Understanding Attrition Rate Formulas: Which Calculation Method is Correct and Why?

Understanding Attrition Calculation Formulas

Can anybody tell me what's the logic behind the attrition calculation formula in the attached file? As per my understanding, the simple calculation for attrition is:

\[ \text{Attrition Rate} = \left(\frac{\text{Left Employees}}{\text{Opening Balance} + \text{New Joiners}}\right) \times 100 \]

However, I found another formula for the attrition rate calculation in that file. Please tell me which is correct and why.

Regards,
JC

The formula for attrition given in the attached file is not correct. It should be:
\[ \text{Attrition Rate} = \frac{\text{Number of Employees Left}}{\text{Opening Balance} + \text{New Joiners}} \times 100. \]

Regards,
Vinod Yadav

Yes, Krishna, you are correct. The opening balance represents the current employees, or the closing balance of the last month. Thank you.

Upon my observation, in the attached format, the calculation is not correct only for the month of January. However, for February, March, and April, the calculation is accurate.

Regards,
Starlet

Understanding the Closing Balance Formula

The closing balance of a particular month is calculated as follows:

- Opening number of employees for the month
- Plus the number of new joiners during the month
- Minus the number of employees who left during the month.

Attrition Rate Calculation Formula

1. The formula to calculate the monthly attrition rate is: Total number of resigned employees / (Opening Balance + New Joinees) * 100. You can also use it without multiplying by "100" by expressing it in percentage (%).

2. Understanding Opening Balance

Opening balance refers to the total number of active employees' headcount at the beginning of the first day of a month.

3. Understanding Closing Balance

Closing Balance is defined as the total number of active employees' headcount at the end of the month on the closure date or the last day of the month.

4. Please find the attached CTC structure, which may be helpful for you to calculate both monthly and annual CTC.

Regards,
Sunil Kumar Verma
AM-HR
Indiabulls

Hi seniors, the formula for the month of January is incorrect, but for the other months, except January, it is accurate.

I believe the following formula is correct to calculate attrition:

Attrition Rate Formula

\[ \text{Attrition Rate} = \left( \frac{\text{Number of Employees Left}}{(\text{Opening Balance} + \text{Closing Balance}) / 2} \right) \times 100 \]

You have to find out the average number of employees during the month. For better clarity, I have attached the attrition register and calculator.

Regards,
Aliabbas
[Email Removed For Privacy Reasons]

Hi Startlet, even in the rest of the rows, the formula is incorrect. The monthly attrition rate is calculated as: No. of employees left in the current month / ((No. of employees at the start of the month + No. of employees at the end of the month) / 2).

Regards,
Satpreet Kaur

According to my organization's procedure, we calculate attrition using the formula: (Number of Deletions / Total Number of employees) * 100.

Regards,
Starlet

The total number of employees for the month is the number of employees who come onto the payroll for the month after considering additions and deletions.

Regards,
Starlet

This is what I had written. Please don't get confused. The concept is the same, though we have used different terminologies.

Regards,
Satpreet Kaur

I regret to say that I didn't get you. For example, consider the number of employees at the beginning of the month = 210. Addition = 20. Deletion = 10. So, the number of employees at the end of the month will be 210 + 20 - 10 = 220. As per your calculation, the total number of employees will be (210 + 220) / 2 = 215. But as per our calculation, it will be 220, which we will take for payroll.

Regards,
Starlet

I have further cross-checked and found that there is a difference in our formulas. The reason is we are calculating the attrition rate based on the average number of employees in a month, whereas you are considering the employees who come on the payroll for the specific month.

There has already been a lot of discussion on this site regarding attrition calculation, and as per my information and understanding, attrition is calculated on the basis of average employees. However, I am still open to suggestions. Therefore, I would request the seniors to shed some more light on the monthly attrition rate.

Attrition Rate Calculation Example

To make it clearer, I have calculated the attrition rate based on your example:

• No. of deletions/Total number of employees * 100: 10/220 * 100 = 4.54%
• (Number of EEs left in the current month / (EEs at the start of the month + EEs at the end of the month) / 2) * 100: 4.65%

Therefore, there is a deviation of 0.11%.

Regards,
Satpreet Kaur

I am also sharing the link regarding the discussion on attrition rate on CiteHR. You may like to read: https://www.citehr.com/254173-need-f...tion-rate.html.

Regards,
Satpreet Kaur

Below is the formula to calculate the attrition rate:

Attrition Rate Formula

No. of people left / Average (Opening balance, closing balance).

Regards,
HR.

The information and the attachment are really great, but I would like to know how to control forced and unforced attrition in the aspects of Operations and training. Any input or information on this would be greatly appreciated.

Regards,
Anantha Ramakrishna
[Phone Number Removed For Privacy Reasons]