Attrition rate refers to the gradual reduction in the number of employees in an organization due to employee departures, such as resignations, retirements, or terminations.
It is typically expressed as a percentage and can provide valuable insights into employee turnover and retention within a company.
The attrition rate is calculated by dividing the number of employees who left during a specific period by the average number of employees during that same period and then multiplying the result by 100.
The formula is as follows:
Attrition Rate (%) = (Number of Employees Who Left / Average Number of Employees) x 100.
A high attrition rate suggests that an organization is experiencing significant employee turnover, which can be detrimental to its stability and success.
It may indicate problems with employee retention, the work environment, or other underlying issues that need to be addressed.
High attrition can lead to increased recruitment and training costs, decreased employee morale, and potential disruptions in workflow.
It may also affect your company's ability to retain top talent and negatively impact its reputation as an employer.
To reduce attrition, companies can focus on,
improving workplace conditions
offering competitive compensation and benefits
providing opportunities for career growth and development
maintaining a positive work culture
Employee engagement and retention strategies play a significant role in addressing attrition issues.
On an average, companies aim to maintain an employee attrition rate of 10% or lower, however, an acceptable attrition rate can vary by industry and organization.
You can compare your attrition rate to industry benchmarks and establish goals that align with your company's specific circumstances and objectives.