What is Attrition?

Definition and examples of Attrition
By Abhishek Kathpal Updated 07 August, 2022

The same set of people cannot keep working in a company forever. The reason for employees quitting their workplace can either be professional or personal. However, the constant thing is employees will leave the company, and it can be a major concern. Attrition is unavoidable in a company, but the response of the manager after it will determine the level of problem it can cause. There may be diversion within the company when attrition occurs among the minority workers. In contrast, a considerable gap in leadership within the company will arise if attrition occurs among senior leaders.

What is Attrition

Attrition meaning and definition

The reduction in the size of the employees of a company as a result of unpreventable factors is attrition. Based on statistics, it is when the rate at which workers quit is higher than the rate at which they are hired. Most employers cannot persuade employees not to leave work because their reasons can be personal or professional. Employees quit their job for many reasons, such as the inability to relocate, better salaries or wages offered elsewhere, hostility within the workplace, lack of confidence in the company, and so on.

What Are the Different Types of Attrition?

Employees quit working for many reasons; however, there are five primary types of attrition. They are:

  1. Attrition due to retirement: A time will come when some employees will need to retire, and attrition may occur as a result of their retirement, depending on their numbers. If the number of employees retiring is small, it is technically not attrition; however, if a massive number of them quit, it is attrition. When such attrition occurs, the company needs to look for replacements or risk the consequences of a talent gap.

  2. Voluntary Attrition: Workers can suddenly decide to quit a job; such attrition is known as voluntary attrition and is the most typical type of attrition. Many reasons can lead to workers leaving their job suddenly. However, most of the time, the employee can prevent it from happening or work around it. It is the employers' job to convince their rising talents not to quit so as not to hamper the business's productivity. For instance, voluntary attrition within the marketing department of a company should not be overlooked as it will hugely affect the company's ability to make sales or draw in customers.

  3. Involuntary Attrition: This type of attrition results from a company initiating the dismissal of employees. Most of the time, involuntary attrition usually occurs after the employee commits huge misconduct at work. Also, the structure of the business can lead to involuntary attrition. Many involuntary attritions typically take place after merging or acquisition of companies.

  4. Internal Attrition: This type of attrition occurs in the same company, and it appears in a scenario whereby employees from a company's department leave for another department. Some employees leave a department to go to another because that is where they are better suited, which is a good thing for the company. However, it will leave a gap within the department they are moving from, thereby reducing their productivity. Constant attrition in a particular department of the company is worth investigating if it persists for a year.

  5. Demographic-specific Attrition: This type of attrition is particular to a group leaving the company in huge numbers. It is a major concern for businesses that aim to create equal opportunities at work. When such attrition occurs, identifying the cause of the problem is essential, and so is acting on it to prevent further occurrence. The company's culture will become affected if the root of this type of attrition is not identified.

What Is Employee Attrition Rate?

It is possible to determine the rate at which employees leave a company or department and then compare it with the rate at which they are hired. Newly employed workers are also accounted for when calculating the rate of attrition. To calculate the attrition in a company, the following are necessary:

  1. Knowing the number of employees in the company at the beginning of the year by conducting head counts. Let us assume the total number of employees is 500

  2. Obtain the number of employees no longer working at the company for personal or professional reasons. Assuming the number is 150 for the sake of calculation.

  3. Obtain the number of newly hired employees in that year. Let us assume the number is 300; thus, the total number of employees in the company for that year is 800.

  4. Then, calculate the average number of workers in that year as illustrated below. (500+800)/2 = 650

  5. To obtain the Attrition rate, calculate the number of employees that quit the company as a percentage of the average number of workers. This is shown below: (150/650) x 100 = 23.08%

Thus, Attrition rate = (number of Attritions / average number of employees) x 100.Knowing a company's Attrition rate is vital to such companies' growth as the attrition will leave a gap within the company, thus, the need to hire more employees.

About the Author

Abhishek Kathpal

Abhi is the co-founder at Longlist.io. Funded by US based OnDeck, Longlist is currently enabling 50+ businesses to increase their candidate and client reach outs, automating the workflow across stages.

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