Losing employees is never easy. It changes the workplace dynamic, but it can also cost your company a great deal of money.
When you consider the loss of productivity, the resources you put into hiring a replacement, and the hassle of onboarding, it's a significant loss. Estimates say that losing a single employee costs the business about 50 percent of that worker's annual salary. For more information about calculating employee attrition rate, visit this website.
When an employee leaves your company, it falls into two categories: Attrition and turnover. While both are costly, one has less impact on your organization than the other. Keep reading to learn more about the differences and calculating employee attrition rate figures.
What is Employee Attrition?
Staff attrition is when the company doesn't replace an employee who separates from the company. Typically the separation occurs naturally. For example, it's usually because of retirement, voluntary resignation, going back to school, etc.
With attrition, the organization usually gets rid of the position. Because that employee isn't replaced, there's a lower financial impact on the business. Furthermore, the separation is generally amicable.
Calculating Employee Attrition Rate
Calculating attrition rates is easy. The formula involves dividing the number of full-time employees who leave per month by the company's total average number of employees. Multiply that figure by 100, and you have the attrition rate.
Good HRIS software can help you monitor attrition rates and their impact on the organization.
What is Employee Turnover?
Employee turnover is when the company does replace an employee that leaves. Turnover is a more costly endeavor. As a result, many businesses focus on improving employee retention rates.
Turnover can occur on a voluntary or involuntary basis. For the latter, it's usually due to termination or firing. However, voluntary separations from an employee quitting are part of the equation, too.
Calculating Employee Turnover Rate
To calculate turnover, divide the number of employees who leave during the year by the number of total employees you had at the start of the year.
This figure tends to hold more weight than attrition due to its impact on the business.
Both attrition and turnover will affect your company's bottom line. Luckily, there are ways to foster change. Prioritize employee retention and invest in talent management software to fill open positions quickly and efficiently.
Read a similar article about 2022 tax changes here at this page.