Employee attrition and retention are like peas in a pod: attrition is the peas and employee retention is the pod. Companies must address them as a package deal, even though they’re not the same.
When employee retention is low, you have a problem: Happiness is down, engagement is off, or staff are leaving for better opportunities in a strong economy. High employee attrition might not signal a problem, but it’s still something you need to address.
In this article, we’ll cover everything you need to know about calculating and improving attrition rates at your organization, including:
- Attrition vs. retention
- Calculating employee attrition
- What high attrition says about your business
- How HR leaders can address attrition
What is the attrition rate?
Attrition rate measures how quickly people leave a company, whether voluntarily or involuntarily. It’s expressed as a percentage and serves as a key metric HR departments track to assess company health.
Attrition vs. retention
The retention rate measures the percentage of people who remain employed by a company over a specific period. This is the opposite of attrition metrics, which measure the percentage of employees who leave the company.
Retention is a complex metric that, on its own, doesn’t tell much about organizational health. To understand the nuances, you can look deeper into retention data, including turnover and attrition.
Attrition vs. turnover
Though often used interchangeably, attrition and turnover have distinct meanings. Employee turnover measures the rate at which people leave their jobs, voluntarily or involuntarily, during a specific period of time.
Attrition is a long-term concept, focusing on how many people leave over extended periods and seeks to use big-picture, strategic thinking to solve larger organizational problems.
Types of attrition
Attrition can take different forms, depending on the reasons behind departures. Understanding the various types helps organizations address the underlying causes and develop strategies to manage them successfully.
- Voluntary attrition is when staff choose to leave the organization. Reasons include seeking better opportunities, pursuing further education, dissatisfaction with their current job or company culture, or personal circumstances.
- Involuntary attrition is when the employer terminates an individual’s contract. Common reasons for involuntary attrition include poor performance, misconduct, layoffs due to restructuring or downsizing, or changes in business needs.
- Internal attrition refers to staff who leave their current position but stay with the company by transferring to a different department or taking on a new role. While this doesn’t result in a net loss of staff, it can affect team dynamics and require training and onboarding for new roles.
- Demographic-specific attrition describes turnover within a particular demographic group, such as age, gender, ethnicity, or employee tenure. For instance, a company might experience higher attrition rates among younger team members or within a specific department, which can signal issues with inclusivity, career growth opportunities, or workplace culture.
- Retirement attrition happens when team members retire and the company doesn’t immediately replace them, leading to a natural reduction in the workforce.
Why are attrition rates important?
Attrition rates provide valuable insights into workforce stability and overall company health. While some staff turnover is expected, unusually high attrition rates (anything over 20 percent) may indicate problems with your people strategy. These issues might include poor company culture, low staff engagement, inadequate compensation, ineffective management, or low job satisfaction.
High attrition leads to recruitment costs, training expenses, and delays in getting new hires up to speed. Replacing a departing team member often costs between six to nine months of their salary.
By analyzing and addressing the causes of attrition, companies can strengthen their workforce and reduce these costs, improving operational efficiency and long-term success.
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What do employee attrition rates say about your business?
Attrition isn’t necessarily a bad thing. A robust company can withstand minor reductions to its headcount without seeking immediate replacements.
However, sometimes your organization’s role in high attrition rates can’t be denied, which can point to potential issues with management, employee experience, or internal culture.
This offers HR professionals an opportunity to improve the organization as a whole.
How to calculate your employee attrition rate
To calculate attrition, divide the average number of departures in a given period by the average number of employees in that period, then, multiply by 100 to get the percentage.
This represents the number of people left after departures: In other words, how much manpower you’re losing. Keep in mind your attrition calculation isn’t measuring retention or turnover—it measures how quickly and efficiently your organization can replace people who have left.
What is a high attrition rate?
We can’t analyze the attrition rate in a vacuum: We look at the attrition rate within the context of what is happening in the industry, the area, and the world.
According to averages, you can consider any attrition rate over 20 percent high. However, this varies by industry, so it’s worthwhile to research how your organization’s rate compares to similar companies.
As a rule of thumb, if your annual rate exceeds 20 percent, it signals the need to investigate potential issues and explore areas for improvement.
Top causes of high attrition rates
Several factors can contribute to high attrition rates, including:
Pay
Compensation fundamentally impacts employee satisfaction and plays a significant role in reducing attrition and boosting retention. While pay isn’t the sole reason team members stay with a company, it ensures they feel valued and fairly compensated for their work.
It’s estimated that 80 percent of improvement in turnover rates stems from workers’ responses to higher pay. When people perceive their wages as below market rate or feel their compensation doesn’t reflect their contributions and experience, they may seek new job opportunities.
Regularly reviewing and adjusting pay structures to align with industry standards can help reduce attrition.
Growth and development
Today’s workforce prioritizes career growth and development opportunities. Engagement can decline if they have limited opportunities to develop new skills, take on more responsibilities, or advance within the company.
Over 90 percent of people report that they’d stay in their jobs longer if the company invested in their career. Organizations can invest in continuous learning programs, offering mentorship opportunities, and creating clear career progression paths that help staff envision a future within the company.
Company culture
As HR leaders, we already know how important culture is. But it put things into perspective to learn that a toxic corporate culture is the strongest predictor of attrition—10 times more important than compensation.
A positive, inclusive, and supportive workplace culture can foster loyalty and high performance—while a toxic culture with poor communication, lack of recognition, unfair practices, and high levels of internal competition can drive people away.
Nearly half of all decision-makers and leaders see a positive workplace culture as key to improving staff productivity, retention, and engagement. Companies that actively work to build a healthy culture—one that promotes collaboration, diversity, inclusion, and work-life balance—can retain their talent at higher rates.
Stress
The American Institute of Stress shares that around 1 million workers miss work every day due to stress. Stress affects both individuals and organizations on a large scale.
High levels of workplace stress can stem from various sources, including excessive workloads, unrealistic expectations, lack of control over one’s work, poor management practices, and insufficient support. Chronic stress can lead to burnout, decreased productivity, and mental and physical health issues—all of which can increase the likelihood of team members leaving the organization.
Identify signs of stress early, foster a supportive work environment, and address the root causes of stress to improve your people’s wellbeing.
How to reduce high attrition rates
HR leaders can help their companies minimize attrition rates and foster a more stable workforce by incorporating these practices:
1. Plan for varied employment
The best plans consider the company’s and people’s needs. HR leaders can create flexible workforce strategies that accommodate diverse work arrangements, including full-time, part-time, freelance, and remote roles.
By offering a range of employment options, companies can attract a wider talent pool and retain professionals whose needs align with the organization’s evolving demands. This can help improve job satisfaction and engagement, reducing the likelihood of high turnover.
2. Retain your people
HR leaders can increase retention by offering competitive compensation packages, opportunities for personal and professional growth, and fostering a company culture based on trust, appreciation, and respect.
3. Incorporate a warm offboarding program
HR leaders can implement an offboarding program that allows people to leave on positive terms. The offboarding process might include exit interviews, feedback sessions, and expressing genuine gratitude for the person’s contributions.
Send off departing people with gratitude and well-wishes for the next step in their professional journey. This can exemplify integrity and people can serve as positive ambassadors for their ex-employer.
4. Leave the door open for people to return
HR leaders can work with managers and executives to develop policies and a company culture that welcomes boomerang employees. High-quality people who leave and later decide to return can quickly contribute their valuable knowledge, experience, and enthusiasm.
Learn more about attrition rates
If you’ve still got questions about attrition rates and how they impact your organization, explore these FAQs.
Is attrition the same as turnover?
No, attrition and turnover are different. Attrition describes the gradual reduction of the workforce through resignations, retirements, or deaths, with no immediate replacement. In contrast, turnover includes both voluntary and involuntary exits where companies often refill the positions. Understanding these distinctions helps HR leaders address specific challenges and develop targeted retention strategies.
Is a high attrition rate good?
A high attrition rate is generally problematic for organizations. It often signals underlying issues such as poor management or low team member satisfaction. Although high attrition might sometimes indicate positive changes like restructuring or the removal of underperforming team members, it usually reflects more significant problems within the company. Analyzing the reasons behind the high attrition rate is key to understanding its impact and addressing any issues effectively.
What does a 20 percent attrition rate mean?
A 20 percent attrition rate indicates that 20 percent of the workforce has left the company over a specific period, either voluntarily or involuntarily. Whether this rate is high or low depends on factors such as industry, company size, and market conditions.
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What does 80 percent attrition mean?
An 80 percent attrition rate indicates that a significant portion of the workforce has left the company within the period. This extremely high rate often signals serious underlying problems, such as widespread dissatisfaction, poor management, or severe financial instability, and requires immediate attention to prevent further losses.
Understand and improve your company’s attrition rate
Attrition is a natural part of the employee lifecycle. High employee attrition rates mean there’s room to grow—not that you’ve necessarily been doing anything wrong.
By recognizing attrition risk indicators and addressing the root causes, companies can foster a more engaged and loyal workforce. This proactive approach helps retain valuable talent and strengthens an organization’s resilience to create a stable, satisfied, and productive workforce that drives long-term success.
