Understanding Attrition Rate: Can Someone Explain It with an Example?

Dear seniors, kindly help me to understand what the attrition rate is and how it is calculated. I would be thankful if you could explain it with an example.

Regards,
Paras Thakur

Thank you, sir. I have another query: what is the difference between labor turnover and attrition rate? Kindly, please revert to me with an example.

Regards,
Paras Thakur

Understanding Labor Turnover and Attrition Rates

As I understand it, labor turnover is the rate of labor joining and leaving in a particular period, let's say one year. For example, if during 2012, 25 laborers leave and 30 join in a strength of 400 laborers on 1-1-2012, then \([(25+30) / 400] \times 100\) is the labor turnover rate.

On the other hand, the attrition rate is the rate of employees leaving only, i.e., \((25/400) \times 100\).

Regards,
Vibhakar Ramtirthkar.

Dear Mr. Paras,

The question you posted is not only highly relevant but also critical in the current industry scenario. The attrition rate has been explained by some of our members above. The formula is clear: the number of employees leaving in a month divided by the total number of employees in that month, multiplied by 100, gives the attrition percentage.

An increase in labor turnover or employee turnover may sometimes cause concern for management as it indicates a high attrition rate. This situation may prompt management to review the work culture, working atmosphere, and conditions of service offered to employees. Management must consider ways to contain the attrition rate; otherwise, achieving targets may prove challenging, leading to disappointing results in terms of profit and goodwill.

Utilize attrition rate and labor turnover calculations to analyze the causes and address them to maintain efficiency and address any skill deficits.

Best wishes,

C.M. Lal Srivastava

Truly speaking, this is a performance indicator as far as HR is concerned. Of course, these figures can wreak havoc in some companies where attrition rates are high. The sad reality is that many companies do not pay attention to these figures as long as they can hire candidates, even freshers from colleges, to fill the positions. Attached, you will find some materials for your studies.

Regards,
Kumar S.

The general way to calculate attrition is to use the average strength of the month. This is determined by adding the opening and closing strength of the month and dividing the sum by two. That number would be the denominator, and the number of employees who left during the month will be the numerator. Accordingly, the percentage will have to be calculated.

Dear seniors, I am really thankful to all of you for suggesting to me regarding the attrition rate. This will definitely help me during my professional career. I just need one more help from all of you. Actually, I am looking for a job in HR, so if there is any vacancy, I request you to inform me.

Regards,
Paras Thakur
[Phone Number Removed For Privacy Reasons] (Nagpur)