How to Calculate Attrition Rate ? What is Attrition rate ?

How to Calculate Attrition Rate

There are many ways to calculate attrition few of which are explained below.

It should be kept in mind that different companies have different way of calculating Attrition

Attrition rates means the rate at which employees leave a company.

High attrition rates are a problem in the IT industry.

How to calculate attrition rate ?

Calculating Attrition Rate

Determine the average number of employees that were employed by the company in a single year

A normal average is merely the simple average change in employees for the year. Take the number of employees working for the company at the beginning of the year, add the number of employees working for the company at the end of the year, and then divide that sum by 2.

In contrast to a normal average, a weighted average would bring into consideration the length of time the company had a certain number of employees under work. For example, if a company had 30,000 employees for the first half of the year and 40,000 employees for the second half of the year, the average would be (30,000 x 0.5) + (40,000 x 0.5) = 35,000 employees.

Determine the average number of employees who left the company in a single year. This number can be an estimated calculation or it can be calculated specifically by going through the company records and files.

ATTRITION

Attrition is the reduction in the number of employees in organization due to resignation, retirement or death.

Layoffs and firings shall not be considered while calculating/determining  attrition.

Attrition %  =  (No. of employees left the organization/ average Headcount) X 100

Average headcount   = (opening balance + closing balance )/ 2

Annualized Attrition = monthly Attrition %  *  12

Example:

Head count on 1 January (opening balance)   = 100

No of employees resigned in January (voluntary)  =   20

No of layoffs in January  =   10   # Lay-offs and firing are not counted

New joiners in January   =   10

Total employees on 31 January (closing balance) = 100-20-10+10 = 80

Average headcount in January = (100+80)/2 = 90

Attrition % for Jan = (20/90)* 100 = 22.2

Overall attrition% for Jan = (30/90)* 100 = 33.3 (This is including Layoffs and firing)

ANNUALIZED ATTRITION

Annualized attrition is term which is described to arrive at projected attrition on annual basis. When the attrition for the year ahead is calculated in advance on the basis of data available for a specific period , it is called annualized attrition.

ANNUAL ATTRITION

When attrition for the year is calculated on the basis of actual data available for all the previous 12 months, it is called annual attrition. It is calculated at the year end, not in advance.

Please note that, attrition calculation do not have a standard formula and different organizations calculate differently to suit their requirements

Below is the formula that we are using to calculate Annual Attrition rate:

Annual Attrition Rate : (Employees left in Current Month * (12/No. of Month))/((Current employee strenghth+Employees at start of the month)/2)

Labour Turnover/Attrition=Avg no:of employees left during the period/Total no of employees during the year*100

Annual turnover is computed by adding up the monthly turnover for a 12-month period. Monthly turnover is first calculated as the number of employee separations during one month divided by the average number of active employees during the same period.

Monthly Turnover Rate = Number of separations during the month/Average number of employees during the month x 100