Attrition
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Definition
Attrition is the gradual reduction of a workforce as employees leave through resignation or retirement and their positions are not filled again. Attrition rate is usually calculated as departures not replaced during a period divided by average headcount, times 100. It differs from turnover, where departing employees are replaced.
SHRM defines attrition as "gradual workforce reduction through employee retirements, resignations, deaths or elimination of positions without immediately filling vacancies" and contrasts it with turnover, which covers voluntary and involuntary departures generally (SHRM). Usage varies. Some HR teams and many analytics tools use "attrition" to mean all voluntary departures, whether or not the job is backfilled. State your definition on every report.
How attrition works
Attrition is often a deliberate choice. A company that wants to reduce costs without layoffs can freeze hiring for some roles and let headcount fall as people leave. It is also a planning input: workforce planning and headcount planning models assume a rate of departures to forecast how many hires a plan needs.
Attrition rate = (departures not replaced during the period / average headcount) x 100, with average headcount = (start + end) / 2. Tracking it next to turnover rate, which counts every departure, shows how much of the company's churn is reducing headcount and how much is being refilled.
Example
Illustration: a company begins the year with 400 employees and freezes hiring for back-office roles. During the year 28 people leave. The company backfills 10 of those roles, all customer-facing, and leaves 18 unfilled. It makes no other hires.
| Measure | Calculation | Result |
|---|---|---|
| End headcount | 400 - 28 + 10 | 382 |
| Average headcount | (400 + 382) / 2 | 391 |
| Turnover rate (all departures) | 28 / 391 x 100 | 7.2% |
| Attrition rate (not replaced) | 18 / 391 x 100 | 4.6% |
If the average fully loaded cost of the 18 unfilled roles is $70,000 a year, the reduction saves about 18 x $70,000 = $1.26 million a year once all 18 have left, with no severance cost. The risk is that attrition doesn't choose which roles empty out. If 5 of the 18 were in one team, that team has lost a quarter of its capacity, and the work lands on the people left.
Related terms
- Turnover rate: all departures, whether or not they are replaced.
- Workforce planning: uses attrition assumptions to plan hiring.
- Headcount planning: the budget view of the same numbers.
- Turnover intent: an early signal of future departures.
- Employee retention strategies: guide to keeping the people you want to keep.
- Headcount planning template: a free template to model attrition.
Common mistakes
- Using attrition and turnover as synonyms in one report. Readers will compare numbers calculated on different definitions.
- Relying on attrition to cut costs quickly. Departures are slow and unpredictable. A 4.6% rate takes years to deliver a 15% reduction.
- Losing the wrong people. Strong performers find jobs most easily, so a hiring freeze can lose them first.
- Not redistributing work. Unreplaced roles still have tasks attached. Decide what stops, not only who leaves.
- Ignoring retirements. In older workforces, planned retirements are the most predictable source of attrition. Use them in forecasts.
Is attrition good or bad?
Neither by itself. Planned attrition can reduce costs without layoffs, while unplanned attrition in critical teams can leave them short-staffed. What matters is which roles are emptying out.
How is attrition different from a layoff?
A layoff is a decision to end specific jobs now. Attrition waits for people to leave on their own and then chooses not to refill the role, so it is slower and the company can't choose who goes.
Sources
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