Attrition Formula

Attrition Formula (Table of Contents)

• Formula
• Examples
• Calculator

What is the Attrition Formula?

The term “attrition” refers to the rate at which employees of an organization leave the workforce over a given period of time. In other words, it can be used by the organizations to assess their employee retention rate and analyze it to see if there is an alarming trend. The attrition rate is also known as employee churn rate or employee turnover.

The formula for the attrition rate is expressed as a number of employees who had left the workforce during a given period divided by the average number of employees for the same period. Mathematically, it is represented as below,

Examples of Attrition Formula (With Excel Template)

Let’s take an example to understand the calculation of Attrition in a better manner.

Attrition Formula – Example #1

Let us take the example of an IT-based company in the US. At the start of 2018, there were 250 employees in the company which ended up at 240 by the end of the year. 25 employees left the company during the year. Calculate the attrition rate of the company for the year 2018 based on the given information.

Solution:

Average No. of Employees is calculated using the formula given below

Average No. of Employees = (No. of Employees at the Start of 2018 + No. of Employees at the End of 2018) / 2

• Average No. of Employees = (250 + 240) / 2
• Average No. of Employees = 245

Attrition Rate is calculated using the formula given below

Attrition Rate = No. of Employees that Left Workforce / Average No. of Employees

• Attrition Rate = 25 / 245
• Attrition Rate = 10.2%

Therefore, the company’s attrition rate for the year 2018 was 10.2%.

Attrition Formula – Example #2

Let us take the example of another firm that is engaged in the manufacturing of shoes. At the start of 2018, the firm had a total workforce of 300 employees on the job floor. During the year, 40 new employees joined the firm while 20 employees left. Calculate the attrition rate of the firm for the year 2018 based on the given information.

Solution:

No. of Employees at the End of 2018 is calculated using the formula given below

No. of Employees at the End of 2018 = No. of Employees at the Start of 2018 + No. of Employees that Joined During 2018 – No. of Employees that Left During 2018

• No. of Employees at the End of 2018 = 300 + 40 – 20
• No. of Employees at the End of 2018 = 320

Average No. of Employees is calculated using the formula given below

Average No. of Employees = (No. of Employees at the start of 2018 + No. of Employees at the end of 2018) / 2

• Average No. of Employees = (300 + 320) / 2
• Average No. of Employees = 310

Attrition Rate is calculated using the formula given below

Attrition Rate = No. of Employees that Left During 2018 / Average No. of Employees

• Attrition Rate = 20 / 310
• Attrition Rate = 6.5%

Therefore, the firm’s attrition rate for the year 2018 was 6.5%.

Explanation

The formula for the attrition rate can be computed by using the following steps:

Step 1: Firstly, determine the number of employees in the subject organization at the start of the given period.

Step 2: Next, determine the number of employees who had joined the organization during the given period.

Step 3: Next, determine the number of employees who had left the organization during the given period.

Step 4: Next, compute the number of employees in the organization at the end of the given period by adding the new employees (step 2) to the number of employees at the start of the period (step 1) and then deducting the number of employees who left (step 3).

No. of Employees at the End of the Period = No. of Employees at the Start of the Period + No. of Employees Who Joined – No. of Employees Who Left

Step 5: Next, compute the average number of employees based on a number of employees at the start (step 1) and at the end of the period (step 4).

Average No. of Employees = (No. of Employees at the Start of the Period + No. of Employees at the End of the Period) / 2

Step 6: Finally, the formula for the attrition rate can be derived by dividing the number of employees who left the workforce during the period (step 3) by the average number of employees (step 5) as shown below.

Attrition Rate = No. of Employees that Left Workforce / Average No. of Employees

Relevance and Use of Attrition Formula

It is important to understand the concept of the attrition rate as it provides useful insights about employee sentiment in the company. A high attrition rate indicates that the employees are leaving the organization very frequently, while a low attrition rate means that an average employee is retained for longer periods of time which is always a good sign for a company. One of the primary reasons for the high attrition rate is the lack of adequate benefits or career opportunities provided to the employees.

Attrition Formula Calculator

You can use the following Attrition Formula Calculator