Attrition vs. Turnover: 2 Key HR Metrics to Track

To accomplish your organizational goals, it’s vital to address employee attrition and reduce turnover. Let’s take a look at some key stats about attrition vs. turnover.

Gallup has found that 1 in 2 employees are open to leaving their company. Engagement and culture is the primary reason for respondents’ willingness to leave, followed by well-being and work/life balance. These two areas make up 69% of the total motivators driving employees to consider leaving. 

Moreover, employees often decide to leave quickly. And 42% say their exit could have been avoided if their boss had proactively checked in with them about their role and career plans. Additionally, as many as 1 in 3 senior leaders aims to depart in the next 12–18 months.

At the same time, the “Big Stay” phenomenon is beginning to take hold, meaning more employees are prioritizing job stability over job changes. Attrition has been decreasing by 26% year over year, reports LinkedIn. By understanding how to manage attrition and turnover, you can take advantage of these positive trends to improve retention in your organization.

Table of Contents

1. Key Differences Between Attrition and Turnover
2. How Turnover and Attrition Affect Organizational Health
3. How to Measure Attrition vs. Turnover
4. Strategies for Reducing Turnover and Attrition

Key Differences Between Attrition and Turnover 

How can you distinguish attrition vs. turnover? Both can be either voluntary or involuntary. 

Attrition is a gradual decrease in workforce numbers within an organization. It can occur as employees retire or positions are eliminated, acting as a passive form of workforce reduction. However, it can also involve restructuring that leads to termination of positions, says the Society for Human Resource Management (SHRM). Attrition can also occur when an employee resigns and the company doesn’t fill the position. 

Turnover happens when employees depart their organization for a job elsewhere. It can also occur when employees are let go for reasons such as poor job fit. In either case, the company typically seeks to fill the open position as quickly as possible.

How Turnover and Attrition Affect Organizational Health

Attrition can reduce a company’s talent base over the long-term, affecting its success. Turnover can cause shorter-term disruptions that still have a major impact—especially if turnover remains high over a prolonged period of time.

In some cases, organizations willingly allow attrition to happen because certain positions are no longer needed. However, leaders should consider designing new roles that involve more current skill sets in order to maximize their company’s success. If they are simply eliminating positions without thinking creatively about alternatives, they’re likely missing out on opportunities to gain a competitive advantage in the current market.

Today, 61% of organizations struggle to retain their talent—and turnover typically costs 1–2 times the employee’s salary. Both turnover and attrition disrupt how an organization functions, causing substantial overwork and confusion among employees who stay. Further, the loss of talent can hamper innovation, lead to missed opportunities, and ultimately affect a company’s position in the market. When leaders themselves depart, these effects can be especially significant.

For these reasons, retaining talent has become the number-one operational priority for U.S. companies. In support of this goal, 54% of organizations aim to ramp up their HR tech solutions by 2025, reports Gallagher.

Attrition and turnover rates vary by industry. In general, aim for a rate of below 10%, says SHRM.

How to Measure Attrition vs. Turnover

Every HR department needs to know how to accurately measure attrition and turnover. Let’s discuss how to do that now.

Method of Measuring Attrition

To measure attrition, you’ll calculate the percentage of employees who have departed and who have not been replaced, following these steps:

1. Determine the number of employees in your company at the start of a given period (e.g., a year). 
2. Count the number of employees who departed during that period.
3. Tally up the number of employees who were hired during the same period.
4. Subtract new hires from the number of departures to identify your company’s decrease in employees (if any).
5. Determine the total number of employees at the end of the year.
6. Add the number of employees at the beginning and end of the year. Then divide the result by two to get the average number of employees. 
7. Use the following calculation to find the attrition rate:

Annual attrition rate = Decrease in employees / Average # of employees  x 100

So, if your workforce decreased by 4 employees, and you have an average staff of 80, your attrition rate would be 5%:

4 / 80 x 100 = 5%

Technique for Calculating Turnover

To calculate turnover, first tally up the total number of departures from employees who resigned or were fired within a specific time period. Then, use this formula for calculating turnover:

Turnover Rate = # of separations / Average # of employees x 100

For example, if 5 employees departed Company X in 2023, and it has 40 employees on average, the turnover rate would be 12.5%:

5 separations /40 employees x 100 = 12.5%

Now, let’s discuss some key hurdles to overcome in managing attrition and turnover.

Challenges of Managing Attrition vs. Turnover

Managing attrition and turnover can be tricky. They’re shaped in part by market forces, which may affect decisions to restructure or employees’ career opportunities. However, enhancing employee engagement, work/life balance, and job satisfaction will give you a strong advantage in any economic climate.

Managing attrition relates mainly to decisions of senior executives and HR leadership. For instance, as employees approach retirement age, leaders must decide whether and how to replace them. This requires thoughtful succession planning—the creation of an organization-wide map showing potential role shifts within the organization, coupled with training and mentoring for each person involved. If the company is struggling financially, leaders may feel pressured to eliminate positions. Balancing financial concerns with ambitions for growth can prove challenging, requiring skilled strategic decision-making.

Similarly, handling turnover requires careful planning informed by strong insights on why employees are departing. First, HR should train managers on how to proactively coach employees. Then, it should work to attract employees who fit the vacant roles through strategic recruitment plans.

Strategies for Reducing Turnover and Attrition

Let’s now take a deeper dive into some strategies for lowering attrition vs. turnover. These strategies will foster a strong culture that promotes employee retention.

Hold Regular One-on-Ones

This is probably the single most important thing you can do to decrease turnover. “Nearly half (45%) of voluntary leavers report that neither a manager nor another leader proactively discussed their job satisfaction, performance or future with the organization with them in the three months before leaving,” writes Gallup. “Of those whose manager or leader did engage with them in the three months before leaving, fewer than three in 10 had a conversation about the future of their career with the organization (29%) or their job satisfaction (28%). They were even less likely to report that they discussed what it takes to be effective in their job (18%) or what it would take for them to stay with the organization (17%).”

So, urge managers to hold weekly one-on-ones with direct reports. In these conversations, they can discuss career goals and training needed, as well as job expectations and how to overcome challenges.

Conduct Stay and Exit Interviews

Hold stay interviews with employees to ask about factors that would persuade them to stay vs. leave. Also conduct exit interviews with departing employees to find out why they’re leaving. An HR manager should conduct these interviews. Then, follow up by making changes in response to their feedback.

Explore Creative Job Redesign Ideas

Redesigning roles to respond to emerging needs can help prevent attrition. Executive and HR leaders can partner to map out future roles that respond to these needs. Then, they can help current employees upgrade their skill sets accordingly. This effort should be part of any organizational succession plan. In turn, implementing a strong succession plan will help minimize attrition and turnover.

Integrate Diversity, Equity, and Inclusion into Your Culture

Integrating DEI into the culture is a key way to boost retention, as Gallagher says. Employees want to be part of an inclusive culture that prioritizes fairness. Review existing policies on salary and advancement, and create standardized training and mentorship protocols. In meetings, show appreciation for everyone’s ideas and actively solicit their input. 

Additionally, offer employee resource groups that improve everyone’s sense of belonging. You can also hold allyship circles that help those with more societal privilege learn to be allies to those in marginalized groups.

Upgrade Your Onboarding Process

A great onboarding experience sets an employee up for long-term success. Regular feedback, one-on-ones with managers, and peer mentoring will help new employees feel fully included and supported. 

Monitor and Respond to Attrition vs. Turnover Using HR Tools

Using HR software that leverages analytics can deliver powerful insights on how to prevent turnover and attrition. Quality HR solutions will track patterns in engagement and how they relate to turnover. Using 360 review software can also uncover interpersonal challenges that are influencing job satisfaction. And performance management software can highlight areas where employees are struggling, which can undermine morale if left unaddressed. 

You can then proactively address these issues, greatly improving the employee experience. Most importantly, such software can reveal how managers are performing, guiding the training you offer your leaders.

You can also send out regular pulse surveys to ask about factors shaping employee satisfaction. Each survey can have a particular theme. Inquire about work/life balance, the amount of feedback they receive, and organizational culture, for example. 

Equipped with a strong understanding of attrition vs. turnover, you can accurately monitor and reduce their rates of occurrence. By using the right tools and strategies to improve engagement and morale, you’ll retain your talented employees and enhance your organization’s overall health.

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