Employee Turnover vs. Attrition: Understand the Key Differences
Employee turnover and employee attrition are two HR metrics with some similar themes... but very different implications. While both terms describe employees leaving a company, the expected outcome that each metric can shed light on are quite different. Differentiating and measuring these metrics can help businesses act on them, and companies have plenty of incentives to do that. For example, handling turnover or attrition can result in lower operational costs or can even raise employee satisfaction.
This article walks through key differences between turnover and attrition, how to calculate their rates, common causes, and practical strategies for managing both to promote long-term organizational success.
What is Employee Turnover?
Employee turnover refers to the rate at which employees leave an organization and are replaced by new hires. These departures can be voluntary, such as when employees resign for better opportunities or career growth, or involuntary, including layoffs because of restructuring or terminations based on performance. Companies with high turnover often face increased recruitment and training expenses, interruptions in productivity, and challenges in maintaining positive morale among remaining staff.
For example, if a business with 100 employees experiences 15 staff departures within a year, its annual turnover rate would be 15%. We’ll get into the formula later. The underlying causes can range from management issues and inadequate growth opportunities to a lack of competitive compensation or benefits. We’ll also develop on that.
The cost of turnover is often calculated at 33% of a departing employee’s salary in replacement expenses alone. Some other sources claim even higher costs. Every study agrees on one thing: Turnover is too expensive and should be avoided.
But turnover impacts businesses beyond their financials. Productivity might take a hit as new hires take time to adapt and become fully productive. Meanwhile, especially during layoffs, lingering employees may feel uncertain about their job security, which logically takes a toll on employee morale.
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What is Employee Attrition?
Employee attrition starts when the workforce gradually shrinks without immediate replacements for departing employees. This gradual process often results from retirements, career changes, or voluntary resignations that occur when the organization chooses not to fill the vacant roles (that’s why there’s involuntary and voluntary attrition). Still, unlike turnover, which requires businesses to hire replacements promptly, attrition could be a reflection of a more deliberate and strategic downsizing approach.
For example, a company may experience attrition when senior employees retire, or certain positions are phased out due to technological advancements or changes in business focus. This approach might actually be for the best when businesses need to realign workforce size with strategic goals or manage their payroll costs without recurring to layoffs.
That said, attrition isn’t always a balm. It can become a problem, especially if it means losing key skills or knowledge. Without a solid plan for succession and sharing expertise, companies might find themselves facing gaps that slow down their growth. While attrition is gentle on recruitment costs, it’s important to plan carefully to make sure the company stays flexible and competitive over time.
Employee Turnover vs. Attrition: Key Differences
Though both employee turnover and attrition describe workforce changes, they differ quite a lot in their causes, management strategies, and even their impact on a business. Turnover typically refers to employees leaving unexpectedly, to which companies react with more recruiting. Attrition, on the other side, represents a usually planned reduction where positions are not backfilled. In any case, both are measurable percentages which companies can observe and work around with.
A practical comparison highlights these distinctions:
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How to Calculate Turnover Rate and Attrition Rate
Calculating turnover and attrition rates gives companies a good sense of how stable their workforce is and helps them zoom into where they might need to make improvements.
How to Calculate the Turnover Rate
The turnover rate measures the percentage of employees who leave and are promptly replaced during a specific time frame. It’s calculated using this formula:
For example, if a company averages 100 employees over a year and experiences 20 separations, the employee turnover rate is 20%.
How to Calculate the Attrition Rate
The attrition rate tracks the percentage of employees who leave without replacement. This often implies a natural reduction in workforce size because of retirements or role cuts. The formula is:
If five employees leave during a year and their positions are not filled in a workforce of 200, the employee attrition rate will be 2.5%.
Causes of Employee Turnover
High employee turnover can cost businesses money and cause problems. But, if you understand why employees are leaving, you can come up with ways to keep them around and get more people excited about their work.
One significant driver of turnover is poor management practices. Employees typically leave not just because of the job but because of their immediate supervisors. Micromanagement, lack of clear communication, and poor leadership are frequent complaints among disgruntled (former) employees.
Another key factor is the lack of growth opportunities. Employees who feel stuck in their roles are more likely to seek new opportunities that offer development and career progression.
Low employee engagement also contributes heavily to turnover. When employees don’t feel connected to their work or aligned with the company’s mission, they are more likely to look elsewhere. Lack of enthusiasm, decreased productivity, and frequent absenteeism are some of the signs of disengagement, and, coincidentally, these are all problems in and by themselves.
Turnover trends typically vary across industries. In retail and hospitality, for example, turnover rates tend to be higher due to the seasonal nature of work and lower job stability. In contrast, specialized industries like technology or finance may be subject to lower turnover rates. But, what is a good, bad or healthy turnover rate?
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What is a good turnover rate?
A healthy turnover rate is at 10% or below. Of course, that this figure on employee turnover depends on the industry, but it’s an oft-repeated rule of thumb. This figure can also be transposed to what a good retention rate is: 90% is a healthy retention rate for most companies.
Causes of Employee Attrition
Attrition is a natural part of any workplace, but that doesn’t mean it’s always easy to handle. Employees may leave for all sorts of reasons. Some retire after years of service, while others might decide it’s time for a career change and head off to explore new industries or passions. Sometimes, a company restructures in a way that shrinks the workplace because HR doesn’t replace roles that are simply no longer necessary.
There’s a difference between natural attrition—like planned retirements—and unwanted attrition, where valued employees leave unexpectedly, and the company fails to fill those positions out. Natural attrition can be easier to manage when it aligns with business needs, especially because a certain attrition rate can be planned for. But when key players walk out the door without warning and the company can’t find talent that can match those absences, it can disrupt productivity and leave noticeable gaps in skills or leadership.
Strategies to Manage Attrition and Turnover
Keeping turnover and attrition in check starts with having a solid plan—and a people-first mindset.
When it comes to reducing turnover, strong onboarding and training processes make a big difference. When new employees feel welcomed and supported from day one, they’re less likely to jump ship early on. This is a well-researched claim. A study found out that almost 70% of candidates who accept an offer after great onboarding are more likely to stay with a company for three years.
Creating clear pathways for career growth and development also helps. Employees would rather not feel like they’ve hit a dead end at work. Regular check-ins to discuss goals, feedback, and promotion opportunities can go a long way in growing engagement. And let’s not forget the basics—competitive pay and benefits keep your company in the game when employees have plenty of options.
Planning ahead is the best way to deal with attrition. If you know key employees will be retiring soon, start succession planning early. Identify and prepare potential successors, so the transition is simple. But then again, not every role needs to be replaced when someone leaves.
Lastly, push for knowledge sharing between employees. When teams collaborate and share expertise, there’s a smaller risk of knowledge gaps when someone moves on. Plus, recognizing warning signs—such as sudden declines in performance, reduced collaboration, or increased complaints—can help managers address issues proactively and improve employee retention strategies.
How Turnover and Attrition Impact Business Performance
Both turnover and attrition can significantly impact a company and can hit productivity, the bottom line, and team morale alike. Let’s start with the financial side. Every time an employee leaves, the company faces costs associated with recruiting, hiring, and onboarding a replacement. Add to that the expense of training new hires and the productivity loss as they ramp up, and the bill gets heavy quite fast. High turnover can feel like a constant drain on resources, which makes it hard for companies to stay ahead.
Then there’s the impact on company culture and morale. When employees see a revolving door of colleagues coming and going, it can hurt team cohesion. Remaining staff may feel overburdened, wondering if they’ll be next to leave. If skilled employees walk away frequently, trust in leadership can erode, and a negative atmosphere can set in—which makes it even harder to retain the team you have left.
Long-term, both turnover and attrition shape a company’s talent strategy and ability to grow. High turnover can make it difficult to attract top talent, as jobseekers might question why people don’t stick around. On the flip side, natural attrition offers opportunities to realign the workforce with evolving business goals, but only if managed strategically. Without thoughtful planning, companies risk creating skill gaps that go against growth.
Understand Your Turnover and Attrition Rates with HR Tools
Turnover and attrition are some elements a company should keep an eye out for if they want a reliable and committed workforce. While turnover often signals areas for immediate improvement, attrition can present opportunities for strategic growth—when handled thoughtfully, of course. Companies that take a proactive approach when probing these two HR metrics can take steps to take the edge off disruption and retain top talent.
If you’re wondering how expensive turnover has become for your company, you can check out the TalentHR Turnover Costs Calculator. This tool can help you estimate turnover costs so you can make informed decisions about improving retention and optimizing your workforce strategy. And if you’re struggling with a high turnover or attrition score, and you can’t understand why, an HR tool might help you out. TalentHR, for example, is an all-around HR tool that can you can set up in seconds and can gather people analytics, including engagement scores, so you can track your employee’s performance.
Sign up for free to TalentHR today and try all the features—including a Safe Voice tool—with the Premium plan 14-day trial. No credit card needed.
