Attrition rate

Attrition Rate is a term commonly used in business and economics to describe the phenomenon of employees or customers leaving a company over a certain period of time. It is often used as a measure of the long-term sustainability of a company's workforce or customer base.

Definition

The attrition rate is defined as the number of individuals who leave a group over a specific period divided by the remaining number of individuals. It is typically expressed as a percentage. For example, if a company starts the year with 100 employees and 10 of them leave during the year, the attrition rate for that year would be 10%.

Calculation

The calculation of the attrition rate is straightforward. It is calculated by dividing the number of individuals who left during the period by the initial number of individuals, and then multiplying the result by 100 to get a percentage. The formula is as follows:

Attrition Rate = (Number of Attritions / Number of Employees at the start of the period) * 100

Factors Influencing Attrition Rate

Several factors can influence the attrition rate in a company. These include job satisfaction, work environment, compensation, work-life balance, and career opportunities. Companies with high attrition rates may need to investigate these factors to understand why employees are leaving and what can be done to retain them.

Impact of High Attrition Rate

A high attrition rate can have several negative impacts on a company. These include increased recruitment costs, loss of institutional knowledge, and potential damage to the company's reputation. It can also lead to a decrease in productivity as new employees may take time to reach the same level of efficiency as those who left.

Strategies to Reduce Attrition Rate

Companies can employ several strategies to reduce their attrition rate. These include improving employee engagement, offering competitive compensation packages, providing opportunities for career advancement, and creating a positive work environment.

See Also

• Employee turnover
• Retention rate
• Human resource management
• Employee engagement