Attrition Rate and it’s impact to an organization
Attrition Rate is one of the important elements of running an HR department successfully. Attrition can be defined as the departure of employees from the company for any reason including resignation, termination, death or retirement and are not replaced at a given period of time. The attrition rate can be also termed as “Churn rate”.
There are some general categories of employee attrition:
- Voluntarily: This is when employees choose to leave the company, it is considered voluntary attrition. This is the most common type of attrition and is the most important for the HR team to consider. Example: Resignation.
- Involuntarily: This is when an employee has been dismissed from his position, mainly when the company plan to downsize the employees. Example: Termination.
- External: This is when an employee leaves the company to join another company. This may be due to compensation or getting a better position in another company.
- Internal: This is when an employee leaves the current position within the company and joins the other position. For example, we can consider promotion within the company.
How to calculate attrition Rate:
Attrition Rate (%) = (No. of Leavers / Avg. No. of employees) x 100.
Example:
You have 20 employees at the beginning of the year. 2 Employees leave the company.
The total number of employees at beginning of the year: 20
Current Total number of employees: 18
Average of Total Employees: (20 + 18) / 2 = 19.
No of Leavers: 2
Attrition Rate (%) = (2 / 19) * 100 = 10.53 %
A high rate means that your employees are leaving frequently, while a low rate indicates that you’re keeping your employees for longer periods of time. Employees who stay at a company for longer are often less stressed, more committed to the long-term success of the company, and more productive. They are also more loyal and have a stronger sense of community. A lower attrition rate is good for the company and HR Team.
If your attrition rate is high, HR can retain the employees by offering timely incentives or rewards, taking frequent surveys, encouraging employee development, promote health and wellness. HR can use a human resource management system to keep the track of leavers on the dashboard.
HR Chronicle is the Leading Clouding Based Human Resource and Payroll Management System in the Middle East Region. It has an inbuilt feature in the dashboard to keep a track of New-joiners/Leavers and automatically calculate attrition rate and display it on the dashboard. HR Chronicle is the powerful Human Resource Management system that makes the life of HR easy, reduces the workload, and manages the complete HR and Payroll workflow smoothly.
