From the course: Data-Driven HR: AI-Powered People Analytics for Workforce Planning and Employee Experience

How to measure employee attrition

From the course: Data-Driven HR: AI-Powered People Analytics for Workforce Planning and Employee Experience

Start my 1-month free trial Buy for my team

How to measure employee attrition

“

- Many leaders I've spoken to tell me one of the things keeping them up at night is how to reduce unwanted attrition, but how do you measure attrition anyways? We talked about the concept of early attrition in the talent acquisition chapter, which is the percentage of employees leaving within six months or one year of being hired. Generally speaking, attrition occurs when an employee exits a company. There are two types of attrition. Voluntary is when employees resign and leave, where involuntary is when a company asks the employee to leave. In other words, employees initiate voluntary attrition, whereas the company initiates involuntary attrition. But now that we know what attrition is, how do we measure it? Well, the simple answer is that attrition rate is the number of employees who left the company, divided by the number of employees at the company. This may seem like an easy equation, but as you expand the horizon of time to say, a year, the denominator can become complex. Let's say you need to report the attrition rate for last year. Do you use the number of employees at the company on December 31st or January 1st? Do you take an average of the two? Do you take an average of each of the 12 months and numbers? Do you take the number of people who have ever worked at the company during the year? These are all reasonable ways of measuring headcount in a denominator. In my experience, the average of 12 months in headcount is common and smooths out seasonality or fluctuations in workforce size. Here's what that would look like. So the denominator will be the average of the number of employees at the end of each month, so January 31st, plus February 28th, and so on, divided by 12. As I mentioned earlier, there's two types of attrition, voluntary and involuntary. Voluntary attrition rate is the number of employees who left the company voluntarily over the number of employees at the company. An involuntary attrition rate is the same, but was involuntary in the numerator. To get to voluntary attrition rate versus involuntary attrition rate, you will include in the numerator the number of employees who left voluntarily or involuntarily. It's important to monitor both types of attrition. While voluntary attrition may tell you about your ability to retain talent, involuntary attrition can tell you performance issues that need to be addressed. Employee attrition is one of the concepts in people analytics you think would be straightforward to measure, but I've actually seen several ways of measuring it, and honestly, this gets pretty technical and beyond the scope of this course. But the thing to keep in mind is that most of the time, you, as the people analysts, may not get to change how this is measured, so you should always go back to the business stakeholders for clarification. Benchmarking is usually important to the organization too. If that's the case, you'll want to ensure your measurement is the same as the industry standard.

Contents