Attrition Rate

What is Attrition Rate?

Attrition rate is a reduction in the workforce caused by retirement or resignation, without plans to fill or replace that vacant job position. Outside the HR context, the term attrition refers to a reduction in strength or a weakening — which is likely the reason why the term has a negative connotation, even when there can be positive outcomes resulting from a reduction in staff.

Unless your company is adequately prepared for employees who are planning to resign or retire, attrition can be costly. Your company may experience a loss in productivity, particularly when the departing employee is the only one, or one of very few employees, familiar with that position. In addition to diminished productivity, you stand to lose institutional knowledge.

Employees who have been with the company for years understand how the company operates, and are familiar with the mission and the company’s ethics and principles. They are likely to be involved in training new employees, precisely because they are extremely knowledgeable about company practices, policies and objectives.

What is the importance of Attrition Rate?

There are costs associated with losing employees, but the tangible costs for workforce planning exist in every area of HR. What you may be more concerned about are the intangible costs of attrition, and even those are manageable. When you approach workforce planning with creativity and attention to workers’ intrinsic needs, you can sustain high morale, job satisfaction and engagement among your employees. If you treat attrition as a negative, it will be.

On the other hand, planning for attrition and successfully managing the cost of attrition happens through open communication, succession planning, employee development and making it clear how much you value employees who have contributed to the company but who are now moving on.

How do you calculate attrition rate?

Attrition rate formula

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