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Updated Nov 06, 2023

What Is Employee Attrition?

Here’s what leaders should know about employee attrition and how to address it if you’re struggling to fill vacancies left by exiting team members.

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Nicole Fallon, Senior Analyst & Expert on Business Ownership
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When you run a business, you will inevitably lose some of your employees over time. If you don’t replace those employees, it can lead to employee attrition. Attrition can cause issues like understaffing, low morale, burnout among remaining team members and more. Here’s what leaders should know about employee attrition and how to address it if you’re struggling to fill vacancies left by exiting team members.

What is employee attrition?

Employee attrition occurs when someone leaves a company, for any reason and through any means, and is not replaced by another employee. Regardless of whether the individual left of their own volition, their departure is considered attrition if the position remains unfilled or is eliminated afterward. By itself, attrition isn’t necessarily a negative thing. For businesses that need to cut costs, not filling a vacancy (and having existing employees take on the extra work) can provide some leeway in the budget.

However, problems can arise if attrition levels are too high. Remaining team members may struggle to absorb the additional responsibilities, especially if they lack the necessary training or are already managing high workloads. This can lead to employee burnout and reduced productivity, while adding to a mile-long to-do list of tasks that cannot be accomplished without adequate staffing.

Types of attrition

These are the main types of attrition:

  • Voluntary attrition. This occurs when an employee voluntarily quits their job. Reasons for voluntary attrition include pursuing a new career opportunity, moving to a new city or caring for family. This is the most common type of attrition.
  • Involuntary attrition. This refers to any attrition initiated by the organization rather than the employee. Termination and company restructuring are the most common types of involuntary attrition.
  • Attrition due to retirement. When employees reach their mid-60s and beyond, it is common for them to retire from a job.
  • Internal attrition. Internal attrition occurs when an employee leaves their job in one department to join another.
  • Demographic-specific attrition. This type of attrition occurs when employees from a certain demographic group (e.g., women, people of color or people with disabilities) leave an organization at higher rates than other groups.

Employee attrition vs. employee turnover

While employee attrition and employee turnover are often used interchangeably, there are subtle differences between the two.

Employee attrition

If an individual leaves their job for any reason and the employer does not fill the vacancy, this is considered employee attrition. For example, when an organization must make layoffs or restructure departments, this is typically done with the expectation that the positions will be eliminated altogether. Another example of attrition is when someone retires, and the company decides not to hire a replacement for them.

Attrition is not necessarily a negative thing, especially in circumstances that are beyond the employer’s control. However, high attrition rates or patterns in employees leaving may be worth exploring further for underlying causes that need addressing.

Employee turnover

Turnover refers to when an individual leaves their position and the employer intends to fill the position. Whether an employee has been fired because of poor performance or they are leaving voluntarily to pursue a different opportunity, this falls under the category of turnover if someone else is hired to replace them.

While employee turnover is often caused by similar reasons as attrition, turnover is often viewed more negatively and can cause more pressing issues. In addition to overburdening existing employees to complete the necessary work, staff turnover can be expensive.

Did You Know?Did you know
The cost of hiring and training new employees, as well as the inevitable reduction in productivity, can burden an organization’s budget.

What are the causes of employee attrition?

Common causes of employee attrition include the following:

  • Low unemployment. If your industry or geographic location has low unemployment rates, it can be more challenging to fill vacancies. If a business does not want to expand its search or reduce its hiring standards, it may face high levels of attrition.
  • Workplace demographics. Companies with a larger senior workforce may have many of their employees retire at the same time. This can leave more vacancies than can easily be filled at once.
  • Toxic work culture. Whether due to a difficult boss, employee infighting or unrealistic expectations, a toxic workplace can lead to employees leaving in droves. High turnover rates are often a red flag for potential job candidates, making it difficult to fill and maintain those positions.
  • Business relocation. Even if it makes sense for a business to move to a different geographic location, employees may be unable or unwilling to relocate. In this scenario, it takes time for companies to hire replacements, resulting in high attrition rates.
  • COVID-19 shutdowns. During the early months of the coronavirus pandemic, businesses worldwide were forced to shut their doors, unable to reopen at full capacity or at all. Whether temporarily or permanently, many companies had to let employees go due to a lack of business.
  • Reorganizations/restructures. When companies reorganize or restructure their teams, it is done with the intention of eliminating positions altogether. In this situation, attrition is necessary (and is the ultimate goal of restructuring).

>> Learn More: How to Create a Strong Company Culture

What types of jobs have high attrition rates?

Attrition rates vary across industries, subsectors and job titles. However, certain industries experience higher attrition rates than others. 

As reported in the Bureau of Labor Statistics’ latest Job Openings and Labor Turnovers (JOLTS) report, these are the 10 industries with the highest number of layoffs and discharges as of August 2023:

  1. Professional and business services: 432,000 layoffs/discharges
  2. Trade, transportation and utilities: 297,000 layoffs/discharges
  3. Leisure and hospitality: 225,000 layoffs/discharges
  4. Education and health services: 198,000 layoffs/discharges
  5. Accommodation and food services: 170,000 layoffs/discharges
  6. Health care and social assistance: 162,000 layoffs/discharges
  7. Retail trade: 162,000 layoffs/discharges
  8. Construction: 159,000 layoffs/discharges
  9. Manufacturing: 142,000 layoffs/discharges
  10. Transportation, warehousing and utilities: 113,000 layoffs/discharges

While industry trends can be a helpful starting point, business leaders should look within their own companies to understand their attrition rates and how to rectify them.

How do you calculate attrition?

To calculate your company’s attrition rate over a period of time, take the number of employees who have left (without having their positions filled), then divide that number by the total average number of employees. Multiply this number by 100 to obtain your percentage of attrition.

For example, consider a company with an average of 90 employees year over year. If 11 employees left without a replacement in the last year, the attrition rate calculation would be as follows:

11/90 = 0.12 or 12 percent

Pros and cons of attrition

When compared to employee turnover, in which vacancies are typically filled, employee attrition has its pros and cons.

Pros of attrition

On the surface, it may seem odd that there are pros to attrition, but they do exist. Here are a few to consider:

  • Reduces your labor costs. The most significant advantage of attrition is reducing labor costs, especially if your organization is struggling. These budget cuts can help your business stay afloat. Additionally, eliminating a role or choosing not to fill it after an employee voluntarily leaves reduces your headcount costs and any associated expenses with new hires.
  • Alleviates the need for layoffs. Attrition can lead to a more amicable departure during difficult events and can reduce the number of people who are affected by layoffs.
  • Inspires your team’s performance. Some of your employees may have been performing poorly under the radar. Once they leave, you may find that the rest of your team increases their performance, creativity and output to compensate for the lost position.
  • Provides the opportunity to correct your company culture. You may notice that some team members operate in conflict with your company’s culture and mission. If you let them go, you’re sending a clear message to the rest of your workforce about the importance of the brand’s culture and your belief in its mission.

Cons of attrition

There are also several negatives of attrition to consider:

  • Your business will have to operate with a smaller workforce. When you choose not to fill a vacant position, you’re putting additional pressure on the remaining members of your team to compensate for the loss and take on additional responsibilities.
  • Team members may be unable to manage the overflow of work. Junior workers who lack the necessary training and experience to take over for a more senior employee or those who juggle too many responsibilities could struggle to cover the additional work. 
  • Attrition can be costly. Unexpected attrition for specialized roles or positions that rely on existing client-employee relationships can be difficult and expensive to overcome.
  • Your team could experience burnout. If your team is trying to tackle too many tasks, it could lead to burnout. Those who feel burnt out could begin to underperform. If the situation is dire enough, additional employees may also leave in favor of opportunities that prioritize a more desirable work-life balance.
  • Lack of tenured employees with historical knowledge. Employees who leave your organization take all the knowledge, relationships and experience they’ve gained on the job. Not only must you now try to manage with a smaller team, but you’ve also lost valuable company knowledge and insights that can take years to recover. 
TipBottom line
Whether attrition has a positive or negative impact on your company, implementing top HR software can streamline the process of collecting data and successfully managing your workforce.

How to prevent voluntary attrition

To address attrition within your organization, start by identifying pain points for high-performing employees and those at high risk of leaving, said Ian Cook, vice president of research and strategy at Visier.

“Analyzing indicators such as team makeup, skill sets, roles, tenure and compensation ratios, combined with performance ratings, helps determine common pain points of high performers so organizations can take steps to address voluntary [attrition] among this group,” Cook told us. “With the right data in hand, employers can then create tailored engagement plans, implement more one-on-one engagement between employees and their managers, and realign with high performers on the specifics of their role — all steps that have a powerful impact on retention.”

>> Learn More: How Hiring a Chief Happiness Officer Can Benefit Your Business

Here are a few additional steps you can take to promote employee satisfaction and retention.

Train your managers.

Management is a separate skill set that should be cultivated in all company leaders. Investing in management training is a win-win: It gives leaders the confidence and skills they need to effectively manage their team while allowing employees to enjoy a healthy manager-employee relationship that helps them to grow their skills.

Keep up with competitive salary rates.

Money can often be a deciding factor in both hiring and retaining top talent. Staying up to date on market rates can allow you to offer competitive (yet fair) compensation for your employees.

Conduct stay interviews.

While exit interviews are commonplace and can give insight as to why someone has decided to leave your company, stay interviews can keep them from leaving in the first place. A stay interview is designed to help leaders understand why employees choose to stay with an organization and which areas can be improved.

Revisit your benefits and perks.

The perks that initially drew in your employees may not be the same ones they are seeking now. Revisit your benefits package every few years, considering your staff’s changing needs and any new perks that may be available. For example, younger employees without families may not need paid childcare, but it may be attractive to those same employees five years later if they choose to start a family.

Be flexible.

In the wake of most nonessential workers telecommuting during the pandemic, many teams have found that their jobs can be done just as effectively from home as from the office. Offering flexibility in remote work or start hours can help employees better manage their work-life balance, increasing the likelihood that they’ll stay. [Read related article: 7 Ways to Create a Happy and Motivated Workplace]

Bottom LineBottom line
Prioritizing a positive employee experience, as well as continuously assessing employee satisfaction and making adjustments accordingly, can reduce voluntary attrition rates.

Use accurate job postings.

One of the best ways to retain employees is to ensure that you attract the right candidates and clearly share expectations at the onset. When you craft job postings that accurately describe the job’s responsibilities and specifications, you’re more likely to find candidates who are happy to join and stay with your company.

Sean Peek contributed to this article. Source interviews were conducted for a previous version of this article.

author image
Nicole Fallon, Senior Analyst & Expert on Business Ownership
Nicole Fallon brings a wealth of entrepreneurial experience to with nearly a decade at the helm of her own small business. She and her co-founder successfully bootstrapped their venture and now oversee a dedicated team. Fallon's journey as a business owner enables her to provide invaluable insights into the intricacies of the startup process and beyond, along with guidance in financial management, workplace dynamics, sales and marketing, and more. Beyond her personal entrepreneurial endeavors, Fallon is skilled at offering macro-level analysis of small business trends as a contributor to the U.S. Chamber of Commerce. Her observations have also been published in Newsweek, Entrepreneur and Forbes, showing she's a trusted voice in the business world. Fallon's collaborative spirit extends to partnerships with B2B and SaaS companies, where she lends her expertise to drive innovation and sustainable growth. Her multifaceted experiences converge to offer a holistic perspective that resonates with budding entrepreneurs and industry leaders alike.
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