Eddy’s HR Mavericks Encyclopedia
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Attrition Rate
In this article, we will explore what attrition is, how to calculate and improve your attrition rate, and how it is helpful information for your organization.
What Is Attrition Rate?
Attrition is the rate at which employees leave an organization. As defined by the Society for Human Resources Management, Attrition is a term used to describe voluntary and involuntary terminations, deaths, and employee retirements that result in a reduction to the employer’s physical workforce. When reporting your organization's attrition rate in HR metrics, this figure is represented by a percentage.
Voluntary vs Involuntary Attrition
Voluntary attrition happens when employees leave the organization on their own accord, whether for business reasons (conflict or cultural issues) or personal (retirement or other life changes). Involuntary attrition happens when the organization needs to part ways with an employee, and could encompass poor job performance or attendance or dismissal due to progressive discipline. A more common form of involuntary attrition is the elimination of positions within the organization (layoffs). This occurs when an organization is struggling financially and needs to adjust their internal headcount.
Attrition Rate vs Turnover Rate
Turnover is the process of losing an employee and filling that open spot with a new employee, whereas attrition is simply the number of employees who leave.
Attrition Rate vs Retention
These two terms are often used interchangeably, but are different. Attrition rate is the rate at which employees leave the organization, whereas retention measures the ability to retain employees over a specific period of time.
How to Calculate Attrition
Calculating the attrition rate within your organization requires a simple formula: the number of employee departures divided by the average number of employees. Once you have that number, multiply the figure by one hundred. The final figure is the attrition rate percentage.
Factors That Influence Attrition Rate
The most common factors that influence your organization's attrition rate are pay, workload, and hiring.
- Pay. When organizations are not able to increase wages at the same rate of inflation or at the rate that meets employee expectations, employees may leave to seek greener pastures.
- Workload. Attrition is also caused by employees' perception of overwork, whether by increased responsibilities, a lack of belonging or motivation, or physical or mental fatigue.
- Flawed expectations. The biggest factor influencing attrition is hiring people who don't want to be there or who don't understand the job. During pre-hire assessment, look for warning signs of non-interest. During the hiring process, be transparent, providing a clear, realistic list of job duties—a day in the life, if you will—of what the applicant can expect. Transparency needs to continue throughout the conversation, and the applicant should have a strong understanding of the company culture.
Analyzing Attrition Rate
To understand your attrition rate and discover patterns, the organization needs to uncover the who, when, and why individuals are leaving.
Who
The organization and HR need to understand who within the organization is exiting. The organization and HR can uncover the who by reviewing employee engagement survey data. By reviewing the data year over year, HR can begin to spot trends from the employees identified in the surveys.
When
Next, compare employee engagement survey data with those who have left the organization to understand tenure and employee experience, and reveal areas that need improvement.
Why
Finally, review the results of data collected from exit surveys. This is telling information, as employees tend to “spill the beans” on everything that caused them discomfort in the organization.
Strategies to Reduce Attrition Rate
As human resources professionals, we add value by implementing strategies to reduce attrition by improving engagement, conducting stay and exit interviews, improving compensation and benefits, investing in career development, and improving the culture.
Improve Engagement and Retention
Employees who are engaged at work are eager and ready to work daily. They perform at their highest level because they feel connected to the organization. Engaged workers are less likely to leave an organization, hence increasing retention. Leadership can improve engagement by checking in regularly with employees. This allows managers to identify areas of concern the employee is experiencing and signs of unhappiness prior to the employee deciding to leave. Finally, leaders can illustrate how the employee directly impacts the organization, as well as recognizing and thanking the employees for their efforts. A leader who shows they care and wants their employees and team to succeed goes a long way in retaining their workforce.
Conduct Stay Interviews and Exit Interviews
Stay interviews are conducted with employees while they are actively employed with the company. Conducting stay interviews uncovers current concerns employees face and allows the HR department to learn how to improve daily practices within the organization. Similarly, when employees do leave, exit interviews conducted with the HR department can expose additional areas of frustration for the employees. Using that data, HR can implement an action plan in hopes of removing those barriers for other employees.
Improve Compensation and Benefits Packages
Sharing key performance indicators and revenue with employees allows for full transparency that enables them to understand why or why not the organization is able to raise hourly rates, provide incentives, or increase benefits. It also motivates them to meet goals. It's useful to get creative about benefits that don't negatively impact the bottom line, such as offering a flexible work schedule or providing a wellness fair that offers free incentives.
Invest in Career Development
Lack of career development is one of the top reasons employees leave an organization. Employees who cannot see a defined career path feel that there is nowhere to advance within the organization and may begin looking elsewhere. Leadership can partner with HR to develop career paths for individuals if one is not specifically outlined for their skill set or role within the organization. Career paths may focus on growing horizontally instead of the traditional career path of upward mobility.
Improve Culture and Leadership
Improving company culture and leadership is a topic that impacts both new and tenured employees alike. When examining attrition rate, the organization may discover that employees are leaving the organization due to a lack of respect or inclusion. In partnership with HR, the organization can enhance its culture by ensuring that all employees, regardless of backgrounds, identities, and abilities, feel valued at work. The organization can focus on boosting morale by revamping and leveraging diversity, equity, and inclusion (DE&I) initiatives by establishing employee-led groups.
Topics
Nicole Little, PHR
Nicole Little is a Senior HR Business Partner with over 7 years of experience in the Human Resource field. Nicole has worked for the largest e-commerce company and the leading LTL carrier. Nicole Little's love for human resources comes through as she advocates and builds relationships within all levels of an organization. When Nicole is not working, she is enjoying the outdoors with her husband, two sons, and their dog.
Frequently asked questions
Other Related Terms
Eddy’s HR Mavericks Encyclopedia
Attrition Rate
In this article, we will explore what attrition is, how to calculate and improve your attrition rate, and how it is helpful information for your organization.
What Is Attrition Rate?
Attrition is the rate at which employees leave an organization. As defined by the Society for Human Resources Management, Attrition is a term used to describe voluntary and involuntary terminations, deaths, and employee retirements that result in a reduction to the employer’s physical workforce. When reporting your organization's attrition rate in HR metrics, this figure is represented by a percentage.
Voluntary vs Involuntary Attrition
Voluntary attrition happens when employees leave the organization on their own accord, whether for business reasons (conflict or cultural issues) or personal (retirement or other life changes). Involuntary attrition happens when the organization needs to part ways with an employee, and could encompass poor job performance or attendance or dismissal due to progressive discipline. A more common form of involuntary attrition is the elimination of positions within the organization (layoffs). This occurs when an organization is struggling financially and needs to adjust their internal headcount.
Attrition Rate vs Turnover Rate
Turnover is the process of losing an employee and filling that open spot with a new employee, whereas attrition is simply the number of employees who leave.
Attrition Rate vs Retention
These two terms are often used interchangeably, but are different. Attrition rate is the rate at which employees leave the organization, whereas retention measures the ability to retain employees over a specific period of time.
How to Calculate Attrition
Calculating the attrition rate within your organization requires a simple formula: the number of employee departures divided by the average number of employees. Once you have that number, multiply the figure by one hundred. The final figure is the attrition rate percentage.
Factors That Influence Attrition Rate
The most common factors that influence your organization's attrition rate are pay, workload, and hiring.
- Pay. When organizations are not able to increase wages at the same rate of inflation or at the rate that meets employee expectations, employees may leave to seek greener pastures.
- Workload. Attrition is also caused by employees' perception of overwork, whether by increased responsibilities, a lack of belonging or motivation, or physical or mental fatigue.
- Flawed expectations. The biggest factor influencing attrition is hiring people who don't want to be there or who don't understand the job. During pre-hire assessment, look for warning signs of non-interest. During the hiring process, be transparent, providing a clear, realistic list of job duties—a day in the life, if you will—of what the applicant can expect. Transparency needs to continue throughout the conversation, and the applicant should have a strong understanding of the company culture.
Analyzing Attrition Rate
To understand your attrition rate and discover patterns, the organization needs to uncover the who, when, and why individuals are leaving.
Who
The organization and HR need to understand who within the organization is exiting. The organization and HR can uncover the who by reviewing employee engagement survey data. By reviewing the data year over year, HR can begin to spot trends from the employees identified in the surveys.
When
Next, compare employee engagement survey data with those who have left the organization to understand tenure and employee experience, and reveal areas that need improvement.
Why
Finally, review the results of data collected from exit surveys. This is telling information, as employees tend to “spill the beans” on everything that caused them discomfort in the organization.
Strategies to Reduce Attrition Rate
As human resources professionals, we add value by implementing strategies to reduce attrition by improving engagement, conducting stay and exit interviews, improving compensation and benefits, investing in career development, and improving the culture.
Improve Engagement and Retention
Employees who are engaged at work are eager and ready to work daily. They perform at their highest level because they feel connected to the organization. Engaged workers are less likely to leave an organization, hence increasing retention. Leadership can improve engagement by checking in regularly with employees. This allows managers to identify areas of concern the employee is experiencing and signs of unhappiness prior to the employee deciding to leave. Finally, leaders can illustrate how the employee directly impacts the organization, as well as recognizing and thanking the employees for their efforts. A leader who shows they care and wants their employees and team to succeed goes a long way in retaining their workforce.
Conduct Stay Interviews and Exit Interviews
Stay interviews are conducted with employees while they are actively employed with the company. Conducting stay interviews uncovers current concerns employees face and allows the HR department to learn how to improve daily practices within the organization. Similarly, when employees do leave, exit interviews conducted with the HR department can expose additional areas of frustration for the employees. Using that data, HR can implement an action plan in hopes of removing those barriers for other employees.
Improve Compensation and Benefits Packages
Sharing key performance indicators and revenue with employees allows for full transparency that enables them to understand why or why not the organization is able to raise hourly rates, provide incentives, or increase benefits. It also motivates them to meet goals. It's useful to get creative about benefits that don't negatively impact the bottom line, such as offering a flexible work schedule or providing a wellness fair that offers free incentives.
Invest in Career Development
Lack of career development is one of the top reasons employees leave an organization. Employees who cannot see a defined career path feel that there is nowhere to advance within the organization and may begin looking elsewhere. Leadership can partner with HR to develop career paths for individuals if one is not specifically outlined for their skill set or role within the organization. Career paths may focus on growing horizontally instead of the traditional career path of upward mobility.
Improve Culture and Leadership
Improving company culture and leadership is a topic that impacts both new and tenured employees alike. When examining attrition rate, the organization may discover that employees are leaving the organization due to a lack of respect or inclusion. In partnership with HR, the organization can enhance its culture by ensuring that all employees, regardless of backgrounds, identities, and abilities, feel valued at work. The organization can focus on boosting morale by revamping and leveraging diversity, equity, and inclusion (DE&I) initiatives by establishing employee-led groups.
Topics
Nicole Little, PHR
Nicole Little is a Senior HR Business Partner with over 7 years of experience in the Human Resource field. Nicole has worked for the largest e-commerce company and the leading LTL carrier. Nicole Little's love for human resources comes through as she advocates and builds relationships within all levels of an organization. When Nicole is not working, she is enjoying the outdoors with her husband, two sons, and their dog.
Frequently asked questions
Other Related Terms
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