Understanding Attrition Rates: How to Compare Your Company to Industry Standards?

Hi,

I have a couple of queries regarding the calculation of attrition rate.

1. If we state that the attrition rate in a specific industry is 30-35%, does it refer to the annual attrition rate?

2. If it is the annual attrition rate, how can we determine the monthly attrition rate for that industry?

I require this information to monitor my company's attrition rate compared to the industry average.

Regards,
Nalini

Hello Nalini:

1. If we say that the attrition rate in a particular industry is 30-35%, does it mean the annual attrition rate?

Yes.

2. If it is the annual attrition rate, how can we arrive at the monthly attrition rate for that industry?

We can only guess at the monthly averages unless the source of the industry average has that data.

I need this information to keep track of my company versus industry attrition rate.

Copy the following line into your browser's address window #109924 and download my "to_rate.xls" Excel file, which should help you keep track of turnover rates by the month. Comparing an employer's turnover rate to the industry's average turnover rate is interesting, but we really should compare an employer's turnover rate to the best employers in the industry. Let us not strive for mediocrity when we can be the best.

Bob Gately, PE, MBA [Login to view]

Hi,
Formula to calculate attrition rate.
ATTRITION RATE
(no. Of attritions x 100) / (Actual Employees + New Joined)) /100.
Examples:
1) Actual Employees No. Of people left No. Of Joined Total Employees
(Opening BAL) (Attritions) (Current Headcount)
150 20 25 155
So according to the formula: ((20 x 100) / (150 + 25)) / 100
Which comes to 0.1142 i.e. 11%
Now as you had 150 previously and now 25 joined so it makes 150 + 25 =175
Now if you calculate 11.42% of 175 i.e. 175 x 0.1142 = 20
Which clearly shows that 175 – 20 = 155, which is your current headcount and at the same time you can say my attrition is 11.42% that shows you lost 20 employees of 150 and 25 more joined which makes count to 175.
Thx
Rinky!!!

Thank you, Bob.

You are right. We should compare ourselves with the best employers in the industry every time, whether it be the attrition rate or your performance. My company belongs to the advertising industry, which is considered to be the most disorganized sector; hence, obtaining data like this becomes a bit difficult. Our industry is the worst hit by attrition, so I initiated it in my company. I believe as an HR person, I should keep track of this, keep trying some solutions for this problem, and simultaneously check its effect on the attrition rate.

I'll definitely try to get the required data first and then figure out my company's attrition rate. Thank you once again.

Regards,
Nalini

Hello Nalini:

Thanks, Bob.

You are welcome, and it is my pleasure.

You are right. We should compare ourselves with the best employer in the industry every time, whether it be attrition rate or your performance.

Only if we want to improve, some companies are satisfied to be average.

My company belongs to the advertising industry, which is considered to be the most disorganized sector; hence, getting data like this becomes a bit difficult.

Yes, I believe that. I advise my clients to ignore their industry's average attrition rate since it is irrelevant to them. Reducing turnover is what we do, and we only use industry averages to demonstrate how bad most employers are at keeping employees.

Our industry is worst hit by attrition; hence, I initiated it in my company.

Attrition is an employer's problem, not an industry problem. However, if all members of the industry do the same ineffective things to lower attrition, we should not be surprised that the average is high.

I believe as an HR person, I should have a track of this, keep trying some or the other solution for this problem, and simultaneously check its effect on the attrition rate.

I agree, which is the reason I developed my free workbook for tracking attrition monthly.

I'll definitely try getting the required data first and then out my company's attrition rate.

Feel free to email me.

Bob Gately

[Login to view]

Dear Nalini,

It's very simple... If the particular industry has 30 to 40% attrition, it might be for a year or for a month. Just take the list of deletions/dropouts and divide it by the actuals. You will find the exact attrition rate for the day, month, and year.

Regards,
Christopher.

Hi, I am not able to find a solution or calculation for rolling attrition/Attrition YTD. If someone has a calculation, can you please help me with this?

I also have a calculation, but I really don't think that this calculation is showing me accurate results. The calculation I have is as follows:

1st Month Attrition YTD - (Cumulative Attrition / Cumulative average Headcount) * 12 / number of months.

Cumulative Attrition - 1st Month - Total resources left in the 1st Month.

Cumulative Attrition - 2nd Month - Sum of total resources left in the 1st and 2nd months, and this calculation will continue until the end of the year.

Cumulative average Headcount - Average of the number at the Month End.

Thanks,
Satinder Krishan

I have a doubt about setting objectives for each department for an employee. For example, in a finance department, there is a Senior Accountant. What are his/her objectives to meet the current trends in organizations related to the FMCG sector?