Understanding Labour Turnover and Employee Attrition: Definitions, Calculations, and Benchmarking

Hi all,

I would be really thankful if anybody could let me know the difference between the term "labour turnover" and "employee attrition". Is there any difference like... the term "labour turnover" we use for factory workers and "employee attrition" for highly skilled employees/professionals?

Thank you,
Vini

There are many different definitions of employee turnover. It all depends on which categories you wish to include and which you decide to omit.

Typically, the terms "labour turnover" and "employee attrition" would refer to the same calculation. That is one that simply looks at the number of people that have left during a period of time. It makes no effort to distinguish between retirements, redundancies, dismissals, and voluntary turnover.

External benchmarking will tend to use a broad figure such as labour turnover. Internal benchmarking will tend to examine a narrower definition that does not include redundancies, retirements, and dismissals.

You may even wish to look at definitions that refer to regretted turnover or avoidable turnover. But regardless, there is so much confusion in this area that you can be fairly sure that simple comparisons are nothing of the sort. It is commonplace for managers in the same company to be using different definitions to arrive at their figures.

Anybody who knows it deeply, please also explain "HOW DO WE CALCULATE EMPLOYEE ATTRITION? BOTH MONTHLY AND YEARLY. AND HOW DO WE CALCULATE IT FOR THE PERIOD WE WANT, LIKE FOR THE LAST 6 MONTHS OR IN A SPECIFIC TIME FRAME IN BETWEEN?

IT WILL BE A GREAT HELP FOR EVERYBODY.

THANKS

Hi,

According to my knowledge, when calculating labor turnover and employee attrition, we get the same percentage. The formula is:

Attrition (%) for a year = (total number of resignees in that year * 100) / (strength on the first day of the year + new hires in that year - total number of resignees in that year).

Now, if you want to calculate for a specific period, just include the values of that period. That is, attrition (%) for a period = (total number of resignees of that period * 100) / (total employees at the start of the period + total new hires in that period - total number of resignees at that period).

I believe this explanation will help you.

Pournami Jayakrishnan

Attrition is the gradual reduction in employment as a result of resignations, retirement, and death.

Turnover is the change of the labor forces within a plant, which would include accessions (new hires), quits, discharge, and layoffs. Whereas turnover attempts to keep the workforce stable, attrition is a process of reducing employment.

Calculations: average number of separations (10,000) / average number of employees on the payroll (5,000)

RESULT: 10,000 / 5,000 = 200% Turnover rate

No calculation is required for attrition. The number has been predetermined.

Dear Mr. Paladin,

Can you help me in knowing the difference between "downsizing" and "rightsizing"?

Regards,
Durga

Downsizing refers to the reduction of the existing labor force.
Rightsizing involves aligning the labor force with the specific requirements.

Please let me know if you need any further assistance or clarification on this topic.

Dear Vini,

Good question. Do not worry about the jargon in HR. We need to understand the basic nature of duties.

1. Labour Turnover - mainly refers to the people whose physical presence is needed at work. This can include clerks, production operators.

2. Employee attrition refers to the people whose skills, knowledge, and competency, in other words, mental presence, are required at work. However, in meaning, it does not make any difference.

In practice, there are different mechanisms to address the two variants because the way we treat the people whose physical presence is required is not the same as the people whose mental presence is required.

Regards

Vini:

Debasis has it right. Srinivas must be thinking of something else. I always believed that when an employee is present at work, he or she is not only there physically but also mentally.

Good Morning Bill,

I believe Srinivas is referring to the intellectual contribution that knowledge workers make rather than physical contribution. For example, just imagine the difference between a software engineer and a factory worker.

Correct me if I am wrong.

Regards,
Vini

Hi,

As per my knowledge, both terminologies can be used interchangeably depending on the type of industry one may refer to, i.e., factory or office.

Regards,
Khushnum

Khushnum has stolen my thunder ("both the terminologies can be used interchangeably").

From my perspective, the design engineer takes a concept (his/hers or others) and brings it to fruition by the application of his mental abilities without any physical exertion. The factory worker, on the other hand, has to take that concept and make a product using both his/her mental capacities as well as physical capabilities. Problems encountered in the production process require the workers to resolve them. It is inefficient to have an engineer "stand by" to address potential problems.

Actually, labor turnover is related to blue-collar workers, while employee attrition is related to white-collar workers. 😉

Hi,

My name is Ajay More from Pune, Maharashtra. I am working as an Assistant HR. The formula provided by you is helpful for me. I would like to share my knowledge.

Regards,
More A H

Many of the resources found referred to attrition and employee turnover as the same issue. In addition, most resources that referred to attrition and turnover also talked about recruitment and retention. Attrition is the reduction of numbers through resignation, retirement, or death, while turnover refers to the number of employees hired to replace those who have left. Retention is defined as the act of retaining or the power to retain. While on the surface, attrition seems like a negative problem.

Hira Anwar
AMU, Aligarh