How to calculate employee attrition rate

How to calculate employee attrition rate?

Employee attrition rate is a metric used to measure the rate employees leave an organization. It is an essential metric for businesses to track. However, high attrition rates can lead to increased recruitment and training costs and a loss of valuable knowledge and experience within the organization. In this blog post, we will discuss how to calculate employee attrition rate and what steps can be taken to reduce it.

Now, why is the employee attrition rate such a big deal? Well, a high rate of turnover can be a major headache for any business. It costs a ton of money to recruit and train new employees constantly, and it can also lead to a loss of valuable knowledge and experience within the company.

That’s why it’s so important to keep tabs on your employee attrition rate and take steps to reduce it if it starts to creep up.

But before we reduce the employee attrition rate, let’s discuss how to calculate it. It’s pretty simple. All you need is the total number of employees at the beginning of a given period, the number of employees who left during that period, and the total number of employees at the end. Then, you plug those numbers into the following formula:


(Number of employees who left / Total number of employees at the beginning of the period) x 100 = Employee attrition rate


For example, if a company had 100 employees at the beginning of a quarter, and 5 employees left during that quarter, the employee attrition rate for that quarter would be:

(5 / 100) x 100 = 5%

It’s essential to remember that when calculating employee attrition, you should choose a specific time frame, like a quarter or a year. This way, you can get a more accurate idea of how many employees are leaving and compare it over Time. Understanding the first-year attrition rate is especially important because one-third of new hires decide to quit in the first year.

employee attrition rate formula

Remember that the number of employees leaving a company is one of many things to consider when checking how well the company is doing. You should also keep track of other things like:

  • Employee engagement: how happy employees are,
  • Turnover costs: how much it costs to replace people who leave,
  • and Time to fill: how long it takes to find someone new to fill a job.

This will give you a better idea of what’s happening with the company’s employees. The employee attrition rate is a good starting point for understanding how well your business retains its employees. Now, let’s talk about some things that can contribute to a high employee attrition rate.

  • Poor management is one of the biggest culprits. If your managers need to provide the support and guidance that employees need, it’s no wonder people are looking for greener pastures. And that’s okay for morale. But, unfortunately, it’s bad for business.
  • Another thing that can contribute to high turnover is the need for more career development opportunities. If your employees don’t see a clear path to advancement, they will start looking for jobs where they do.
  • Working conditions are also a significant factor. If your employees work in an uncomfortable or hazardous environment, they will only stick around briefly. And let’s remember about compensation and benefits. If your employees are happier with their pay and perks, they will be more likely to jump ship.
  • If an organization has low employee engagement, it can cause a high attrition rate because employees are unhappy in their jobs and may be actively looking for new opportunities. They may feel undervalued or unappreciated and seek employment elsewhere to find a more fulfilling work environment. When employees are not engaged, it means they are not invested in their work or committed to their employer. This can lead to feelings of boredom, frustration, and lack of purpose. When these negative feelings persist, it can make employees more likely to quit their jobs.

How to reduce employee attrition rate?

Simply measuring employee attrition is not enough – building and implementing strategies to reduce it actively is essential. Companies can increase employee satisfaction, productivity, and retention by proactively addressing the root causes of high employee turnover and creating a positive work environment that meets employees’ needs.

In this way, reducing employee attrition can save businesses time and money and lead to a happier and more engaged workforce.

To reduce employee attrition rate, businesses can take several steps, including:

  • Improving management and leadership: Managers are crucial to employee satisfaction and engagement. Giving managers the training and resources they need to be influential leaders can help reduce employee turnover.
  • Investing in employee development: Providing employees with training and career development opportunities can help them feel more engaged and satisfied with their job.
  • Improving working conditions: This can include things like providing a comfortable work environment, offering competitive compensation and benefits packages, and implementing flexible work arrangements.
  • Encouraging employee engagement includes fostering a positive work culture, recognising and rewarding employee achievements, encouraging open communication between management and employees.
  • Exit Interviews: Conduct exit interviews to understand why employees are leaving. It will give insights on how to improve the retention rate.
  • Improve compensation and benefits: Offer competitive salaries and provide bonuses and perks like health insurance, retirement plan, and paid Time off can increase employee retention.
  • Create a sense of belonging: Employees stay where they feel valued, create a team culture, celebrate wins and birthdays, and receive regular employee feedback and recognition.

The employee attrition rate is an essential metric for businesses to track. High rates can lead to increased recruitment and training costs and a loss of valuable knowledge and experience within the organisation. By understanding how to calculate the employee attrition rate and implementing strategies to reduce it, businesses can improve their bottom line and create a more positive and productive work environment.