Turnover Rate vs. Attrition Rate

Mak oi. For so many years, I thought they were the same thing. But a journalist recently educated me that they are not!

Turnover refers to the total number of employees who leave an organisation, whether voluntarily or involuntarily, and are replaced during a given time period.

We calculate Turnover Rate to understand:
🔄 Workforce movement – How fast are we replacing people?
💸 Cost of replacement – Recruitment, training, onboarding = $$$
🚨 Potential red flags – A high turnover rate may signal poor leadership or uncompetitive compensation

Formula:
Turnover Rate = (Number of resignations in a period)/(Average number of employees in that period) x 100

A healthy turnover is around 10%-15% annually.

Meanwhile…

Attrition, on the other hand, happens when employees leave and are not replaced. This often occurs due to downsizing or restructuring.

We calculate Attrition Rate to understand:
🧯 Natural workforce shrinkage
🧮 Long-term cost savings or headcount planning
📉 Impact of organisational changes like mergers or automation

Formula:
Attrition Rate = (Number of non-replaced exits)/(Average number of employees) x 100
which is a similar to turnover, but focused only on non-replaced exits.

A healthy attrition is usually lower, below 10% annually, since it’s not always intentional.

Hope you learned something new today, because I definitely did!

Happy weekend, everybody! My POV… a little turnover is not a bad thing. It means we bring in fresh blood, new ideas, and energy. But too much (or too fast), well, that’s where alarm bells start ringing!

xoxoxo, AuntyHR