Attrition Vs. Turnover: Key Differences You Need to Know

When it comes to measuring employee retention, attrition and turnover are essential metrics to track. But often, companies don’t pay attention to attrition and turnover, because they either don’t understand the difference or realize the impact. Research from Gallup found that 42% of employee turnover is preventable but often ignored.

Turnover risk is at its highest point in a decade, but to address the challenge, you have to know what you’re facing.

Attrition and turnover are more complex than they seem—and to make matters more confusing, the two terms are often used interchangeably, even though they describe different metrics.

Below, we’ll break down the differences between attrition and turnover. We’ll also walk you through easy-to-understand examples of how to calculate attrition rates and turnover rates so you can evaluate how your organization is performing.

What Does Employee Attrition Mean?

Employee attrition refers to the strategic decision not to replace employees who leave an organization voluntarily.

Employees may leave for a number of reasons, such as:

• Recruitment by another organization
• Seeking growth opportunities
• Embarking on a new career path
• Retirement
• Relocation

These reasons may also be described as “natural attrition,” which just means employees are leaving on their own (“naturally”) without any action from the company.

What Does “Attrition Rate” Mean?

A company’s attrition rate describes turnover over a set period. It’s the key metric that gives HR professionals insight into employee retention.

In general, companies should strive for a low attrition rate. According to experts, healthy organizations have an attrition rate of 10% or less. At this attrition rate, your workforce is stable, and you’re unlikely to risk shortages or other disruptions.

A high attrition rate shows that many employees are leaving your company in the same period. Over time, this can lead to major losses of institutional knowledge, a lack of stability, and negative impacts on morale.

What Is Regrettable Attrition?

Regrettable attrition occurs when employees leave by choice, as opposed to being fired or laid off. It's an HR metric you should track carefully, because it can indicate problems that the company may be able to resolve to avoid losing additional employees.

When an employee quits voluntarily, it’s best practice for HR leaders to schedule an exit interview. Departing employees can provide candid feedback, such as dissatisfaction with their compensation or with aspects of the company culture.

Left unchecked, a high regrettable attrition rate can lead to serious business consequences, including lost revenue, a drop in reputation, and the high cost of hiring and training new employees.

Why Track Attrition Metrics?

Employee attrition metrics tell a story about why employees stay with a company or choose to leave. For human resources professionals, the key is to monitor attrition and employee turnover consistently and compare this ground truth to the overarching business strategy. Failure to keep a pulse on attrition and turnover means that hiring can quickly become a liability, rather than a carefully calculated move.

Strategic HR decisions start with understanding attrition numbers. But it takes more than a headcount statistic to fine-tune the employee skills and collaboration you’ll need to succeed in your industry and your mission. You need the full context—both at an organizational and an employee level—to put each instance of employee churn in its proper perspective. Only then can you make the proper decision on how to respond.

What Is Turnover?

Employee turnover is often incorrectly defined as the number of employees who leave an organization over a year. In fact, employee turnover is more accurately described as the rate at which a company replaces employees over a set period.

Only vacated positions that are filled are counted as turnover. If an employee leaves and their role is not filled, that is either the result of attrition or an intentional reduction in the workforce.

What Is Regrettable Turnover?

Like regrettable attrition, regrettable turnover occurs when a key employee leaves voluntarily.

However, this term has a slightly different meaning. It's used to describe the negative impact that the company experiences when a high-performing employee chooses to take their talents elsewhere.

While it’s important to manage turnover and attrition throughout your company, you should also recognize that some employees have a larger impact than others. For example, an employee could have a unique skill set, deep institutional knowledge, or relationships with valuable clients.

It’s important to recognize these employees’ contributions and reward them with incentives that’ll help them feel valued and appreciated.

Attrition Rate vs. Turnover Rate

Put simply: Turnover is when employees leave your company and are replaced; attrition happens when employees leave a company and aren’t replaced.

Both attrition and turnover can provide insights into why your employees leave, either voluntarily or forcefully. For best results, look at turnover and attrition levels over time to find patterns in leadership, culture, benefits, or any other reason employees may be leaving. You’ll likely find trends or notice patterns in why and when employees leave.

How to Find Attrition Rate

The first step is to decide how often you’d like to calculate your company’s turnover and attrition. Most decide to do this once a year, while some prefer quarterly or even monthly reviews. The more often you do it, the more accurate the picture of your employee structure will be.

Step 1: Calculate the Average Number of Employees

You’ll want to calculate your average number of employees within a set period. So, the first step would be to pick a time frame and stick to it.

Add the number of people employed by your company at the start of the period to the number of people at the end—then divide that by two.

For example: Let’s say you had 95 employees on January 1 and 87 employees on July 1. Your average number of employees would be:

• 90 + 80 = 170
• 170 / 2 = 85

Your company employed 85 staff members on average during the period from January 1 through July 1.

Step 2: Find Your Turnover Rate

Next, you need to calculate your turnover rate. Divide the number of employees who left your company within the period by your average number of employees—then multiply that number by 100.

For example: Let’s say 10 employees left your business between January 1 and July 1. Your calculation would be:

• 10 / 170 = 0.058
• 0.058 x 100 = 5.88%

Your turnover rate in this example would be 5.88%.

Step 3: Calculate Attrition

Calculating your attrition rate builds on the previous two steps. You’ll start by finding the average number of employees you had during a given period, as well as the number who left.

Next, you’ll need to know who left voluntarily and who left involuntarily.

From there, you’ll divide the number of employees who left voluntarily by your average number of employees. To express this as a percentage, simply multiply by 100.

For example: Let’s continue with the example above, in which your company had 90 employees on January 1 and 80 employees on July 1, resulting in an average of 85 employees during that six-month period. Of the 10 employees who left, let’s assume eight voluntarily departed and three were let go by the company. Your calculation would be:

• 8 employees left voluntarily / 85 employees on average = 0.094
• 0.094 x 100 = 9.41%

What’s the attrition rate in this scenario? The answer is 9.41%, which falls within the healthy range experts recommend.

Is Employee Churn Always Negative?

The simple answer is no, employee churn isn’t always negative. Turnover and attrition can be expected or unexpected, planned or unplanned. The context and overall outcomes are what makes those changes either positive or negative for an organization. Sometimes, it can even be a mixed bag.

For example, a sales team might experience a high turnover rate as junior team members advance to more senior teams within the same business. Or a fast-food restaurant may experience high turnover as people leave for higher-paying jobs.

As long as those departures are expected and the market for new employees remains strong, both businesses will remain healthy. A different rate of turnover than expected or budgeted for—whether higher or lower—is what might be cause for concern. The same is true for attrition levels.

What Is a Healthy Attrition Rate?

In general, a high employee attrition rate is anything above 10%. A higher rate is a sign that employees aren’t sticking with the company. This number includes the voluntary attrition rate, or when an employee chooses to leave, as well as employees who are let go for a number of reasons. A pattern of high attrition rates can indicate foundational concerns that are consistently driving employees away.

Put another way, the opposite of the attrition rate is the percentage of employees who choose to stay with the company. The higher that retention number, the more likely employees are to be engaged in and satisfied with their work.

Achieving an Ideal Turnover Rate

While you can’t expect unlimited insight into employees’ lives or guarantee 100% consistency from them, there are ways to better understand your team and support them.

Here are three ways you can stay in the loop:

1. Manager/employee one-on-one meetings. Proactive managers give their employees regular, in-the-moment feedback and take time for formal one-on-one meetings that build all-important trust with employees.

One-on-one meetings allow employees to ask their managers for clarification on any recent team changes, and for managers to ask about employees’ career plans and life events.

1. All-hands update meetings. All-hands meetings are a good place for company leaders to offer background and context on complex issues. For example: employee attrition and turnover, company financial health, and future strategy.

That kind of direct, top-down communication reduces the chance that information will get lost or distorted as it passes through several people. It also helps employees to make decisions based on facts, not rumors or market trends.

1. Manager-level meetings. Once managers are talking to employees and people are hearing accurate information from executives, the only remaining need is to connect the dots.

Holding manager-level meetings means team leaders can talk candidly about trends they are seeing and how company decisions are impacting their employees. This gives HR and talent managers the opportunity to gut-check their onboarding strategy.

Decisions about who and when to hire and are vital for organizational health and growth—and the balance between when and who is tricky to master. Hire too quickly, and you risk the financial and cultural costs of a mis-hire. Hire too slowly, and you leave employees on short-staffed teams. This can also increase the risk of burnout—which everyone wants to avoid.