Attrition vs. Turnover: Key Differences You Need to Know

When it comes to measuring employee retention, attrition and turnover are essential metrics to track. But, often, companies don’t pay attention to either, because they either don’t understand the difference, or don’t realize the impact.

And that’s a real problem—research from Gallup found that 42% of employee turnover is preventable but often ignored.

Turnover risk is at its highest point in a decade, but, to address the challenge, you have to know what you’re facing. 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 metrics.

Below, 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 and turnover rates so you can evaluate how your organization is performing.

Attrition rate vs. turnover rate

Put simply: turnover is when employees leave your company and are replaced; attrition happens when employees leave a company and aren’t replaced.

Both attrition and turnover can provide insights into why your employees leave. For best results, look at turnover and attrition levels over time to find patterns in leadership, culture, benefits, or any other reason employees may be leaving. You’ll likely find trends or notice patterns in why and when employees leave.

What is attrition?

Attrition is when an organization doesn’t replace employees who leave. Employee attrition can be linked to retirement, layoffs, or general resignations. 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
• Retirement
• Relocation.

These reasons may also be described as “natural attrition”, which just means employees are leaving on their own (“naturally”) without any action from the company.

What is the attrition rate?

A company’s attrition rate describes turnover over a set period. It’s the key formula metric that gives HR professionals insight into employee retention.

A  high attrition rate  shows that many employees are leaving your company in the same period. Over time, this can lead to major losses of institutional knowledge, a lack of stability, and a negative impact on morale.

An employee attrition rate is a measurement of employee turnover over a specific time period, typically one year. It helps employers understand whether they are doing a good job retaining their talent in times when downsizing isn’t necessary or desirable.

What is a good attrition rate?

In general, companies should strive for a low attrition rate. According to experts, healthy organizations have an attrition rate of 10% or less. At this rate, your workforce is stable, and you’re unlikely to risk shortages or other disruptions.

In general, a high employee attrition rate is anything above 10%. A higher rate is a sign that employees aren’t sticking with the company. This number includes the voluntary attrition rate—or when an employee chooses to leave—as well as employees who are let go for a number of reasons. A pattern of high attrition rates can indicate foundational concerns that are consistently driving employees away.

Put another way, the opposite of the attrition rate is the percentage of employees who choose to stay with the company. The higher the retention number, the more likely employees are to be engaged in and satisfied with their work.

Why track attrition metrics?

Employee attrition metrics tell a story about why employees stay with a company or choose to leave. For HR professionals, the key is to monitor attrition and employee 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.

Strategic HR decisions start with understanding attrition numbers. But 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 employee level—to put each instance of employee churn in its proper perspective. Only then can you make the proper decision on how to respond.

What is turnover?

Employee turnover is often incorrectly defined as the number of employees who leave an organization over a year. In fact,  employee turnover  is more accurately described as the rate at which a company replaces employees over a set period.

Only vacated positions that are filled are counted as turnover. Attrition—meaning an employee leaves and their role is not filled—is something different.

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, you should also recognize that some employees have a larger impact than others. For example, an employee could have a unique skill set, deep institutional knowledge, or relationships with valuable clients.

It’s important to recognize these employees’ contributions and reward them with incentives that’ll help them feel valued and appreciated, thereby reducing employee turnover.

How to calculate your attrition rate

The first step is to decide how often you’d like to calculate your company’s turnover and attrition using the below attrition rate formula.

Most decide to do this once a year, while some prefer quarterly or even monthly reviews. The more often you do it, the more accurate the picture of your employee structure will be.

Step 1: Calculate the average number of employees

When looking at how to calculate attrition rate, the first step is to calculate your average number of employees within a set period. So, the first step would be to pick a time frame and stick to it.

Add the number of people employed by your company at the start of the period to the number of people at the end—then divide 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:

• 95 + 87 = 182
• 182 / 2 = 91

Your company employed 91 staff members on average during the period from January 1 through July 1.

Step 2: Find your turnover rate

Next, you need to calculate your turnover rate. Divide the number of employees who left your company within the period by your average number of employees—then multiply that number by 100.

For example: Let’s say 10 employees left your business between January 1 and July 1. Keeping with an average employee count of 91, your calculation would be:

• 10 / 91 = 0.110
• 0.110 x 100 = 11%

Your turnover rate in this example would be 11%.

Step 3: Calculate the attrition rate

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 left.
Next, you’ll need to know who left voluntarily and who left involuntarily.

From there, you’ll 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: Continuing with our previous scenario, your company has an average of 91 employees between January 1 and July 1. Of the 10 employees who left, let’s say eight left voluntarily and two were let go by the company.

Your calculation would be:

• 8 voluntary departures / 91 average employees = 0.088
• 0.088 x 100 = 8.8%

What’s the attrition rate in this scenario? The answer is 8.8%.

Be sure to track your attrition and retention rates over time and compare them to industry benchmarks. You’ll be able to spot any alarming patterns at the company level and better understand what the standards are across peer companies.

Tips for reducing employee turnover

While you can’t expect unlimited insight into employees’ lives or guarantee 100% consistency from them, there are ways to better understand and support your team.

Here are three ways you can stay in the loop:

Manager/employee one-on-one meetings

Proactive managers give their employees regular, in-the-moment feedback and take time for formal one-on-one meetings that build 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.

This 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. This gives HR and talent managers the opportunity to gut-check their onboarding strategy.

Decisions about who and when to hire are vital for organizational health and growth—and the balance between when and who is tricky to master. Hire too quickly, and you risk the financial and cultural costs of a mis-hire. Hire too slowly, and you leave employees on short-staffed teams. This can also increase the risk of burnout—which everyone wants to avoid.

Attrition vs turnover FAQs

Here, we’ve answered some of the most frequently asked questions about attrition vs turnover.

How long does employee attrition take?

When companies seek to downsize via employee attrition, it may take months or even years to reach the desired staff size because attrition is voluntary and somewhat unpredictable. Some companies that need to downsize right away offer financial incentives for their employees to leave, speeding up this process.

What is regrettable attrition?

Regrettable attrition is what 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, it’s best practice for HR leaders to schedule an exit interview. Departing employees can provide candid feedback, such as dissatisfaction with their compensation or with aspects of the company culture.

Left unchecked, a high regrettable attrition rate can lead to serious business consequences, including lost revenue, a drop in reputation, and the high cost of hiring and training new employees.

Is employee churn always negative?

No; employee churn isn’t always negative. Turnover and attrition can be expected or unexpected, planned or unplanned. The context and overall outcome are what make those changes either positive or negative for an organization. Sometimes, it can even be a mixed bag.

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 be cause for concern. The same is true for attrition levels.

Next steps: Keep your team happy and attrition low

Take on some of the tips we’ve featured to reduce the chance of increased attrition and to retain your top talent. Monitor and calculate your attrition regularly to spot trends that can be fixed to keep your teams motivated and continuing to do great work.