Quick Read about Attrition Rate

The rate of attrition for a company is a number that shows a company’s or organization’s employee turnover rate. The Business Dictionary defines attrition rate as a percentage rate at which something is lost, or is reduced by, over a period. Attrition rate and turnover rate are both similar terms showing the rate of employees leaving a company or organization. It can also be referred to as churn rate. These terms are often used in the HR Industry where the lower the number, the better for the company. Why is this so? Mostly, it affects the company’s bottom-line in the long run. In simple words, a high attrition rate is very costly to a company due to various factors. Costs associated with a high attrition rate include higher costs of recruitment and training, costs for loss of knowledge and knowledge transfer, costs associated with lost productivity once a team member leaves and costs in communication breakdowns in certain workflows. Due to the high costs of a high attrition rate, it has become a commonly discussed topic for Head of Companies and Head of HRs trying to minimize employee exits overall. The attrition rate of a company is calculated by dividing the number of attrition by the average number of employees, where a lower number depicts less attrition in that given period of time. To lower the attrition rate should be a critical aim of a company’s HR department. However, employee turnover is not always bad, and losing the lowest performers in your business might be a good thing. A turnover rate of approximately 10% is considered normal and healthy as mentioned in Workstride.

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