Confused About Attrition Formulas? Help Me Clarify Monthly vs. Yearly Calculations

There are so many different formulas for attrition. The one which I followed for monthly attrition calculation is as follows:

Average headcount calculation
Average: (Opening Headcount + Closing Headcount) / 2.

Attrition rate calculation
Attrition Rate: (No. of employees left / Average Headcount) * 100.

Now, the confusion is that for monthly attrition, should the average headcount be as per the above formula, or should it be: (Opening Headcount + Closing Headcount) / 12?

I've seen some posts which mention the following:

Average headcount adjustments
- If monthly: divide by 2
- If quarterly: divide by 4
- If yearly: don't divide

Whereas, in some posts, it mentions that for yearly calculation, divide by 12. Please let me know what is the correct formula for monthly and yearly attrition.

Best Regards, Insiya

Location: Mumbai, India.

Calculation of Monthly and Yearly Attrition

For accurate attrition calculation, it's essential to use the correct formula based on the time period being analyzed. Here are the recommended formulas for monthly and yearly attrition calculations:

Monthly Attrition Calculation:
1. Average Headcount: (Opening Headcount + Closing Headcount) / 2
2. Attrition Rate: (Number of employees left / Average Headcount) * 100

Using the average headcount formula of (Opening Headcount + Closing Headcount) / 2 is the standard approach for monthly attrition calculation. This method helps in obtaining a more representative figure of the workforce throughout the month.

Yearly Attrition Calculation:
1. Average Headcount: (Opening Headcount + Closing Headcount) / 2 for monthly attrition, not divided by 12
2. Attrition Rate: (Number of employees left / Average Headcount) * 100

For yearly attrition calculation, it's important to maintain consistency with the monthly formula to ensure accuracy. Dividing by 12 is not necessary as the annual attrition rate should reflect the average headcount over the year, calculated on a monthly basis.

By following these specific formulas for monthly and yearly attrition, businesses can accurately track and analyze their attrition rates to make informed HR decisions and strategies.