Life happens. Employees come and go – fairly frequently, even with the median length of employee tenure running 4.1 years in the U.S. as of January 2022. It’s a natural part of an organization’s lifespan, but attrition and turnover are not uncontrollable forces.
You’ve probably heard these terms before, but do you know how the two metrics differ? Understanding the nuances of attrition vs turnover can give you great insight into retention, engagement, and recruiting, and in this article, we’ll break it all down.
Attrition vs Turnover: A Quick Comparison
Both attrition and turnover are measures of the rate at which employees leave an organization, but these metrics are not interchangeable. Both measure rates within a set period of time, but they diverge at one simple but important point – what happens to a position once it has been vacated.
If an organization fills an emptied spot, we’re talking about turnover. If the position is eliminated or left vacant, then you’ve got attrition. To better understand this and other differences, let’s take a closer look at attrition vs turnover.
What is Employee Attrition?
Because attrition measures only instances where a vacated position is not refilled, its end result is an overall reduction of staff.
High attrition is not always a sign that something is wrong at the organization. Retirement, department restructuring, and organizational changes are just a few examples of causes of increased employee attrition.
Attrition is usually, but not always, employer controlled and predictable. It is often harnessed as a cost-saving measure, such as eliminating positions after employees leave naturally during economic downturns.
Examining attrition rates can help you plan for future changes – ensuring that knowledge is not lost ahead of older employees retiring, for example.
What is Employee Turnover?
When contrasted with attrition, turnover refers to the rate at which positions are vacated and then filled in a given time period at your organization. With turnover, staff size remains the same.
The term is sometimes used to refer to the overall rate at which employees leave your organization, a number that includes attrited positions. This is also called employee churn.
High turnover rates always warrant a closer look, as they are often (but not always) a sign that some aspect of your organization needs improvement – culture or compensation, usually.
Measuring Attrition and Turnover
Attrition and turnover are both typically measured on a yearly, quarterly, or monthly scale. Here’s how you get those numbers:
Start by deciding the timescale you’ll be measuring, then look at the number of employees for that period.
Add the number of employees at the start of the period to the number of employees at the end of the period. Divide this by two to get your average headcount for the reporting period.
For turnover rate, divide the number of employees who left your organization during the reporting period by that average number of employees metric you just got. Multiply this number by 100 to get the final turnover rate.
To get your attrition rate, divide the number of employees who left and were not replaced during the reporting period by the average number of employees. As above, multiply this by 100. That’s the attrition rate.
Are My Organization’s Attrition and Turnover Rates Too High?
A certain amount of turnover is necessary to ensure both that there's a steady flow of new ideas at your organization and that knowledge and skill are being shared and not lost when employees retire. There's no one golden number that everyone should hit, though.
What healthy turnover looks like for your organization will depend on your industry, where you operate, and past turnover, hiring, and promotion rates. A completely normal turnover rate for retail or food service, for example, would be cause for serious concern in an industry like urban planning or energy.
Research average rates within your industry and your region, in addition to looking at the overall national average – numbers you can get from the U.S. Bureau of Labor Statistics – to determine whether your company’s rates are healthy.
On the Flip Side: Harness Employee Churn Data to Improve Retention
Why measure attrition and turnover? Because each one provides specific insights into where, why, and when your people are leaving, and this data can be harnessed to reverse those numbers if they climb too high.
When examining attrition and turnover data, be sure to look at why your people left. Was it unavoidable, or could steps have been taken to prevent it? Is it centralized in one department, or was the increased rate company-wide? Did it happen in response to changes at the organization, or is your staff just aging out of the workforce? You may find that your organization needs a more competitive compensation package, improved management training to strengthen leadership, or a culture shift.
Tracking and studying retention and attrition rates is a crucial step in making the changes necessary to acquire and keep top talent. With those numbers used right, you can develop a successful strategy that turns high attrition and turnover into successful retention and recruitment.