HR and Absence Management Glossary

What is attrition rate?

Attrition rate, also known as employee turnover rate, measures the percentage of employees who leave an organisation over a specific period, without being replaced. It is a critical HR metric used to assess workforce stability, employee retention, and overall organisational health.

Unlike standard employee turnover, which accounts for employees leaving and being replaced, attrition specifically refers to positions that are vacated and not immediately filled. This can occur due to resignations, retirements, redundancies, or structural changes within a business.

A high attrition rate can signal issues such as poor job satisfaction, lack of career growth opportunities, or ineffective management, while a low attrition rate suggests strong employee engagement and retention strategies. Monitoring attrition helps businesses identify workforce trends and implement initiatives to improve employee retention and workplace culture.

How is attrition rate calculated?

To calculate the attrition rate, follow these steps:

Find the average number of employees by adding the number of employees at the start of the period to the number of employees at the end of the period, then divide by two.

Formula: (Employees at the start + Employees at the end) ÷ 2

Divide the number of employees who left by the average number of employees, then multiply by 100 to get the percentage.

Formula: (Number of employees who left ÷ Average number of employees) × 100

Example Calculation

Employees at the start of the year: 500
Employees at the end of the year: 480
Employees who left: 50

Step 1: Calculate the average number of employees: (500 + 480) ÷ 2 = 490

Step 2: Apply the attrition rate formula: (50 ÷ 490) × 100 = 10.2%

What is a ‘good’ attrition rate?

A good attrition rate varies by industry, company size, and workforce demographics, but generally, a rate between 10% and 15% per year is considered healthy.

An attrition rate below 10% suggests strong employee retention, but it could also indicate a lack of fresh talent or progression opportunities.

On the other hand, a rate above 15% may signal workplace issues such as low engagement, poor management, or limited career growth.

Industry benchmarks also play a role; for example, sectors like technology and retail tend to have higher attrition rates due to competitive job markets and seasonal employment, whereas public sector and manufacturing roles typically experience lower turnover.

While high attrition can indicate problems, some level of workforce movement is natural and can be beneficial for business growth. The key is maintaining a sustainable balance between retaining skilled employees and allowing room for new talent and innovation.

Types of employee attrition

There are different types of attrition that businesses should monitor:

Voluntary attrition: Employees leave by choice, often for better job opportunities, career changes, or dissatisfaction with their current role.
Involuntary attrition: Employees are let go due to redundancies, dismissals, or company restructuring.
Retirement attrition: Employees leave the workforce due to retirement.
Internal attrition: Employees leave a department but remain within the company in a different role.

Understanding the specific type of attrition can help businesses implement targeted strategies to improve retention.

Attrition rate vs turnover rate – what’s the difference?

While attrition rate and turnover rate are sometimes used interchangeably, there is a subtle difference:

Attrition rate typically refers to employees leaving without immediate replacement, leading to a shrinking workforce.

Turnover rate includes employees leaving but being replaced, maintaining the overall headcount.

Businesses should track both metrics to gain a full picture of workforce stability and employee retention.

How to reduce high attrition rates

Improve Employee Engagement – Create a positive work culture, offer meaningful work, and recognise employee contributions.
Enhance Career Development – Provide training, mentorship, and opportunities for internal promotions.
Strengthen Wellbeing Support – Offer mental health resources, flexible working arrangements, and a good work-life balance.
Conduct Exit Interviews – Gather feedback from departing employees to identify recurring issues.
Refine Hiring and Onboarding – Ensure new hires are a good fit for the company culture and receive proper training from day one.
Use Absence Management Software – High absenteeism can be a precursor to attrition, as frequent absences often indicate disengagement or underlying wellbeing issues. Absence management software helps businesses track and address absence trends, identify employees at risk of leaving, and implement early interventions such as wellbeing support or workload adjustments.