Employee Attrition Rate: Definition, Calculator, Types and Causes, Importance

When one employee parts ways with your company, that is a shame. But when a lot of them leave, that is a concern.

You have probably heard a storm coming out of nowhere and hitting the workforce everywhere: is the Great Resignation – millions of individuals, from front-line employees to senior executives, are quitting their jobs every month.

According to the U.S. Bureau of Labor Statistics, over 4 million Americans quit their jobs in August.

So, what can you do to avoid the storm? Where is the silver line?

In the current post-pandemic world, every business needs to learn how to attract and retain talented employees.

If you don't know much about your company’s attrition rate (also referred to as churn rate), don’t worry. It is not too late to learn about the attrition rate, including how to calculate attrition rates, causes of high attrition rates, and actionable tips on how to increase retention.

So, if you are ready to improve your staff attrition and keep your best employees, read on.


  • What is the attrition rate?
  • What makes attrition different from other processes?
    • Attrition vs. Turnover
    • Attrition vs. Retention
    • Attrition vs. Layoffs
  • How to calculate the employee attrition rate?
  • The five main types of attrition
  • The principal causes of high attrition rates
  • How to improve employee attrition rates?
  • Wrap Up

1. What is the employee attrition rate?

The term attrition refers to a gradual but deliberate reduction in staff numbers occurring as employees retire or resign and the company is not replacing them.

This measurement is called the attrition rate, and it calculates the percentage of employees who have left voluntarily or involuntarily over a period. 

Employers want a low attrition rate because it means that employees are happy and they want to stay. 

The higher the attrition rate (or percentage), the more difficult it will be to keep up with business goals and objectives.

But before we dive in on how to calculate the attrition rate, let us find what makes attrition different from other terms we use and hear in the HR language.

2. What makes attrition different from other processes?


As we know, there is a difference between attrition and retention. Although the two sound very similar, they are entirely different concepts that require different approaches to combat them.

Attrition is when employees leave their job due to retirement, death, sickness, another opportunity, or, lately, – due to COVID-19.

Retention is when an employee stays at their job for a particular time. Retention data alone is not very informative about the health of your company.

But together, these two terms can help recognize trends you can act upon to help your business thrive. A high retention rate typically means that your company has a low attrition rate.

Attrition is the percentage of employees you have lost over a specific time.

Retention is the percentage of employees you have kept over a certain time. 


Although these terms are interchangeable, attrition is more of a long-term concept. Often, staff turnover is addressed by hiring people to fill gaps quickly.

In that case, turnover means to bandage the wound to your organization, whereas attrition is a signal to treat the potential root cause.

The company is not filling in immediately the vacancies left by employee attrition.

Turnover happens when people leave their job, and new employees replace them.

There are two types of employee turnover: voluntary and involuntary. Voluntary turnover is when an employee leaves the company due to poor payment, an unhealthy company environment, or a better job offer.

On the other hand, involuntary turnover is when the company fires an employee due to employee underperformance or behavioral issues, with the intent to replace them.

Employee turnover, or employee turnover rate, is a more short-term metric and is generally counted within one year.


Changes in management, company structure, or other aspects of operations can cause employees to leave voluntarily, resulting in a higher attrition rate.

The employee may take a new job, retire, or move. An attrition policy takes advantage of this inevitable changeover to reduce overall staff.

Layoffs are a different story.

Laying-off employees result in attrition if the company does not immediately hire as many new employees as it laid off. When a company faces a financial crisis, it must make tough calls and cut its workforce to stay afloat. In these cases, the company might implement a layoff with no intention of filling those positions again.

3. How to calculate employee attrition rate?

In every organization, employees leave. If the situation is not critical, you can patiently plan to save some costs as employees resign.

A voluntary quit may allow you to restructure your workflow. You may be able to transfer employees to different jobs and fill in only critical positions. Remember that in tough economic times, your attrition rate will likely show. For this reason, it is crucial to know how to calculate the employee attrition rate.

Most companies use special software to calculate attrition rates, but learning the formula for attrition can help you better understand the numbers and percentages involved.

Businesses usually determine attrition rates by the month, quarter, or year. When calculating an employee attrition rate, you can probably use exact numbers. Here is how you can calculate the attrition rate for employees:

For example, a human resources generalist needs to know the annual attrition rate. The company started the year with 100 employees. Over the year, fifteen employees left, and the company hired nine.

Here’s how the HR rep could find the annual attrition rate:

100 – 15 = 85

85 + 9 = 94

100 + 94 = 194

194 / 2 = 97

15 / 97 = 0.154

*0.154 x 100 = 15.46%*

Attrition rates can have both positive and negative effects on a company. When an employee leaves and the company eliminates the position, it can save on staffing costs.

However, the manager of the employee who left will typically shift the responsibilities to their team members, increasing their workload, stress, and sometimes leading to employee burnout.

4. The five main types of attrition

The employee attrition rate should be a top priority for employers and managers.

But you need to know more than just your numbers – because attrition rates can differ by demographics like age groups and career paths, gender, race/ethnicity, and education level.

The causes behind the attrition are equally varied. 

Here are five different types of attrition you should know:

# Attrition due to retirement

Employees of a certain age (depending on the industry) are more likely to retire. This type of attrition is also known as normal or natural attrition.

# Voluntary attrition

The revenues of a business are also affected by employee decisions to leave the company. This type of attrition is also named voluntary attrition or employee turnover. 

A low employee engagement can lead to voluntary attrition.

# Involuntary attrition

When an employee leaves the company, this may not be their decision. Instead, it may be an employee involuntarily leaving the company due to termination, demotion, or lack of motivation or promotion.

# Internal attrition

Internal factors are causing internal attrition, unlike other types of attrition. Internal attrition occurs mainly in career fields with high mobility and temporary job durations, such as the military and retail.

# Demographic-specific attrition

The type of attrition also depends on the specific demographics of employees. For example, younger workers tend to have higher turnover rates than older workers.

5. The principal causes of high attrition rates

Whatever your average turnover rate may be, the most important thing is recognizing the why.

Sometimes attrition can be natural.

But when your attrition rate is high, it is essential to focus on voluntary attrition. This topic gives you perspective on areas within your company that you can improve to create a better company culture and reduce staff turnover.

Here are some common causes of high attrition rates:


Your employees will notice if you ask them to take on more work, but you are not willing to pay them accordingly.

Adding new responsibilities without any compensation creates resentment feelings toward the company, which may lead them to leave. Employees will look at what other companies are offering for similar job roles.

The worst thing you can do is lose your valuable team members by not paying them what they deserve.

Career growth

When employees don’t see any career advancement opportunities, they will eventually start looking elsewhere for a place that values their talents and pays more money.

Whether this means moving up in the company or simply switching to a different one, it is essential to let your employees know that their role is crucial to your goals and available opportunities.

Work-life balance

There will always be days when you get pulled into work and can’t make it home in time for dinner.

But when your team members skip plans, work weekends, and come in on holidays to catch up on their workload, they will feel like they lost their personal lives.

Your employees need to maintain a healthy work-life balance, so encourage them to prioritize their personal lives.


People want recognition - it is a natural process. Without an employee recognition plan, your team members feel you don’t appreciate and value them. 

They will ask fewer questions and have less motivation to do their jobs. And it is a small step from these to absenteeism and resignation.

It is more challenging to give feedback to every employee, especially when most of them are working from home. But don’t let remote work stop you from regularly checking in with your team members to ask how they are doing and if there are any areas of improvement.

Company culture

Having an official list of core values is just half of the equation. Your employees will know if these are empty words that don’t translate into actions.

If you want your employees to buy into the mission, vision, and core values, they need to see that you practice what you preach.

6. How to improve employee attrition rate?

Employee retention is one of the most important goals of managers and company owners. After all, finding a new employee costs much more than keeping an existing one.

So how do you improve employee attrition?

# Evaluate the goals and motivation of your employees

Learn what your employees are looking for in their careers. Do they want additional responsibilities? A chance to work on special projects or more closely with management?

Be in consistent communication with your employees to make sure you know their goals and motivations.

# Keep your mission strong

Employees don’t just quit their job; they quit their companies.

Promote a positive culture and encourage healthy relationships among them. Make your company a desirable place to work.

# Have an open door policy

Employees need to know that they can come to you with problems or concerns without the fear of retaliation. Make sure they understand you value their opinions and that you are approachable.

# Challenge your employees

Some employees may not have the courage to ask or volunteer for new opportunities. If you think an employee would be great at handling new tasks, approach and allow them to grow in their role.

# Give constructive feedback

It is essential to let your employees know if they are meeting or exceeding expectations, but don’t forget to give them feedback if they are not. Make sure your praise and criticism are specific to know what they did to earn it.

Wrap up

The Great Resignation impacts business everywhere and forces companies to emphasize the attrition rate.

Businesses need to know what attrition rate is, why it is essential, calculate it, and improve it.

Failure to do so could lead to a decrease in revenue, employee morale, loss of talents, and the position on the work market.

And worst of all – you would not know the causes why employees are leaving and what you can do to keep them.

If you read through this post, you should be well-equipped to improve your attrition rate and keep your best employees.

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