Attrition rate isn’t just another HR term. But it’s actually a big deal for the business; it hints at a silent leak in your company’s performance and profits. High attrition means people keep leaving, and every exit costs more than you’d expect.
The truth is many businesses don’t track their attrition rate properly. But let us tell you that knowing that number can help you understand why people leave—decisive information to make a positive work culture. Therefore, in this blog, you will know
- What is the attrition rate meaning in HR?
- Attrition rate formula for easy calculation
- Impact and cost of high attrition rates
- How can you avoid higher employee attrition? and
- How can HRMS software help in reducing undesirable attrition?
Ready? Let’s start!
What Is Attrition Rate?
First, understand what attrition in HR is! Attrition means an employee willingly leaves a company, and the company does not have to immediately find a replacement.
So, the attrition rate is a way to measure the number of employees who left the company on their own during a certain time. We can conclude this as follows:
Attrition means voluntary employee exits; the attrition rate measures how often it happens over time.
This is not just a number but can signal the company’s health. When attrition rates are lower, it may imply that the employees are happy with the management’s working style and the company’s overall culture. But the higher attrition rate can indicate that something’s wrong in the company.
High attrition can translate to:
- Growth opportunities are not available to employees.
- Dissatisfaction because of pay or work-life balance issues.
- Not liking management’s working style or the culture has become toxic.
That is why HR professionals closely track employee attrition in the company. This metric tells if the retention strategy is working or not.
How It Differs From Turnover
One more term, “employee turnover,” may confuse you with “attrition rate.” But both terms’ meanings differ slightly.
Attrition means that when an employee exits voluntarily and the company does not have to find a replacement immediately. This happens when an employee receives a better opportunity, changes careers, or has any personal reasons that make the employee resign.
But employee turnover is a broader term. In turnover, we calculate employee firings, layoffs, and retirements, along with voluntary resignations. This means whether the employee left of their own will or the company terminated their duties—both these cases are counted in employee turnover rates.
Keep a note that both impact business:
- Attrition becomes the reason for talent to leave.
- Turnover (especially involuntary) can negatively impact the productivity or morale of the team.
So, this makes it important for HR teams to understand both metrics differently so that they can reach the root causes to fix both cases.
Causes of High Attrition Rates
Employee attrition doesn’t happen randomly. Behind every resignation, there is a reason, which is quite crucial for HR to understand. Let’s see the major reasons for high employee attrition:
1. Poor Management and Leadership
The first and foremost reason is bad bosses.
There is a famous quote in the HR world: People quit managers, not jobs.
This quote seems so true. When the leadership is not supportive, criticizes instead of providing constructive feedback, or controls every little detail, employees get tired and feel frustrated. Also, lack of empathy, unclear communication, and not appreciating directly hurt morale. As a result, you see higher employee attrition rates.
2. Compensation and Benefits
When the salary is lower than the market standard, people start exploring for new jobs. The logic is simple: everyone wants fair compensation—the company wants good revenue, and the employee wants a good salary.
Not only basic salary but also perks and benefits like health insurance, paid leave, flexible hours, etc., matter. When these benefits feel missing, the employees feel underpaid and undervalued. So the bottom line becomes Low pay = high attrition.
3. Work Environment and Culture
Workplace culture is an invisible factor that has a real impact on attrition. No one can live for a long time in a bad, negative, and unfair environment.
Furthermore, employees want three things: respect, safety, and purpose. Without inclusiveness, trust, and positivity in the workplace, people begin to feel mentally disconnected, ultimately causing an increase in attrition rates.
So, if there is a friendly and growth-driven culture, employees become naturally loyal.
4. No Career Growth
Today’s workforce doesn’t just want a job but a career path. When they feel their career has stagnated—neither are they getting promotions nor are they able to learn new skills—then they start looking for other opportunities.
Lack of training and an unclear growth roadmap can also increase attrition.
Therefore, HRs have to define career development plans, upskilling programs, and internal promotions clearly and explicitly.
Impact of High Attrition Rates
Fluctuation in employee attrition rates is usually acceptable, but it becomes a problem when attrition keeps consistently high. The high attrition rate for long-term impacts not only the HR department but also affects the whole organization. How? Let’s understand this by three key examples:
1. Financial Costs
Every time an employee resigns, it costs the company time and money to hire new talent. Of course, we’ve read that attrition usually does not need replacement, but there are cases such as when a high-performing employee leaves, it may require immediate replacement. So the recruitment, onboarding, and training—all these cost greatly. The acceptable fact in the HR world is that replacing an employee can cost as much as 30-50% more of the annual salary.
Owing to this stat, think how much money and time it will cost to fix frequent employee attrition!
This simply translates to high attrition meaning low ROI on your people’s investment.
2. Lower Productivity and Morale
Increased attrition also impacts teams’ morale. Frequent changes to the team can disrupt the work rhythm. So, as new people come in, they need to be trained, and that takes time. This can feel like a hectic task and hinder the project progress. Obviously, frequently doing the same task feels redundant and can be the reason for stress and burnout.
Additionally, constant disturbance in the team or an unsuitable hire weakens the team bonding. Project collaborations also suffer, which do not seem to be ending nearly. All these factors lower productivity and team morale negatively.
As an HR, you can fix this by team building or employee engagement activities and provide regular appreciation, which rebuilds morale.
3. Damage to Brand and Reputation
Job seekers are smart. If a company’s Glassdoor reviews or LinkedIn updates are always full of exits, their trust gets eroded. High attrition signals that the company is unstable or that the work culture is problematic.
Additionally, potential hires will see these as red flags, and the best talent will move elsewhere.
To overcome this negative factor, improve your work culture, maintain transparency, and build a stable brand image by displaying internal testimonials.
How to Calculate Attrition Rate (Formula + Example)
Knowing the attrition rate is essential for HR. Without the right numbers, issues cannot be understood or fixed.
A. Attrition Rate Formula
Employee Attrition Rate = (Number of employees who left during the period ÷ Average number of employees during the period) × 100
Explanation:
Employees who left = People who voluntarily left the company within a specific time frame.
Average employees =The average of the starting and ending number of employees for the period.
Time frame: Monthly, quarterly, or yearly—the time period for which the analysis is required.
Example of Attrition Rate Calculation:
Suppose in a company:
- Starting employees = 50
- Ending employees = 44
- Employees who left = 7 (voluntarily)
So it becomes:
Average employees = (50 + 45) / 2 = 47.5
Attrition Rate = (15 ÷ 47.5) × 100 = ~31.5%
This means that approx 31.5% of the employees quit voluntarily during that period.
B. Different Metrics Associated with Attrition
A single number is not enough to understand attrition—its types and context also need to be understood.
1. Voluntary vs. Involuntary Attrition:
- Voluntary = when employees resign on their will because of career change, job dissatisfaction, or due to personal reasons.
- Involuntary = When the company fires someone or does the layoffs.
The reason and impact of both are different—hence it is important to track them separately.
2. Departmental vs. Overall Attrition Rates:
- Overall attrition = company-wide number.
- Departmental attrition = Individual attrition of departments like HR, sales, and tech.
This differentiation helps in pinpointing which area the problem is more.
C. What’s the healthy attrition rate?
A “healthy” attrition rate varies depending on the industry, but a general rule of thumb is that 10%–15% per year is considered a healthy attrition rate. According to the Deloitte India Talent Outlook Survey, attrition rates (2024) in different sectors in India are:
Note that:
- Too low attrition might hint at lack of innovation or growth.
- Too high attrition signals poor retention, low engagement, or culture issues.
- Higher rates are common in fast-moving sectors like IT, BPO, or startups, but anything above 15% should still be monitored.
Role of NYGGS HRMS Software in Reducing Attrition Rate
Keeping tabs on 100s of HR tasks, where all seem to be high priority, can be confusing, frustrating, and errorful. So with the right HR tool, like HRMS software, employee attrition calculations and employee engagement strategies can be automated. Readily available attrition rate in real time helps HR control the situation effectively.
NYGGS HRMS software does the same. It is a smart, data-driven automation solution that tracks, analyzes, and provides information to control attrition. It helps in:
- Exit tracking along with reason for resignation collection
- Analysis of employee exit interviews
- Continuous performance reviews and feedback
- Departmental attrition calculations
- Regular surveys to collect important information
- Anonymous suggestions recording about anything
- Attendance, payroll, and engagement reports
- Manager-wise attrition comparison reports
- Feature of retention risk prediction
- Time-wise and role-wise analysis of attrition measurement
- Detection of skill gaps to create personalized development plans
- And so much more.
NYGGS HR not only highlights problems but also suggests solutions to fix them. It helps set up effective employee training plans and promotes one-on-one check-ins, performance reviews, and feedback loops to build better employee engagement strategies. These features enable HR professionals to collect and think through strategies to reduce high attrition rates.
In short, NYGGS HRMS software helps organizations predict, prevent, and prepare for attrition challenges so that you do not lose talent. Instead, nurture them and include them for personal and professional growth.
Book a free demo of NYGGS today to reduce your attrition rate and retain your best talent!
FAQs
Q. What is attrition rate?
Attrition rate tells how many employees have left the company during a specific period in relation to the total number of employees hired during that same period.
Q. How to calculate attrition rate?
You can calculate a company’s attrition rate using the following formula:
Attrition Rate = (Number of employees who left during the measurement period ÷ Average number of employees during the measurement period) × 100
Q: Are turnover and attrition the same?
No. Attrition means by voluntary exits or resignation on employees’ will. But employee turnover covers both voluntary and involuntary exits, which include resignations, layoffs, and terminations.
Q. Is a 0% attrition good?
Yes, for the short term, but NO for the long term. A 0% attrition rate can indicate stagnant growth, as new people are not coming, so fresh ideas and innovation may be lacking.
Q. How to calculate attrition rate in Excel?
Just input the values for exit and average employee using the following formula in Excel: = (Left_Employees / ((Start_Employees + End_Employees)/2)) * 100.