Attrition rate is the rate of employee turnover in an organization. It is calculated as the number of employees lost to the organization as a percentage of its total strength. Here, the number of employees lost means the difference between the number inducted and the number left in a year; Strength of employees is the average figure, arrived at by the opening balance + closing balance divided by 2.
Attrition rate is an indicator for several factors concerning the organization, such as its working climate, reward systems, performance management, and employee satisfaction. The threshold percentages vary from industry to industry. However, any percentage of attrition of over 10% should be a matter of concern.