How to Calculate Attrition Rate

Employee Attrition Rate Calculator

Understanding Employee Attrition Rate

Employee attrition rate, often referred to as turnover rate, is a crucial metric for businesses to understand the rate at which employees leave an organization over a specific period. A high attrition rate can signal underlying issues within a company, such as poor management, inadequate compensation, lack of growth opportunities, or a negative work environment. Conversely, a low attrition rate generally indicates a healthy and stable workforce.

How to Calculate Attrition Rate

The calculation for employee attrition rate is straightforward. You need three key pieces of information:

1. Number of Employees at the Start of the Period: This is your total headcount at the beginning of the month, quarter, or year you are analyzing.
2. Number of Employees at the End of the Period: This is your total headcount at the end of the same period.
3. Number of Employees Who Left During the Period: This specifically counts the employees who voluntarily resigned or were terminated during the period. Note that this number should ideally be a subset of the employees who were present at the start, or it should account for new hires if your calculation method requires it. For the standard formula, we often focus on those who left from the initial pool. A more precise calculation might average the number of employees at the start and end, then divide the number who left by this average. However, the most common and simplest method is shown below.

The Formula:

The most common formula for attrition rate is:

Attrition Rate (%) = (Number of Employees Who Left During Period / Number of Employees at Start of Period) * 100

It's important to be consistent with the period you choose (e.g., monthly, quarterly, annually) to allow for meaningful comparisons over time.

Why is Attrition Rate Important?

• Cost Savings: Replacing employees is expensive. High attrition means significant recruitment, onboarding, and training costs.
• Productivity: High turnover can disrupt team dynamics and reduce overall productivity due to knowledge loss and the need for new staff to get up to speed.
• Morale: A constantly changing workforce can negatively impact the morale of remaining employees, who may feel overworked or uncertain about job security.
• Identifying Problems: A rising attrition rate can be an early warning sign that there are issues within the company culture, management, or employee satisfaction that need to be addressed.

Example Calculation:

Let's say at the beginning of the quarter, a company had 100 employees. During that quarter, 15 employees left the company. At the end of the quarter, there were 90 employees.

• Number of Employees at Start of Period = 100
• Number of Employees Who Left During Period = 15

Using the formula:

Attrition Rate = (15 / 100) * 100 = 15%

This means that 15% of the employees who were with the company at the start of the quarter left by the end of it.