Turnover and attrition – two words that get thrown around in business talk like they are the same thing. But they are not. And honestly, it is more important than you think to know the difference between turnover vs attrition. They are the real issues and if you are not paying attention to which one is happening in your business, you might be solving the wrong problem.
In this guide, we will clear up the confusion between turnover and attrition so you can finally understand what is really going on when people leave your company – and why some positions stay empty for longer than they should. Oh, and we will make the math easy, too so you can know whether you need to step up recruitment or rethink your employee retention strategy.
Turnover vs Attrition Difference In A Nutshell
Turnover and attrition both refer to employees leaving a company, but the major difference is replacement. Turnover is when employees leave, and you actively replace them. Attrition is when employees leave, but their positions stay empty – either permanently or for a long time. One keeps the hiring cycle spinning, the other slowly shrinks your team.
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What Is A Turnover Rate?
The turnover rate is the percentage of employees who leave a company within a certain period, usually a year. It includes both voluntary exits (when employees choose to leave) and involuntary exits (when the company lets them go). A high employee turnover rate means you are constantly replacing employees, which can get expensive and disruptive.
Voluntary Turnover
This happens when employees choose to leave on their own. Some common reasons are:
- Better job opportunities – Higher pay, better benefits, or career growth elsewhere.
- Toxic work environment – Bad management, poor company culture, or lack of support.
- Burnout and stress – Heavy workloads, unrealistic expectations, or lack of work-life balance.
- Lack of career growth – No promotions, no skill development, or feeling stuck.
- Poor compensation – Salary, benefits, or perks that don’t match industry standards.
Involuntary Turnover
This happens when the company decides to part ways with an employee. Some reasons include:
- Poor performance – Employee isn’t meeting expectations despite feedback.
- Misconduct – Violating company policies, unethical behavior, or legal issues.
- Company downsizing – Layoffs due to budget cuts, restructuring, or mergers.
- Attendance issues – Chronic absenteeism or not showing up on time.
- Cultural misfit – Employee doesn’t align with company values or team dynamics.
What Is A Good Turnover Rate?
A good turnover rate depends on your industry, but generally, 10%–15% per year is considered healthy. It means people are leaving, but not at a rate that disrupts operations or drives up hiring costs.
What Is A High Turnover Rate?
A high turnover rate is anything above 20% and usually signals deeper issues. It happens when:
- Departing employees feel undervalued or overworked.
- There is no clear career growth path.
- The workplace culture is toxic or mismanaged.
- Hiring mistakes lead to bad job fits.
- Compensation isn’t competitive.
Did You Know?
???? Regular feedback can reduce turnover by 14.9%.
(Source)
What Is An Attrition Rate?
The attrition rate is the percentage of employees who leave a company and aren’t replaced. Unlike turnover, where positions are quickly refilled, attrition slowly reduces the workforce over time. This can happen naturally as people retire, resign, or move on – and the company either decides to operate with fewer employees or restructure roles instead of hiring replacements.
Voluntary Attrition
This happens when employees leave on their own, and the company chooses not to replace them. Common reasons include:
- Retirement – Employees reaching the end of their careers naturally step away.
- Career shifts – People leave for new industries or roles outside their current expertise.
- Workplace dissatisfaction – People quietly leave due to burnout, lack of employee engagement, or bad leadership.
- Better opportunities elsewhere – When high performers leave and companies don’t backfill the role.
- Relocation or life changes – Moving cities, going back to school, or stepping away for personal reasons.
Involuntary Attrition
This happens when employees leave due to company decisions rather than personal choice. Some reasons are:
- Layoffs and downsizing – The company cuts roles due to financial struggles or restructuring.
- Position elimination – A job is no longer needed, often due to automation or mergers.
- Business closure – Entire departments or locations shut down, causing job loss.
- Cost-cutting measures – Companies reduce headcount to save money without rehiring.
- Shift in company strategy – Moving away from certain roles or business functions, leaving employees without a position.
What Is A Good Attrition Rate?
A good attrition rate varies by industry, but generally, less than 10% per year is considered healthy. This level of attrition allows for natural employee movement without causing major disruptions.
What Is A High Attrition Rate?
A high attrition rate is anything above 15%, and it often signals bigger issues. Unlike high turnover, which shows frequent employee movement, high attrition means positions are disappearing – and that can be a warning sign.
Some reasons why attrition gets out of hand:
- Layoffs, budget cuts, or uncertain leadership create uncertainty.
- Employees leave, but no one is prepared to take over their responsibilities.
- The company struggles to hire due to a weak reputation, low pay, or outdated work models.
- If the company isn’t evolving, employees may move on while leadership chooses not to replace them.
- Some sectors shrink due to automation, outsourcing, or changing market demands.
A high attrition rate isn’t always bad – sometimes it is a sign of strategic downsizing – but if it is unplanned, it can leave a company scrambling to function with fewer and fewer people.
How To Calculate Turnover & Attrition Rates
Understanding your turnover and attrition rates is about getting a clear picture of how your workforce is changing. Here’s how to calculate both so you can track what is really going on.
Turnover Rate Formula:
Turnover rate tells you how many employees leave and are replaced within a specific time period. The formula is:
Turnover Rate = (Number of Employees Who Left ÷ Average Number of Employees) x 100
Where:
Employees Who Left = Total number of employees who resigned or were terminated in a given period.
Average Number of Employees = (Starting headcount + Ending headcount) ÷ 2.
Sample Turnover Rate Computation:
Let’s say your company starts the year with 200 employees and ends the year with 180 employees. Over the year, 40 employees left (some were replaced, some were not).
Step 1: Find the average number of employees:
(200 + 180) ÷ 2 = 190
Step 2: Apply the turnover rate formula:
(40 x 100) ÷ 190 = 21.05%
So, your company’s annual turnover rate is 21.05%, meaning just over one-fifth of your workforce left and had to be replaced.
Attrition Rate Formula:
The employee attrition rate focuses on how many employees leave without being replaced. The formula is:
Attrition Rate = (Number of Employees Who Left and Weren’t Replaced ÷ Average Number of Employees) x 100
Where:
Employees Who Left and Weren’t Replaced = Only those whose positions remained vacant.
Average Number of Employees = (Starting headcount + Ending headcount) ÷ 2.
Sample Attrition Rate Computation:
Using the same example, let’s say that out of the 40 employees who left, 15 were not replaced.
Step 1: Find the average number of employees:
(200 + 180) ÷ 2 = 190
Step 2: Apply the attrition rate formula:
(15 x 100) ÷ 190 = 7.89%
So, your company’s attrition rate is 7.89%, meaning nearly 8% of your workforce left and was not replaced.
Something to Ponder
???? 50% of employees say recognition reduces turnover.
(Source)
Why Is Knowing The Turnover & Attrition Rates Important?
These numbers tell you way more than just how many people are leaving. Here’s why they actually matter.
a. Spot Underlying Problems Early
High turnover or attrition is a warning sign. If people are leaving faster than usual, something’s off – whether it is leadership, culture, or workload.
b. Prevent Hiring Headaches
Constantly replacing employees is expensive and exhausting. Tracking these rates helps you stay ahead of staffing issues instead of scrambling when key people leave.
c. Plan For Workforce Changes
Attrition can sneak up on you. If roles keep disappearing without a hiring plan, you might wake up one day understaffed and struggling to keep up.
d. Gauge Employee Satisfaction Without The Guesswork
If turnover is creeping up, exit interviews won’t always tell the full story. The data gives you a real measure of whether people are happy or just tolerating their jobs.
e. Keep Leadership Accountable
A high turnover or attrition rate can point directly to management problems. If one team is bleeding employees while others are stable, you know where to look.
f. Protect Your Company’s Reputation
Constantly losing employees can make your company look unstable. Keeping an eye on these rates helps you avoid becoming “that place” everyone wants to leave.
g. Strengthen Long-Term Business Strategy
Growth isn’t just about revenue; it is about talent. If your workforce is shrinking when it should be expanding, your long-term plans might need a rethink.
Strategies To Reduce Turnover & Attrition Rates
Reducing turnover and attrition is more than just hiring new people or offering higher salaries. Here’s a breakdown of how to reduce employee churn.
1. Implement Personalized Career Development Plans
Every employee has unique goals, strengths, and areas to grow. Offering personalized career development plans shows you care about their progress and are invested in their future.
- Have one-on-one discussions to understand what employees want from their roles and future.
- Offer courses, certifications, or mentorship programs that match their goals.
- Track progress with regular check-ins so they know where they stand.
- Make sure there is always something new or challenging in their role to keep them engaged.
- Recognize achievements and improvements along the way to boost morale and show that growth matters.
2. Introduce Flexible, Employee-Tailored Work Schedules
Not everyone thrives in a rigid 9-to-5 setup. Offering flexibility that suits individual needs can help improve job satisfaction and reduce the desire to leave.
- Let employees work from home, especially for roles where it makes sense.
- Allow team members to set their hours within a range that works for both them and the company.
- Split roles between 2 employees if full-time work isn’t necessary.
- Let employees work longer hours over fewer days if that fits their lifestyle.
- Show flexibility during personal milestones like family events or health needs.
3. Create A Transparent Feedback Loop
Employees want to know their voices are heard, and that their input can make a difference. Establishing a transparent feedback loop keeps everyone aligned and helps resolve issues before they become big problems.
- Schedule frequent one-on-ones to get honest feedback on how employees are doing.
- Conduct anonymous surveys to gather insights on workplace culture and employee satisfaction.
- Make sure you are not just collecting opinions; take real action on the feedback you receive.
- Create an environment where employees feel safe to share concerns without fear of backlash.
- After gathering feedback, share the changes or plans you are making based on what they said.
4. Offer Sabbaticals Or Long-Term Leave Options
Sometimes, burnout happens, or employees just need time to recharge – especially if they have been with your company for a while. Offering sabbaticals or long-term leave options shows you care about their well-being, while also preventing them from leaving for good.
- Define who qualifies, how long the leave can be, and how it impacts their benefits.
- Some employees may prefer paid sabbaticals, but even unpaid ones give them the flexibility to take time off without quitting.
- Consider offering sabbaticals every 5-10 years to keep employees committed.
- During the sabbatical, ask employees to reflect on their career goals and re-evaluate their position in the company.
- When they return, ensure a smooth transition with a clear plan for reintegration into the team.
5. Conduct Regular “Stay Interviews”
Stay interviews are your chance to understand why employees stick around and what might eventually make them leave.
- Start with simple questions like, “What keeps you here?” or “What could make your job better?”
- Look for patterns in what employees like most about working with you (i.e., career growth, work culture, etc.).
- If issues come up, take immediate action to fix them or provide solutions.
- Use the insights to shape company policies, reward systems, or leadership strategies.
- Schedule these interviews annually or bi-annually to keep a pulse on employee satisfaction and commitment.
This Needs to Improve
???? Only 14% of U.S. workers are completely happy with their job.
(Source)
6. Provide Personalized Recognition & Rewards
Generic recognition doesn’t always hit home. Personalized recognition makes employees feel seen and valued as individuals, not just as part of the workforce.
- Understand whether they prefer public recognition, private praise, or tangible rewards like gift cards or extra time off.
- Acknowledge work anniversaries, completed projects, or personal achievements with a thoughtful gesture.
- Whether it is an experience (a day off for a spa, tickets to an event) or something they value (like a donation to a cause they care about), make the reward feel personal.
- Implement a peer-to-peer recognition system where employees can acknowledge each other’s contributions.
- Make sure recognition is ongoing, not just tied to big accomplishments, so employees feel appreciated regularly.
7. Develop Cross-Functional Project Teams
When employees get the chance to work with others outside their usual roles, it breaks down silos and helps prevent burnout by creating a more engaging work environment.
- Pick projects that need diverse expertise and can benefit from different skills.
- Create teams from different departments or disciplines, so that employees learn from each other.
- Ensure regular check-ins and meetings to keep everyone on track and aligned.
- Allow team members to take turns leading initiatives to help with career growth and ownership.
- Recognize the team’s success as a group to create a sense of accomplishment and cohesion.
8. Allow Employees To Take On Side Projects Or Passions
Employees are more likely to stay when they feel they have the freedom to explore their personal passions or side projects.
- Make sure side projects don’t interfere with their main responsibilities by setting reasonable time limits.
- Allow employees to use side projects to develop new skills that can benefit the company.
- Provide resources like company time or budgets to help employees pursue their side interests.
- Give employees a platform to share their side projects with the team, whether through a demo day or a casual lunch meeting.
- Help employees find ways their personal projects can contribute to the company’s broader objectives.
Conclusion
In the end, knowing how the difference between turnover vs attrition is about taking control of your business’s future. Keep an eye on both, figure out which one is affecting your company more, and then take action. The clearer you are on what is driving people out (or not filling those spots), the better you can plan for the future.
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FAQs
What is the difference between attrition and resignation?
Attrition happens when employees leave naturally over time (retirement, moving, etc.), with no immediate replacement. Resignation is when an employee voluntarily quits to take another job or for personal reasons. While resignation is an active decision by the employee, attrition is more passive and gradual.
How do turnover and attrition affect employee morale?
High turnover can lower morale, as constant changes disrupt the team and increase workload. Attrition can also affect morale if employees feel overwhelmed with unfilled roles or worry about the company’s long-term stability.
Does the turnover rate include layoffs?
Yes, the turnover rate generally includes both voluntary exits (like resignations) and involuntary ones (like layoffs or terminations). It is a measure of all separations from the company.
How often should I track turnover and attrition rates?
Ideally, track turnover and attrition rates quarterly. This frequency gives you enough data to spot trends and take action, while not overwhelming you with too much information. You can adjust the timing based on your company’s size and industry.
