The natural reduction of a workforce due to resignations, retirements, or other voluntary departures without replacing those employees.
What Is Employee Attrition?
Employee attrition refers to when employees leave a company, through resignation, retirement, layoffs, or other reasons, and are not replaced. Unlike turnover, where new hires, attrition results in a permanent reduction in workforce size, typically follow departures.
What Causes Employee Attrition?
Attrition can occur for a variety of reasons, including:
- Voluntary resignation for a better job
- Retirement
- Relocation
- Health issues or death
- Organizational restructuring
- Hiring freezes or budget cuts
- Role or department obsolescence
While some attrition is natural, high attrition rates often point to deeper issues like:
- Poor management or leadership
- Lack of career growth
- Uncompetitive compensation
- Unfavorable work conditions or culture
What Is an Attrition Rate?
An attrition rate is the percentage of employees who voluntarily leave a company during a specific period, usually one year, without being replaced. It helps employers measure how well they’re retaining talent and can highlight workforce trends.
How to Calculate Attrition Rate?
- Divide the number of employees who left by the average number of employees
- Multiply the result by 100 to get a percentage.
Example:
- Start of year: 110 employees
- End of year: 90 employees
- Average: (110 + 90) / 2 = 100
- If 20 employees left during the year:
20 / 100 = 0.20 = 20% attrition rate
How Long Does Attrition Take?
If a company is intentionally downsizing through attrition (rather than layoffs), the process can take months or years, since it depends on when employees voluntarily leave. Some businesses may offer voluntary exit incentives to speed up the process.
When Is Attrition Strategic?
Attrition can be a cost-effective and less disruptive way to reduce headcount during:
- Economic downturns
- Organizational restructuring
- Mergers or acquisitions
Rather than firing staff, companies may pause hiring and let natural attrition reduce workforce size over time.
How to Reduce Unwanted Attrition
If high attrition isn’t part of your strategy, take steps to retain top talent:
- Hire for both skills and cultural fit
- Offer competitive pay and benefits
- Provide career development opportunities
- Act on employee feedback and engagement surveys
