Employee Attrition vs. Turnover

Employee attrition and employee turnover are not the same things. Both involve employees leaving their place of work, however, and thus are issues that businesses should be aware of. Business owners, C-level executives, directors, HR teams and managers should all know how to prepare for and handle these. For all involved, here’s a closer look at the difference between employee attrition vs. turnover.

What is attrition?

Employee attrition is the natural and gradual reduction of a workforce over time. The process involves individual employees leaving for their own reasons, having nothing to do with the workplace itself. And attrition grows as more employees leave.

The employer’s reaction isn’t necessarily to hire new employees to fill the job vacancies that attrition creates. A few specific positions might be refilled, but most often, departed employees don’t get replaced. Executives and managers might reassess their company’s workforce needs, restructure departments, outsource, or automate instead.

Factors and examples of attrition

Attrition occurs when employees leave the workforce or a company for reasons unrelated to specific company culture or job performance problems. It’s normally considered attrition when employees exit an organization voluntarily due to:

• Personal reasons (e.g., to care for a loved one).
• Health reasons (e.g., chronic disease, long-term disability).
• Relocation.
• Pursuit of a new endeavor.
• Retirement.
• Nonrenewal of a completed term or contract.
• Local demographics (e.g., residents slowly leave a city, state, or region).

The scenarios do not require that the employees be replaced. Seasonal layoffs generally aren’t considered attrition for this reason, as employees return the next season.

While firings and layoffs might have a similar effect, they’re not often considered attrition because they’re involuntary.

Furthermore, these examples show attrition is largely outside of an employer’s control. Poor workplace culture, poor job performance due to insufficient training, and low job satisfaction aren’t causes of attrition.

What is employee turnover?

Employee turnover refers to situations in which employees leave an organization and are replaced by new hires. The turnover rate isn’t so much a process as a rate of change among staff. And turnover can be due to voluntary or involuntary exits. Both voluntary and involuntary turnover have essentially the same impact. The rate is often expressed as an annual turnover rate, though it can be measured monthly or quarterly.

All cases of employee turnover involve employers replacing the employees who leave. Employers rehire so that they can maintain essentially the same operations.

In other words, the difference between employee turnover and attrition shows up in how many employees a company has. Employee attrition results in a reduction in the number of employees. Employee turnover maintains approximately the same average number of employees (allowing for minor fluctuations).

Factors and examples of employee turnover

Turnover encompasses all reasons why employees leave a company, so long as they’re replaced.

Firings due to poor performance, resignations due to low job satisfaction, promotions for career advancement, and quitting due to poor work-life balance are only some scenarios that can contribute to employee turnover rates. So too can the aforementioned attrition examples if new employees replace the former staff.

Some controllable factors that can contribute to a company’s turnover rate include the following:

• Insufficient pay resulting in financial stress for employees.
• Lack of benefits.
• Poor workplace culture leading to job dissatisfaction and low employee engagement.
• Training (e.g., employees are fired because insufficient training results in poor performance).
• Job responsibilities (e.g., employees leave because they are overburdened or under-challenged).

Employee attrition vs. turnover: The implications in business

Since attrition and turnover both directly impact a company’s workforce, they each have major implications for business. Companies should know their employee turnover rate, attrition rate, and what’s normal for their industry.

Employee turnover rates can vary substantially by industry. Employee attrition rates vary more so by industry, local area, demographics and other factors.

How employee attrition can impact a business

There’s not much a company can do to control employee attrition. But a 2-pronged approach can help employers effectively manage the workforce reductions.

First, they should seek to hire a diverse workforce so that single trends don’t overly affect the workforce. Diversification can involve hiring employees of different ages and backgrounds, and increasingly in different areas with remote work.

Second, companies should review their operations and workforce needs to adjust. The aforementioned tactics of restructuring, outsourcing, and automating for increased efficiency may be helpful.

The impacts of employee turnover

Employee turnover warrants a different response. Companies generally should seek to minimize it, as the cost of employee turnover can be great. Hiring new employees costs more than retaining current ones. Interviewing, training, and other steps increase the expenses over time.

To increase employee retention, employers should focus on what they can control. Improving employee satisfaction might not only keep remaining employees onboard. It might also attract high-quality talent as the company earns a reputation as a desirable employer. Good compensation can keep employees from leaving for higher paying jobs. Enriched training and development programs can also enhance job performance, career growth, and overall employee morale.

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