Attrition Rate
Attrition rate is the proportion of employees who leave over a period, usually expressed annually. It is calculated as leavers divided by average headcount for the period, times one hundred.
Also called: employee turnover rate, staff turnover, churn rate HR
Key facts
- Formula
- Leavers / average headcountTimes one hundred, for a percentage.
- Denominator
- Average headcountOpening headcount distorts a growing company.
- Period
- Usually annualQuarterly figures are noisy in small teams.
Getting the denominator right
Use average headcount over the period, not the opening or closing figure. In a company that grew from forty to eighty people, dividing by either end produces a number that is wrong by roughly a factor of two, and the direction of the error is not obvious.
Average headcount is the mean of the monthly figures. It is a small amount of extra work and it is the difference between a metric and a talking point.
The cuts that make it useful
- Voluntary against involuntary. A high number driven by resignations means something very different from one driven by restructuring.
- By tenure. Losing people inside their first year points at hiring or onboarding, not at retention.
- By department and by manager, which is usually where the number stops being an average and starts being a specific problem.
- Regretted against non-regretted, if the company is honest enough to classify them.
What the headline number cannot tell you
A single company-wide percentage compresses several unrelated stories into one figure. It is worth reporting because the trend matters, but every decision it prompts should come from a cut, not from the headline.
Attrition on a team that grew during the year
- Headcount at the start
- 40
- Headcount at the end
- 80
- Average headcount
- 60
- Leavers during the year
- 9
- Attrition rate
- 15%
Dividing by the opening headcount would report 22.5%, and by the closing headcount 11.25%. Both are the same nine people.
Attrition Rate, answered
Divide the number of leavers in the period by the average headcount for that period, then multiply by one hundred. Average headcount, not opening or closing headcount, is what keeps the figure meaningful in a growing company.
It varies too much by industry and role to have a single answer. What is readable is your own trend over time and the difference between teams, which is why the cuts matter more than the headline.
This page explains general practice in Nepal. It is not legal or tax advice, and statutory figures are revised from time to time. Check the current Act, rule or notice before acting on it.
Related terms
- Absenteeism RateAbsenteeism rate measures unplanned absence: days lost to unscheduled absence divided by the days that should have been worked, expressed as a percentage. Planned leave is excluded, because it is not the thing being measured.
- Offboardingबहिर्गमन प्रक्रियाOffboarding is the process of ending employment properly: handover, asset recovery, access revocation, clearance from each department, the exit conversation, and the final settlement.
- HRMSAn HRMS, or human resource management system, is software that holds employee data and runs the workflows around it: payroll, attendance, leave, performance and the approvals that connect them.
- Employee Onboardingकर्मचारी भर्ना प्रक्रियाOnboarding is everything between an accepted offer and a new employee being productive: paperwork, identifiers, access, equipment, introductions and the first pieces of work. It is a process with owners and dates, not a first-day checklist.
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