Back to Glossary

Definition of Attrition

Attrition occurs when there’s a reduction in the workforce, and the company does not address or replace this loss immediately.
Attrition is an inevitable part of every company. Employees leave for personal reasons or move to greener pastures. Some factors are beyond your control, such as employee retirement, leaving to study further, relocation, and so on. However, if your employee leaves because of poor leadership, company culture, declining company health, or no professional growth, that is something you can address upon and make amends. To broadly classify the reasons:

How is Attrition different from Employee turnover?

Attrition
Employee turnover

Attrition occurs as a part of a planned exit such as retirement or because of some personal reasons.

Employee turnover occurs because of poor employee-company and employee-job fit, poor company culture, leadership and so on.

Attrition openings are usually planned or informed beforehand.

Employee turnover vacancies are unexpected because the issues are with the company.

They are not filled in immediately

The company issues need to be addressed, and the vacancies substituted immediately. 

Calculating the employee attrition rate

Attrition rate measures the number of people who left the company when compared to the average number of employees in the company.
Formula: (No.of attritions/Average no.of employees over the year) x 100

For instance, in the year's start,  if you have 100 employees, of which 20 employees leave. By the end of the year, you have 120 employees. As a result, the average number of employees in that year is:

(100+120)/2 = 110

 Attrition rate= (20/110) x 100 = 18.1%

That is your attrition rate of your company. 

 

Can attrition have a positive effect on business?

Sometimes, attrition can benefit you in ways hitherto unknown to you. It can help you: 
-  Weed out the poor performers, paving way for better talent.
-  Make space for a diverse work environment.
- Focus on employee-job and employee fit candidates.
- Bring in a unique perspective, with a diverse workforce. 

Attrition is an indicator that your company is going through changes (good or bad). As a HR professional, it is important to identify the ill-effects of changes and curb the increasing attrition rate. At the same time, you need to ensure that you attract and retain talent who can help the company grow.