Attrition

What Is Employee Attrition? Definition, Attrition Rate,

Factors, and Reduction Best Practices
Staff Writer Feb 21, 2020 | 06:11 PM | 10 Mins Read | Level - Basic | Read Mode
Chiradeep BasuMallick Contributor, HR Technologist Full Bio
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Employee attrition is defined as the natural process by which employees leave the
workforce – for example, through resignation for personal reasons or retirement –
and are not immediately replaced.

Some forms of attrition are unavoidable, like if an employee is retiring or is moving to another city. But
after a certain threshold, attrition can make a big dent in your company’s bottom line as well as its
culture. In this primer, we tell you all you need to know about employee attrition, and how to measure
it accurately.

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Attrition is an inevitable part of any business. There will come a time when an employee wants to leave
your company – for either personal or professional reasons.

But when attrition crosses a particular threshold, it becomes a cause for concern. For example, attrition
among minority employee groups could be hurting diversity at your organization. Or, attrition among
senior leaders can lead to a significant gap in organizational leadership. Do you know where your company
stands on the employee attrition curve?

Table of Contents

 What Is Employee Attrition?

 What Are the Different Types of Attrition?
 What Is Employee Attrition Rate?
 4 Factors Affecting Employee Attrition
 Can Attrition Be Beneficial?
 Recent Trends in Attrition, with Examples from Google and Uber
 Best Practices to Reduce Employee Attrition Rate

What Is Employee Attrition?

Employee attrition occurs when the size of your workforce diminishes over time due to unavoidable factors
such as employee resignation for personal or professional reasons.

Employees are leaving the workforce faster than they are hired, and it is often outside the employer’s
control. For example, let’s say that you have opened a new office designated as the Sales Hub for your
company. Every salesperson must work out of this office – but a few employees cannot relocate and choose
to leave the company. This is a typical reason for employee attrition.

But there are other reasons for attrition as well, including the lack of professional growth, a hostile work
environment, or declining confidence in the company’s market value. Weak leadership is another factor
that often drives attrition among employees.

Employee attrition vs. turnover

When defining attrition, remember not to confuse it with turnover. Vacancies left by attrition aren’t
immediately filled up. This is because a lot of factors can contribute to attrition, including retirement,
planned resignations, and structural changes.
Turnover, in contrast, is a more short-term metric. The dent made by turnover must be addressed
immediately through rehiring.

Learn More: Why Your Best Employees Quit

What Are the Different Types of Attrition?

There are five types of employee attrition that you need to know of:

1. Attrition due to retirement

If two or three people have retired from your company this year, this is statistically too small an employee
group to count under attrition. However, if a sizable chunk of your workforce retires at the same time, this
can cause attrition.

Attrition due to retirement shouldn’t be swept under the rug – your senior professionals may choose to
retire early or become independent consultants due to factors other than age.

2. Voluntary attrition

This is the most common type of attrition, where employees decide to simply quit their jobs. There can be
many reasons for voluntary attrition (more on that later) and most of them are in your control.

You should proactively try to curb voluntary attrition among high-value talent, as this can bring down your
productivity over time. For example, if a company sees its marketing experts moving out of different
business units, it’s a clear cause for concern.

3. Involuntary attrition

In this scenario, it is the company and not the employee that initiates the exit. For example, the employee
may have shown instances of misconduct in the workplace – a common reason for involuntary attrition.
Structural reasons could also cause attrition. Mergers and acquisitions are often followed by a wave of
involuntary attrition.

4. Internal attrition

Here, employees are quitting their jobs in one department to join another department. In some cases,
internal attrition is desirable, as it routes talent towards more profitable areas. It also ensures better
employee-job fitment.
But if a specific department has witnessed a high rate of attrition one year, it merits an investigation. Is
there something missing in the job? Is the manager inadequately skilled? These are questions that HR
needs to ask and find answers to.

5. Demographic-specific attrition

This is a significant concern for progressive companies trying to build an equal-opportunities workplace.
Demographic-specific attrition means that employees from a single group – women, ethnic minorities,
people with disabilities, veterans, or older professionals – are leaving the company in droves.

You need to immediately deploy employee surveys to identify the root cause of demographics-based
attrition before it affects your workplace culture. A positive culture can be the antidote to the quitting
epidemic.

Learn More: How to Identify Flight-Risk Employees

What Is Employee Attrition Rate?

Attrition measures how many people left a company/office/department compared to the average number
of people employed in that year. This takes into account fresh hires as well. Here’s a simple formula to help
you calculate attrition:

 Conduct a headcount to know how many employees you started with at the beginning of the year.
Let’s say this number is 1,000.
 Keep track of how many people leave throughout the year. Let’s say 200 employees left the company
due to voluntary and involuntary reasons.
 Keep track of the employees you hire across the year, and conduct a final headcount at year-end.
Let’s say that you hired 400 people that year – this means your final headcount is 1,400.
 Now, calculate the average number of employees for that year. In our example, this will be
(1000+1400)/2 = 1,200.
 Finally, calculate the number of employees who left as a percentage of the average number of
employees. This will give you the attrition rate: (200/1200) x 100 = 16.66%.

Simply put,

Attrition Rate = Number of Attritions/Average Number of Employees x 100

As you can see, the impact of attrition cannot be negated by going on a hiring spree. This is what makes it
such an important metric for companies.
Learn More: Why Employee Retention Techniques Are So Important - Q&A With Salesforce’s Ana Recio

4 Factors Affecting Employee Attrition

By now, you already know the top reasons for employee attrition. Let’s look at the reasons for voluntary
attrition:

Fig 1. The factors that cause employee attrition

1. Personal motivation

There has been a change in an employee’s personal life that compels them to switch jobs. New parents
might want to move to a city with better schools, a mid-career professional may want to return to school
– these reasons are endless.

By conducting detailed exit interviews, you can keep in touch with these employees and ensure that they
consider your company in the future, whenever they have an opportunity.

2. Professional motivation

This is where HR could play a massive role in controlling attrition. An employee might leave because they
felt there simply aren’t enough opportunities for career progression in your organization. This is the case
in several technology companies, where technical talent is forced to fight for managerial positions as they
move up the ladder. Take inspiration from Microsoft, which created a long-term technical track to prevent
professionally-motivated attrition.

3. Challenges with the workplace

This is another common reason for attrition. Challenges in the workplace can range from uncollaborative
leadership to the lack of requisite tools for work.
This type of attrition is relatively easy to fix. Ask for regular feedback, listen to the voice of the employee,
and address any gaps in their employee experience. Typically, someone who is happy with their job won’t
quit if most of their workplace requirements are met.

4. Poor employee-to-job fitment

We have all seen employees who join a company full of enthusiasm, only to leave a month or two later.
This could be an indicator that the job was not right for that candidate, to begin with.

You can address attrition arising from this factor by finetuning your job descriptions as well as the
onboarding process. Employees will know exactly what to expect, and you are less likely to witness new-
hire attrition.

Learn More: Driving Retention Using Talent Data and Analytics

Can Attrition Be Beneficial?

Interestingly, attrition isn’t always a bad thing. In many cases, turnover can actually be good for business
for the following factors:

 Poor-performing employees leave your company, reducing overheads and making room for new
talent.
 In one-dimensional workplaces (for example, tech companies employing a disproportionately large
number of men), attrition can enable diversity.
 It roots out employees who aren’t a good fit for their job and probably shouldn’t have been hired in
the first place.
 It helps to create a dynamic workforce, as the same employees with the same perspectives aren’t
running the company for decades on end.
 It is required in times of structural alterations, like when you’re pivoting towards a new business
direction or have insufficient funds.

Keep these possibilities in mind when analyzing your employee attrition rate. It will depend on the kind of
talent lost, and why they left to figure out the impact of attrition on your business. You can analyze this
using HR analytics.

Learn More: Top Trends Driving the Demand for HR Analytics

Recent Trends in Attrition, with Examples from Google and

Uber
Expectedly, the rate of attrition varies across industries, job roles, and sub-sectors.

For example, LinkedIn’s 2018 talent turnover report found that technology (13.2%), retail and consumer
products (13%), and media & entertainment (11.4%) are the industries with the highest turnover rates. But
if you look within media & entertainment, marketing specialists are far more likely to quit at 19.8%, than
the average technology sector employee.

It is vital to take these trends with a grain of salt and deep-dive into your own company for the most
relevant metrics. That's precisely what Google did in its 2018 Annual Diversity Report with a separate
section dealing with employee attrition. Here’s what Google found:

 Attrition among black and Latinx employees outdid the attrition in other demographics, as well as
the company average, by a wide margin.
 Black employees make up just 2.5% of Google’s U.S. employee base. Latinx employees are only
slightly higher, at 3.6%.
 White and Asian employees comprise the majority of the workforce.

This example from Google highlights why monitoring, measuring, and addressing attrition is so essential.
The company turned an honest spotlight on its workforce, guiding the way towards a more equitable
future.

Another example underscoring the importance of measuring attrition is Uber. Uber has categorically
denied above-normal attrition rates – but anecdotal evidence suggests otherwise. In 2019, when the
company filed for an IPO, its public disclosures mentioned several instances of workplace culture issues,
poor employer reputation, and reduction in employee incentives. This can be linked to a large number of
employees who have allegedly left Uber in the last couple of years.

There is a clear difference between Google and Uber’s attitudes. While Uber approaches attrition as an
inevitable outcome of its workplace policies, Google takes a more honest and candid stance, admitting that
employee attrition is an issue that needs to be addressed. And this is in sync with the overall retention and
attrition climate in the U.S. today.

Take a look at these trends highlighted in the 2019 Retention Report by Work Institute:

 Preventable attrition is more prevalent than unpreventable attrition. 10, 6, and 6 out of 100
employees left due to relocation, retirement, or termination – that’s just a total of 22%.
 By 2023, the rate of attrition will be so high that 35% of employees will leave every year to work in a
different company.
  In 2018, the number of vacancies crossed the number of unemployed workers for the first time. This
means that you can’t rely on basic job satisfaction to keep your employees loyal. There are more
options than ever before.
 Career development was the no. 1 reason for leaving, the work-life balance came in second, and
manager behavior was a close third.

These trends suggest that attrition is now standard at every company, and employers must sit up and
take notice. We recommend that you follow in Google’s footsteps and carefully consider the root cause of
attrition among your workforce.

Learn More: Key Ways to Reduce Your Employee Turnover Rate

Best Practices to Reduce Employee Attrition Rate

There is an apparent downside to attrition – your workforce shrinks in size, you lose out on valuable
product/domain knowledge, and you risk damaging your employer brand. That's why, in 2020, companies
should:

 Assess for job and culture fitment right at the time of hiring
 Offer learning and employee development opportunities to accelerate career growth
 Regularly solicit feedback on employee satisfaction
 Ensure a competitive pay package compared to other companies
 Conduct detailed interviews after an employee has exited to spot attrition trends

Fig 2. Some ways to reduce employee attrition

Now that you know the definition of attrition and its various nuances, you can approach this metric from a
clear, informed point of view. Remember, there is no one-size-fits-all model that defines the causes of
employee exits. Segment the workforce into specific groups, use cutting-edge people analytics, and
measure improvements year-on-year to stay ahead of the attrition curve.
What, in your experience, is the most common reason for attrition? Share your thoughts with us on
Facebook, LinkedIn, or Twitter.