Formula for annualized attrition = Attrition for the period x (12/ period) where period is calculated in months.
So if monthly attrition is 10%. Annualized = 10% x (12/1) = 120%
Also, if quarterly attrition is 15%. Annualized = 15% x (12/3) = 60%
The main reason to calculate the annualized attrition figures is to check the overall attrited headcount for the year if the same rate is continued. That means, if the process have 100 people and 8 attrite every month and we backfill just with 8 in the month, the process will have 8% attrition and 8%x12 = 96% annualized attrition.
You may fill this data for 12 months and this will give you the point.
So this gives us an idea that we will have almost the entire people changed in the year (actually that does not happen as new guys leave more, but it is an indicator of loss of investment)
But as they say, the most corrupt formula in BPO industry is Attrition as there are many formulas and many interpretations. So, I thought I list some of them with their pros and cons of different Attrition formulas:
Formula 1:
Attrited / Start of the month HC -->
E.g. 95 at the start. 5 joiners. 2 Attrites. Monthly Attrition = 2/95.
Con --> what if the 2 attrites are from the new joining batch, then this is not representative.
Formula 2:
Attrited / End of the month HC --> Commonly used formula
E.g. 95 at the start. 5 joiners. 2 Attrites. Monthly Attrition = 2/98.
Pro -- at least looks at the HC at the end of the month.
Con -- what if the guys have left on the last day of the month?
Formula 3:
Attrited/(Average of Start and End of month HC) -->
E.g. 95 at the start. 5 joiners. 2 Attrites. Monthly Attrition = 2/96.5.
This takes both the start and end HC negates the effect of attrites less than or more than the joiners. Still have some effect of last day attrite.
“This is also a formula which is recommended by COPC which does benchmarking on Call Center data via audits conducted in companies implementing the standard”.
Formula 4:
Attrited / Weighted Avg of Daily Headcount --> Negates the day of leaving effeect on the month but becomes difficult to consistently delpoy across multiple teams which need to understand the metric.