The difference between employee turnover rate vs. attrition rate in HR
Attrition vs. turnover – how well do these metrics tell the story of your organization?
There’s currently a bright spotlight on employee satisfaction, retention, and attrition in the workplace. According to data from the U.S. Bureau of Labor Statistics, almost 48 million people left their current roles and moved to new ones last year, many of which moved to entirely new industries.
So, while there are many metrics to track across your organization within areas like sales, finance, and customer service, understanding key employee metrics like retention and attrition rates in HR are equally crucial. Having a good grasp on attrition vs. turnover allows you to take corrective action before valuable employees depart, saving your organization time, money, and productivity.
In today’s post, we’ll review the definitions of these metrics to ensure you know how to measure attrition and turnover effectively.
Attrition vs. turnover defined
If your company wants to stand out in a highly competitive global economy, you must first understand how to retain top talent. And the first step in doing so is understanding the difference between attrition and turnover.
Attrition is a reduction in your workforce that happens when employees leave (voluntarily or involuntarily) for any reason. Reasons for attrition include resignation, termination, death, retirement, and automation.
38% of employers expect to eliminate certain jobs due to automation in the next 3 years. Automation will inevitably lead to organizational transformations, requiring change management and upskilling and reskilling training for employees.
Turnover is when employees leave a company voluntarily. It’s also known as “employee churn” and can be high in certain industries (such as retail) or during specific times of year (like after bonus season).
What’s the key difference between attrition and turnover?
Though the terms are often used interchangeably, there’s a key difference in turnover rate vs. attrition rate. Attrition includes voluntary and involuntary departures, while turnover only includes voluntary ones. For example, if an employee is fired or laid off, your organization should count it as attrition. But, if the employee quits of their own accord, it’s considered a turnover.
How to measure attrition and turnover
So, how can you measure your company’s turnover rate vs. attrition rates?
To measure turnover metrics, divide the number of employees who quit during a given period by the total number of employees. Then, multiply your result by 100 to get your organization’s turnover rate. For example, if you have 100 employees and 10 left in a year, your turnover rate would be 10%.
To calculate attrition rate in HR, take the number of employees that left/were eliminated divided by the average number of employees during a given period. Then, multiply by 100 to achieve the attrition rate.
By tracking employee turnover, you can gain a good sense of how happy your employees are with your current company culture and if there’s an immediate need to improve morale and productivity. For example, a high turnover rate may indicate that employees feel unsupported and unsatisfied, while a high attrition rate may signal that the company is downsizing.
Turnover metrics: Which rate is most important?
Now that you know how to calculate attrition vs. turnover rates, you may wonder which is more important.
While both offer valuable insights, turnover rates are generally more helpful, especially for companies that want to improve retention. It gives you a better idea of how many employees are leaving voluntarily and may motivate you to find out why.
Causes of turnover
You can likely trace high turnover rates to a number of factors. However, here are some of the top culprits.
- Employee satisfaction: If you have a high turnover rate, it may indicate that employees are unhappy with their jobs. This could be due to various factors, such as poor management, low pay, or a toxic work environment.
- Training and development: A high turnover rate can also indicate that your company is not providing adequate training and development opportunities. This can leave employees feeling frustrated or undervalued. In fact, poor or non-existent employee training is one of the leading causes of turnover.
- Company culture: If your turnover rate is high, it could be a sign that your company culture is not aligning with your employees’ values. This can make it challenging to attract and retain top talent.
- Lack of benefits: Money alone doesn’t buy happiness for your employees. Today’s workforce prefers hybrid work, which supports a healthier work-life balance. Hybrid work models are quickly becoming the future, and employers who don’t offer it as an option will likely lose employees to companies that do.
Learn more about the key shifts happening in the workforce today by downloading our white paper: Five Shifts Impacting the Future of Workplace Learning.
Benefits of tracking employee turnover
While a high attrition rate may sometimes be unavoidable, a high turnover rate is, in some ways, within your control. By accurately tracking employee turnover, you can:
- Reduce costs: A high turnover rate can be expensive, costing up to 150% of an employee’s salary to replace them.
- Increase productivity: A happy employee is achampion of your organization, eager to advance their team forward toward its goals. However, when employees leave, it can significantly disrupt the workflow as other team members must pick up the slack.
- Improve morale: You can take steps to decrease turnover by improving employee morale. This may include maintaining open communication with management, giving employees opportunities for advancement, and making sure they are adequately trained.
- Implement a strategic focus: While you can certainly track turnover metrics organization-wide, you can also track turnover by department to identify trends before they cost you productivity, morale, and, ultimately, profit.
Tracking turnover metrics can help you make the right decisions and changes to improve retention and reduce employee churn.
Reduce employee churn with custom training and development programs by Unboxed
At Unboxed Training & Technology, we offer innovative custom training solutions that help organizations engage, upskill, and retain employees.
By implemeting custom management and leadership training, you can expect to:
- Reduce employee turnover
- Increase confidence among leaders
- Improve training satisfaction among managers
Schedule a leadership training demo to learn how we can help you develop all-star leaders and managers.
In addition to training effective leaders, a successful onboarding strategy will:
- Reduce attrition
- Reinforce your culture
- Increase employee engagement
- Improve customer satisfaction
- Benefit your bottom line
Ready to level up your onboarding? Schedule a demo to see examples of our onboarding training and learn more about how we can help you reduce employee churn.
Request a custom training demo to see what a difference having a custom leadership and onboarding training program can make.