What Is the Employee Attrition Rate
We can define attrition as the percentage of employees who leave a company during a certain period.
Companies can calculate this number in various ways. Still, the most common way to calculate it is by dividing the total number of employees who left in a given period by the average number of employees during that same period. This blog post will explain how to calculate the attrition rate and discuss some factors that can contribute to it.
What Is the Average Attrition Rate in Companies
The average attrition rate in companies varies widely. The average turnover rate for companies in 2020 was 57.3 percent. However, this percentage drops significantly—to only 25% if only voluntary separations are considered.
High employee churn rates are usually due to poor management practices, insufficient training programs, lack of engagement among workers, and general dissatisfaction with the job.
What Causes High Attrition Rates
There are many factors that can contribute to high job attrition rates in a company. Some of the most common causes include poor management practices, insufficient training programs, lack of engagement among workers, and general dissatisfaction with the job.
Other causes include low salaries, lack of advancement opportunities, too much work or not enough work responsibilities, and poor working conditions.
How to Reduce Attrition of Employees
There are a few ways that companies can reduce employee churn. The most obvious solution is to focus on improving the work environment and creating a more positive work experience for employees.
Other solutions include offering better pay and benefits, providing more training and development opportunities, and increasing workplace flexibility.
How to Calculate the Attrition Rate
In order to calculate how many employees you should expect to lose in a year, you need to know the next data:
- How long the measuring period is (month, year, etc.)
- Number of employees you have at the start of the measuring period
- How many employees you have at the end of the measuring period
- Number of employees hired in this period
- How many employees left the company
Let’s say you’ve started the month of January with 100 employees. No one joined your company during that time, but 20 people left.
The first step to calculating turnover rates of employees is to find the average number of employees for the given period.
You do this by adding the number of employees at the start of the analyzed period (100) to the number at the end of the same period (since we know 20 employees left, this means there were 80 left at the end of the month). This will sum up to 180—you divide this number by two to get the average number of employees for that month (90).
For the exact attrition rate calculation, divide the number of employees who left in a given period by the average number of employees during that same period. Now multiply the number by 100% to get the percentage. Or, in our example:
The attrition rate formula is:
So, if you had 100 employees and 20 of them left in January, your employee turnover rate equation would show a 22.22% attrition rate.
Or:
The attrition rate is usually expressed in percentages.
How to Calculate the Attrition Rate in Excel and Google Sheets
The attrition rate can also be calculated in Google Sheets or Excel by using some of the basic formulas. To do this, you need to know the same metrics mentioned in the previous section of the article.
Here’s how our team simplified the employee attrition analysis process:
Download Google Sheet template FREE
The sheet is free to download and doesn’t require any sign-up or leaving your personal information. Just make a copy and input your own data to find out your company’s monthly or annualized turnover rate.
Why Is the Attrition Rate Important for a Company
The employee attrition rate is an important metric because it can indicate how healthy a company is. High attrition rates can be a sign of poor management, low employee morale, and general dissatisfaction with the job.
Low staff attrition rates, on the other hand, can be a sign of a healthy company where employees are engaged and satisfied with their work.
Therefore, it is crucial for companies to monitor how many employees they are losing and how often. This will allow them to identify any potential problems and address them before they become too serious.
Conclusion
The employee turnover rate is an important metric—hence knowing how to calculate the attrition rate on your own is very handy.
As previously stated, many factors can contribute to high attrition rates. The most common causes include poor management practices, insufficient training programs, lack of engagement among workers, and general dissatisfaction with the job.
There are a few ways that companies can reduce employee attrition. These include improving the work environment and creating a more positive work experience for employees.
Other solutions include offering better pay and benefits, providing more training and development opportunities, and increasing workplace flexibility.