is inadequate.
- Dysfunctional Attrition - When high-performing employees leave the organization (for example as a result of a better job offer, a lack of career opportunities). As this is costly, companies want to avoid/lower this category.
- Involuntary Attrition - When employees are unwillingly dismissed by a decision from their employer (as a result of poor performance, a staff conflict, forced labor reductions, firing, mass layoffs). The US Bureau of Labor Statistics uses the term "Quits" to indicate voluntary turnover and "Total Separations" for the combination of voluntary and involuntary turnover.
- External Attrition - When employees decide to leave and work for another company. This could be due to factors like compensation, commute or perhaps they feel more aligned with another company's values.
- Internal Attrition - When employees leave their current position for another role within the same company. They may have received a promotion or they might be involved in Job Rotation.
Calculating Attrition/Turnover Rate. Formula
The Attrition Rate can be calculated by dividing the the number of people who have left the company over a period of time by the average number of employees over that same period of time x 100. It is typically expressed as a percentage (%).
For example, let's say a company had an average of 500 employees during a year. In that same period, 25 people left the company for various reasons.
Annual Attrition Rate = # of leavers / avg # of employees x 100
Annual Attrition Rate = 25 / 500 x 100
Annual Attrition Rate = 5%
Likewise, you can also analyse the attrition rate over a specific timeframe like perhaps the probation period of new employees.
For example, a company had 15 new employees joining the firm. However, 5 of those 15 newcomers already quit during the probation period for various reasons.
Probation Attrition Rate = # of leavers / total # of new hires x 100
Probation Attrition Rate = 5 / 15 x 100
Probation Attrition Rate = 33%
Likewise, attrition can be also used to indicate the action of not filling openings created by voluntary resignation and normal retirements.
Ways to Lower the Attrition/Turnover Rate
To avoid employee disengagement and resulting attrition, companies typically use a number of mechanisms:
Employee Turnover versus Attrition
Employee Attrition and Employee Turnover are similar terms, but they're not the same:
- Both pertain to the loss of workforce and are components of retention that HR professionals need to consider.
- However, a difference between the terms is that turnover is usually viewed negatively and reflects that the company has to fill the vacancy as soon as possible. Attrition on the other hand is viewed more neutral and reflects that vacancies left by attrition aren't necessarily immediately filled up.
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