Attrition vs. Turnover: Learn How to Calculate Rates and Why They Matter
When it comes to measuring employee retention, attrition and turnover are two of the most vital HR metrics to monitor.
In general, a low attrition rate signals a healthy company. Fewer employees are leaving voluntarily, keeping morale higher and preserving institutional knowledge. A high attrition rate, however, can be a warning sign that problems are driving your staff away.
However, attrition and turnover are more complex than they seem—and to make matters more confusing, the two terms are often used interchangeably, even though they describe different measurements.
In this post, we'll break down the differences between attrition and turnover. We'll also walk you through easy-to-understand examples of how to calculate attrition rates and turnover rates, so you can evaluate how your organization is performing.
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What Is Attrition?
Employee attrition refers to the strategic decision not to replace employees who leave an organization voluntarily.
Employees may leave for a number of reasons, such as:
- Recruitment by another organization
- Seeking growth opportunities
- Embarking on a new career path
This process may also be referred to as "natural attrition," in the sense the employees depart on their own accord without intervention from their employer.
What Does "Attrition Rate" Mean?
An attrition rate describes turnover during a set period of time. It's the key metric that gives HR professionals insight into employee retention.
In general, companies should strive to have a low attrition rate. According to experts, healthy organizations have an attrition rate of 10% or less. At this attrition rate, your workforce is stable, and you're unlikely to risk shortages or other disruptions.
A high attrition rate indicates that employees are leaving your company after relatively short tenures. Over time, this can lead to major losses of institutional knowledge, a lack of stability, and negative impacts on morale.
What Is Regrettable Attrition?
Regrettable attrition occurs when employees leave by choice, as opposed to being fired or laid off. It's an HR metric you should track carefully, because it can indicate problems that the company may be able to resolve to avoid losing additional employees.
When an employee quits voluntarily, human resources leaders should always schedule an exit interview. Departing employees are uniquely capable of sharing candid feedback, such as dissatisfaction with their compensation or with aspects of the company culture.
» Learn More: The 15 Best Exit Interview Questions [Free Download]
Left unchecked, regrettable attrition can lead to serious business consequences. Amazon learned this in October 2022, when the company came under fire for bleeding an estimated $8 billion annually due to its churn-and-burn company culture.
What Is Turnover?
Employee turnover is often incorrectly defined as the number of employees who leave an organization over a year. In fact, turnover is more accurately described as the rate at which a company replaces employees over a set period of time.
Only vacated positions that are filled should be counted as turnover. If an employee leaves and their role is not filled, that is either the result of attrition or an intentional reduction in the workforce.
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What Is Regrettable Turnover?
Like regrettable attrition, regrettable turnover occurs when a key employee leaves voluntarily.
However, this term has a slightly different meaning. It's used to describe the negative impact that the company experiences when a high-performing employee chooses to take their talents elsewhere.
While it's important to manage turnover and attrition throughout your company, managers should also recognize that some employees have a larger impact than others. For example, an employee could possess a unique skillset, deep institutional knowledge, or relationships with valuable clients.
It's important to recognize these employees' contributions and reward them with incentives that will help them feel valued and appreciated.
How to Calculate Attrition
The first step is to decide how often you’d like to calculate your company’s turnover and attrition. Most people decide to do this once a year, while some prefer to do it quarterly, or even monthly. The more times you do it, the more accurate the picture of your employee structure will be.
Step 1: Calculate the Average Number of Employees
Looking at your decided time period, you need to calculate your average number of employees in a given time period.
You can achieve this by adding the number of people with your company at the start of the period to the number of people with your company at the end – then dividing that by two.
For example: Let's say you had 95 employees on January 1 and 87 employees on July 1. Your average number of employees would be:
- 90 + 80 = 170
- 170 / 2 = 85
So, your company employed 85 staff members on average during the period from January 1 through July 1.
Step 2: Find Your Turnover Rate
Next, you need to find out your turnover rate. You do this by dividing the number of employees who left your company within the period by your average number of employees – then multiplying by 100.
For example: Let's say 10 employees left your business between January 1 and July 1. Your calculation would be:
- 10 / 170 = 0.058
- 0.058 x 100 = 5.88%
So, your turnover rate in this example would be 5.88%.
Step 3: Calculate Attrition
Calculating your attrition rate builds on the previous two steps. You'll start by finding the average number of employees you had during a given period, as well as the number who departed.
Next, you'll evaluate the employees who departed. You'll need to know who left voluntarily and who left involuntarily.
From there, you will divide the number of employees who left voluntarily by your average number of employees. To express this as a percentage, simply multiply by 100.
For example: Let's continue with the example above, in which your company had 90 employees on January 1 and 80 employees on July 1, resulting in an average of 85 employees. Of the 10 employees who left, let's assume 8 voluntarily departed and 3 were let go. Your calculation would be:
- 8 employees left voluntarily / 85 employees on average = 0.094
- 0.094 x 100 = 9.41%
So, your attrition rate would be 9.41%, which falls within the healthy range experts recommend.
Is Employee Churn Always Negative?
The simple answer is: No, employee churn isn't always negative. Turnover and attrition can be expected or unexpected, planned or unplanned, and that context is what makes it either good or bad for your business.
For example, a sales team might experience a high turnover rate as junior team members advance to more senior teams within the same business. Or a fast-food restaurant may experience high turnover as people leave for higher-paying jobs.
As long as those departures are expected, and the market for new employees remains strong, both businesses will remain healthy. A different rate of turnover than expected or budgeted for—whether higher or lower—is what might indicate there’s an issue to be concerned about. The same goes for attrition.
For human resources professionals, the key is to monitor attrition and turnover consistently and compare this ground truth to the overarching business strategy. Failure to keep a pulse on attrition and turnover means that hiring can quickly become a liability, rather than a carefully calculated move in the right direction.
It takes more than a headcount statistic to fine-tune the employee skills and collaboration you’ll need to succeed in your industry and your mission. You need the full context—both at an organizational and an employee level—to put each instance of employee churn in its proper perspective. Only then can you make the proper decision about how to respond.
How to Fix a High Attrition Rate
While you can’t expect unlimited insight into employees’ life events, and you can’t always guarantee 100 percent consistency from them, you can still gain knowledge about the former and support the latter.
Here are three opportunities to do so:
Manager/employee one-on-one meetings. While managers should be giving their employees regular, in-the-moment feedback, taking time for formal one-on-one meetings allows you to sync up and build that all-important trust with employees.
One-on-one meetings allow employees to ask their managers for clarification on any recent team changes, and for managers to ask about employees’ career plans and life events.
All-hands update meetings. All-hands meetings are a good place for company leaders to offer background and context on complex issues. For example; employee attrition and turnover, company financial health, and future strategy.
That kind of direct, top-down communication reduces the chance that information will get lost or distorted as it passes through several people. It also helps employees to make decisions based on facts, not rumors or market trends.
Manager-level meetings. Once managers are talking to employees and people are hearing accurate information from executives, the only remaining need is to connect the dots.
Holding manager-level meetings means team leaders can talk candidly about trends they are seeing, and how company decisions are impacting their employees. It then gives HR and talent managers the opportunity to gut-check their onboarding strategy.
Decisions about who to hire and when are important choices—and the balance between when and who is a tricky one to master. Hire too quickly, and you risk the financial and cultural costs of a ‘mishire’. Hire too slowly, and you leave employees on short-staffed teams facing the dreaded “doing more with less” scenario. This can also increase the risk of burnout – which everyone wants to avoid.
Final Thoughts: Context is Critical
Your organization will change—and that’s the only constant. As you navigate these changes, your employees will always appreciate consistent communication, thoughtfully made decisions, and long term direction that aligns with your company's values.
With the right understanding of how to predict and prepare for employee attrition and turnover, you can respond with decisions that strengthen and maintain company culture, employee experience, and, ultimately, your retention rate.
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