Monday, February 4, 2008

Attrition rate

Attrition rate: There is no standard formula to calculate the attrition rate of a company. This is because of certain factors as:

The employee base changes each month. So if a company has 1,000 employees in April 2004 and 2,000 in March 2005, then they may take their base as 2,000 or as 1,500 (average for the year). If the number of employees who left is 300, then the attrition figure could be 15 percent or 20 percent depending on what base you take.

Many firms may not include attrition of freshers who leave because of higher studies or within three months of joining.

In some cases, attrition of poor performers may also not be treated as attrition. Calculating attrition rate: Attrition rates can be calculated using a simple formula:
Attrition =(No. of employees who left in the year / average employees in the year) x 100
Thus, if the company had 1,000 employees in April 2004, 2,000 in March 2005, and 300 quit in the year, then the average employee strength is 1,500 and attrition is 100 x (300/1500) = 20 percent. Besides this, there are various other types of attrition that should be taken into account. These are:

Fresher attrition that tells the number of freshers who left the organization within one year. It tells how many are using the company as a springboard or a launch pad.

Infant mortality that is the percentage of people who left the organization within one year. This indicates the ease with which people adapt to the company.

Critical resource attrition which tell the attrition in terms of key personnel like senior executives leaving the organization.

Low performance attrition: It tells the attrition of those who left due to poor performance.

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