Staff attrition and staff turnover are similar — but if you want to reduce costs associated with them, you need to know the difference.
Staff attrition and staff turnover: what’s the difference and does it matter? Losing employees costs organizations millions of dollars a year, no matter how they make their exit. In fact, replacing a single employee can cost the company up to 2x that employee’s annual salary.
The good news is that you can reduce both attrition and turnover. However, knowing the difference between the two is essential to creating a successful retention strategy.
What is staff attrition?
Staff attrition fulfills the normal lifecycle of an employee in your business. Milestones like retirement, passing away, moving, layoffs, and changes in health are all examples of natural reasons employees choose to leave their organization.
Staff attrition fulfills the normal lifecycle of an employee in your business. Milestones like retirement, passing away, moving, layoffs, and changes in health are all examples of natural reasons employees choose to leave their organization. Typically, businesses do not plan to replace employees lost through attrition.
Losing employees through staff attrition can reduce short-term costs, as is the case with layovers and choosing not to fill positions left by retiring employees. However, since you aren’t hiring anyone new in these positions, you are reducing the size of your workforce and potentially increasing the workload of remaining employees. The cost factor here is in the loss of productivity due to a smaller, overworked staff.
What is employee turnover?
Unlike attrition, staff turnover is when an employee leaves the organization due to receiving better offers, dissatisfaction with the company, or are fired. However, the employee leaves an empty position — which the company then has to spend time, money, and other resources to fill.
Unlike attrition, staff turnover is when an employee leaves the organization due to receiving better offers, dissatisfaction with the company, or are fired.
While it can be a positive thing to lose non-committed or poor performing employees, the process of rehiring, training, and retaining new staff is a costly venture. And if you start losing your talented employees, your organization runs the risk of falling behind your competition.
How to calculate the employee attrition and turnover
Figuring out your current turnover or employee churn is simple. To calculate your employee attrition and turnover, you can use this formula:
- First, find out the number of employees who have left in a given period
- Divide by the average number of employees in the same period
- Multiply by 100
If you want to finetune this formula further, you can separate the employees who have left from those who you plan to replace (turnover) and those you don’t (attrition).
Employee attrition vs. employee turnover in brief
In other words, there are a few key differences between employee attrition and employee turnover. These are:
- Staff attrition is usually friendly and part of a natural employee lifecycle
- Employees lost to attrition may not be replaced
- Staff turnover is usually tenser and is tied to the performance of the company or the employee
- Turnover causes job vacancies that need to be filled
When we look at these small changes, it’s obvious that efforts at retention and training would be incredibly different based on why the employee is leaving.
What to do if you want to reduce attrition
There are some situations that are out of your control when it comes to staff attrition. Retirement, moving away, and passing away are few examples of when businesses have limited — if any — ability to retain employees.
However, there are a few things you can do to keep employees on board, depending on the situation if you feel like their talent is indispensable:
- Offer retirees part-time work as consultants or training for new hires
- Provide remote work opportunities to those moving away and for employees who need to stay home to care for family members or themselves
- Inform laid off employees that they will be the first to be rehired if a position comes up in the company, even if it’s not their old role
- Try to reduce layoffs by looking for other avenues to reduce expenses
What to do if you want to reduce turnover
When it comes to reducing employee turnover, employers need to take a different approach. Even when looking at turnover alone, there are many reasons why an employee chooses to leave their company:
- Lack of career development
- Low salary or irrelevant benefits
- Toxic workplace
- Poor relationships with colleagues and managers
And of course, you may choose to fire an employee who is poor performing or causes harm to the company or its employees.
To reduce turnover, you’ll want to invest in your workplace and employees. Ask for feedback about what benefits make sense, how you support their career trajectory, and how you can improve their work life. Consider offering work-from-home options and giving employees more responsibility on when and how they finish their tasks. You’ll also want to address your hiring and onboarding process since 80% of turnover is related to poor hiring and training practices.
Your next steps in reducing turnover
So how can you best solve issues related to staff attrition and turnover? In short, the answer lies in how you run your workplace. Transparency, collaboration, and feedback are all essential parts of how you can better support employees and discover more about creating the ideal workplace.
The first step to supporting your workforce is picking up the right tools for the job. Finding the easiest way to communicate with your employees is critical, especially as your organization continues to grow. Because once you know how your employees feel about your company and official policies, you can begin to implement changes.