Attrition is a term used to describe the reduction of a workforce by not replacing employees who leave voluntarily.
Workers leave for various reasons, including the following:
- Getting a better job elsewhere
- Moving away
Generally, organizations fill vacancies as they arise. However, there will be times when a business freezes hiring, and vacancies are left unfilled. For example, a role can become obsolete following a restructuring or operational change. If a company faces financial difficulties, it may decide to cut the wage bill. Rather than introducing layoffs, the organization can choose not to fill vacancies. Or it may choose to offer financial incentives encouraging employees to leave and speeding up the attrition process.
What Is An Employee Attrition Rate?
An employee attrition rate measures the number of workers leaving the organization that are not replaced.
Use the following equation to work out the employee attrition rate in your company:
Number of attritions / Average number of employees x 100 = Employee attrition rate
So, divide the number of employees leaving the company over a set period (say one year) by the average number of employees. And then multiply by 100.
Employee attrition rates vary widely between different industries. Benchmark your result with the industry average to see how you are doing.