How to Calculate Attrition and Keep Your Talent Around for Longer

Dealing with attrition and turnover is an unfortunate reality every industry has to face. But just because it happens doesn’t mean there’s nothing you can do about it. In this article, we’ll discuss how to calculate attrition and turnover, the cost of losing employees, and what you can do to reduce your attrition rates.

What Are Attrition and Turnover?

Attrition and turnover are both terms used to communicate a loss of talent in a company, but they refer to two slightly different occurrences.

Attrition is when an employee leaves the company voluntarily (retirement, pursuing new opportunities, etc.), and the organization chooses not to replace the employee. Companies may choose not to replace an employee for a few reasons, including:

• Budgetary concerns about starting the hiring process again
• Other employees picked up the extra slack with little difficulty
• Technological changes that make your teams just as efficient with fewer people

Turnover refers to when an employee leaves the company, and you replace them with a new employee. This is the preferred route for many employers, as it allows you to maintain a consistent workload without asking too much of your other employees. However, turnover can be costly—you’ll have to start the recruiting process again and take time to train the new employee.

While these differences are subtle, they tell two different stories about your company’s health. If you have high turnover, there may be an issue with your company culture. If you have high attrition, it may highlight inefficiencies in your business model.

How to Calculate Attrition and Turnover

While turnover and attrition are indeed two different things, they describe two different strategies to deal with the same phenomenon: employees leaving the company. As such, attrition and turnover rates share the same equation.

Here’s how to calculate attrition and turnover:

Turnover & Attrition Rate = Number of Separation / Average Number of Employees x 100

This equation can be suited to cover any time period you wish to analyze, be it monthly or annual turnover/attrition rates. But to really understand how to calculate turnover and attrition, it’s helpful to understand how to get those other variables:

• Average Number of Employees: Every company sees fluctuation in its total headcount. For Q3, you have 87 employees in July, 95 in August, and 89 in September. That means you have an average of 90.33 employees. You can take as many data points as you need to calculate a monthly turnover rate or tally at the end of each month of an annual turnover rate.
• Number of Separations: Take a tally every time an employee leaves your company, be it voluntarily or involuntarily. Record the date it happened so you can segment this number as needed. We’ll continue our Q3 example: between July and September, there were a total of 8 separations.

Now, let’s calculate our hypothetical Q3 turnover/attrition rate:

8 / 90.33 x 100 = 8.86% Turnover & Attrition Rate

What Is the Cost of Losing an Employee?

It’s difficult to calculate the average cost of losing an employee—it varies significantly by the department and skill level of the individual employee. But there are several monetary (and non-monetary) costs you should be aware of when trying to replace that employee.

Monetary Costs

The following are just a few of the monetary costs you’ll face when hiring a new employee:

• Recruitment costs
• Training costs
• Equipment retrieval & redeployment
• Administrative costs (system deactivation, adding/removing employee data, etc.)

If you have a dedicated recruiter or trainer on staff, you may be able to limit these costs. If you don’t have those people on staff, restarting those processes can be costly.

Non-Monetary Costs

While these non-monetary costs are harder to quantify and calculate, they are equally important to consider:

• Time spent by leaders developing relationships with employees
• Time invested in training, coaching, and developing
• Loss of product and systems knowledge
• Loss of productivity while the new employee is getting trained

Ultimately, most leaders do not consider these non-monetary costs. This leads them to deprioritize retention strategies and they are more likely to fire employees for emotional reasons.

How to Retain Your Employees

Some attrition and turnover are expected and even healthy, so it’s not realistic to try and eliminate them completely from your company. Still, it’s important to employ some level of retention strategy so you can keep your talent around for longer. 

Here are five ideas to get the ball rolling:

1. Engage at all levels of proficiency: New hires and veterans need to be engaged if you want them to stay. For new hires, train them to develop mastery in the skills they will use every day at their job. For veteran employees, train them to prepare for new responsibilities, such as management.
2. Give leaders the right tools to lead: If your leaders take advantage of their authority to inspire fear in their teams, those teams won’t stick around for long. Rather, they should lead with influence and comradery—they’re a part of the team, just like anyone else.
3. Eliminate gaps in perks and privileges: Your management and entry-level employees should not have drastically different perks and privileges from one another. Leveling the playing field in this regard will help employees at every level feel appreciated and valued.
4. Clarify the definition of success: Success looks different in every role, but just because there’s variety does not mean there can’t be clear expectations. Set up regular one-on-one reviews between employees and managers to objectively assess performance and compare it to performance expectations.
5. Tie tasks to life goals: How do your employees compare to their daily tasks? If there’s a large disparity, they’re more likely to leave. If you look at the qualities required to complete a task, you can tie virtually any task to any life goal. So, sit down with your employees, and paint a picture of how completing their tasks can help them prepare for their goals.

Learn How ClearSource Leads Our People

ClearSource BPO is proud to say our attrition rate is among the lowest in our industry because we put the above practices at the heart of our management strategies. If you wish to learn more about what you can do to improve your BPO or call center’s retention, contact ClearSource today.