Reduce employee attrition by understanding why people leave, and creating a workplace where people want to stay. 

High employee attrition doesn’t just drain your HR budget, it also drains your whole organization’s energy, culture, institutional knowledge, and momentum. What can you do to reduce attrition? 

What is employee attrition?

Employee attrition refers to the shrinkage of your workforce. It happens as your people retire, resign, or are laid off, and you don't replace them.

People leaving their jobs is an everyday occurrence. It's even called the ‘employee lifecycle' because it comes to an end somehow. No employee goes on forever.

Employee attrition becomes a business headache when it is ‘unwanted attrition' – losing talented, high-performing, high value employees – for reasons that could have been prevented.

Free eBook: Employee Lifecycle Feedback

Employee attrition vs employee turnover

Employee attrition is not the same as employee turnover, even though both involve people leaving the organization.

Employee turnover happens when employees leave their jobs and are replaced by different people – either internal or external candidates. The number of employees remains the same. 

A company can have a high turnover rate, but still be growing, because it's not losing people.

While some level of employee turnover is expected, excessive turnover costs a company a lot of money, in rehiring, onboarding, and ramp time.

Employee attrition doesn't account for refilled vacancies, just those that are lost. A company may be refilling one in three vacant positions, but those two remaining vacant positions mean attrition is ongoing.

Even though there is a difference between employee turnover and employee attrition, they have something in common: attrition data and turnover data both provide insight into the causes of why people leave, enabling you to make improvements that help retain your people.

Types of employee attrition

There are two main types of employee attrition: involuntary attrition and voluntary attrition:

1. Involuntary attrition

In this scenario, the employee doesn't want to go. The organization has made the decision to part company with them. This may be due to:

• Redundancy: the employee's position is being eliminated
• Layoffs: there's not enough work to support the number of employees
• Termination: the employee's performance may be poor, or their conduct unacceptable, and they are asked to leave

Often, business leaders decide to terminate employees rather than redeploying or retraining them, to save money. This often turns out to be a false economy: layoffs affect the morale and engagement of existing employees who may be overburdened with extra work that affects their work life balance, and in turn burn out and go off sick, or leave themselves – voluntarily.

2. Voluntary attrition

In this second scenario, it's the employee who wants to leave, or who is at the end of their working life. Common reasons for voluntary departures include:

• Lack of development or career progression opportunities
• Dissatisfaction with current employer – perhaps a poor employee experience
• Finding a new job
• Wanting a change of career
• Relocation
• Family reasons
• Health reasons

3. Retirement

Just one or two employees retiring won't make too many ripples in an organization, particularly with sound succession planning. A bigger internal attrition problem is when a significant sector of your workforce who are of the same age retire together.

4. Demographic-specific attrition

When people of a particular demographic – gender, age, minorities, people with disabilities etc. leave unexpectedly. This may flag up incidents, inadequacies, or attitudes incompatible with those demographics and require immediate investigation.

Reasons for employee attrition

People leave their workplaces for many and varied reasons, including:

• Lack of opportunity to grow and achieve professional goals
• Inability to get work done efficiently, frustrating high performers’ efforts
• A toxic or negative work environment
• Poor organizational leadership
• Discontentment with manager or supervisor
• Unsatisfactory pay and benefits
• Lack of recognition for work
• Lack of support, not being valued, feeling disrespected
• Low employee satisfaction
• Employee values don’t chime with company values
• Workload too heavy to be able to achieve work life balance
• Experiences don’t meet expectations
• Personal reasons

These are all typical factors that build up over time, but the trigger to leave can occur at any stage in an employee’s lifecycle.

To reduce your organization’s attrition rate, you need to understand the what, the why, and the how:

• What has caused it?
• Why has it happened?
• How can we prevent it happening to our other high-performing employees?

What is an acceptable level of attrition?

Acceptable attrition rates vary by role and by industry, market competition, the skills in demand, talent mobility, business size, and other factors.

Fast-moving sectors such as tech and consulting may have a higher acceptable attrition rate than more stable sectors, such as government or healthcare. For example, in the tech sector, employees often leave due to high demand for their talent elsewhere — along with better compensation.

Also, larger organizations generally have more resources to be able to handle employee attrition better than smaller organizations, which need a lower rate for stability and continuity.

Economic conditions and local job markets can also affect employee attrition rates. Attrition may be higher in a highly competitive job market with plenty of opportunities, whereas areas with talent shortages or limited job opportunities may see lower rates and higher employee retention.

Furthermore, attrition rates often change when disruption occurs — we may see people staying put and ‘weathering the storm’ for a while in times of instability and uncertainty. This can, though, lead to complacency and boredom, which causes disengagement and lower motivation, leading to both wanted and unwanted attrition.

While high levels of employee attrition can be a red flag signaling there are problems in the organization that need identifying and addressing, attrition itself is a fact of working life, and isn't all bad.

In fact, it opens doors to lots of opportunities:

• In the short term, companies may be able to save on labor costs by not replacing employees who leave
• Employees who may have been quiet quitting, disruptive, problematic, negative, or maybe just not a happy cultural fit are removed from your organization
• New brooms: once attrition issues have been identified and addressed, you can hire new people who sweep in and bring fresh innovation and energy to the business

And even when attrition is low, it doesn’t mean that everyone is happy and working to the best of their abilities. You need to ensure your organization is doing everything it can to not only understand how employees are feeling (and what matters to them so you can help them stay), but also to maintain a good employee experience. After all, when organizations invest in the employee experience and focus on what their employees need, those employees are much more likely to stay.

What is the employee attrition rate? 

The employee attrition rate measures the number of employees who’ve left your organization within a set period of time. In the same way you measure employee engagement, intent to stay, wellbeing, inclusion — it gives you an idea of how you’re performing.

How to calculate employee attrition 

You calculate your organization’s attrition rate using this simple attrition rate formula:

Take the number of employees who’ve left your workforce in a given time period (definitely an annual attrition rate and maybe more often, depending on size), divide it by the average number of employees, then multiply by 100.

 So if 12 employees left in one year, and there was an average of 180 employees during that period, your attrition rate would be 6.6%

Too much effort? We’ve made it easy for you. Find out your attrition rate with our calculator below: 

Why it's important to understand attrition drivers

You've done the calculation above, and you may have found that your employee attrition rate needs to be improved. How are you going to do that?

The answer is to use an exit listening process. Organizations are increasingly using automated employee exit surveys to gather more honest feedback from their departing employees rather than exclusively face-to-face interviews, although these are still used. The process may include:

• Exit surveys
• Exit interviews
• Social exit surveys

These are a great way to understand at scale why employees are leaving. But unless this data is combined with the employee feedback from other stages in the lifecycle and with operational data such as staff turnover figures, it's difficult to identify actions to improve the situation.

When employees leave, you need to measure key topics identified as exit drivers. This will help you to:

• understand the main reasons why employees left the organization
• take action to retain employees in the future

Former employees can be outstanding ambassadors for your organization, or even future employees (i.e., “Boomerangs”). So it's important to understand whether employees are leaving feeling positive or negative about their experience, and whether they'd consider returning.

Key drivers of the employee experience that you can measure at the time of employee departure include:

1. Development

Growth is a fundamental human need. Seeking further development opportunities is still emerging as a top driver for finding alternative employment.

It's measured using: meaningful career development discussions, regular conversations about performance, giving opportunities to improve skills

2. Enablement

This is having the ability to get work done. When employees, especially high performers, don't feel enabled this can be a great source of frustration.

It's measured by looking at how: the job makes good use of skills and abilities, the processes support productivity, managers help to remove barriers, and the workspace and technology supports productivity.

3. Reward

Receiving fair pay and recognition for individual contributions at work is the backbone of the employee and employer relationship. When these don't align, they can compound other perceived issues in the employment relationship.

It's measured by looking at: fair pay, benefits that meet employee needs, and meaningful recognition.

4. Support

Today's workforce increasingly seeks job opportunities where they have the flexibility to manage their workload alongside their personal life. The happiest workplace environment is one where employees feel valued, respected and not overloaded with work. 

Support is measured by: Trusting relationships, managers treating teams with respect, the amount of support to adapt to organizational changes, and how much managers care about wellbeing.

5. Values

One of our previous Employee Experience Trends Reports found that being employed isn't just about having a job – it's a part of a person's value system. Many employees choose to work for organizations whose culture aligns with their own personal values.

When employees feel that their organization embodies these values, they're 27% more likely to have higher engagement scores, and 23% more likely to indicate their intent to stay for at least 3 more years.

Measure values with: open and honest communication, pride in the company's impact on the world, checking management behavior is consistent with company values.

6. Workload

It's essential people can balance work with their personal life. Employees who don't feel they have a good work life balance are unlikely to see a long term future with the organization.

Measure whether workload is manageable and flexible enough to meet work and personal needs.

How to reduce employee attrition 

As we’ve explored, your top talent are those able people who have the requisite skills, experience, training for their job, and knowledge of your organization’s functions and culture.

Unfortunately, they’re also the people who are most likely to jump ship to a competitor with a better offer — if you don’t satisfy and engage them. 

We’ll highlight some of things you can do — or strategies you can deploy — to reduce attrition and improve your overall employee experience, as well as how you can tie employee listening into each aspect to get a better handle on what your people need, and want.

Prevent rather than react

When an employee hands in their resignation, it’s too late to unpick the reasons why they were sufficiently dissatisfied with their job to want to leave.

Gallup surveyed US employees who had voluntarily changed their job in the last year, asking ‘What did the organization do to intervene?’ The results speak for themselves: 

45% of voluntary leavers reported that in the three months before their exit, little was done proactively by a manager or leader to find out how their job was going.

When organizations put in place an effective employee listening program that covers the whole employee lifecycle, from onboarding to exit, issues get flagged up to management as soon as they happen.

Focus on creating good manager - employee relationships

Part of a manager’s job is to help their team members thrive. They influence almost every key driver of employee engagement, so it’s critical that managers have the resources they need to not only listen to their team, but are also enabled to act on feedback to improve their experiences.   

The best listening programs for managers bring together and analyze employee feedback from engagement surveys, and what employees are saying on public channels. They also feature action planning and collaboration tools, so managers can huddle with their teams to collaborate, brainstorm ideas, and create plans with shared accountability.

"Most people leave their jobs as a result of their managers, so we're enabling managers to become the heroes of the employee experience," Brad Anderson, Qualtrics' President of Products and Services.

Offer training and development programs

Promoting professional growth is essential, and employees who feel their company has invested in them are more loyal and less likely to leave.

New hires in particular want to quickly ramp up and begin contributing at a high level, and training and development programs can be critical to their success.

Create a career plan that includes the possible highlights for an employee’s future if they remain on board.

Focus on employee wellbeing

Employee wellness has a major impact on every business. Looking after employees and managing their workload can transform their lives and make them happier, more productive, and less stressed.

Senior leaders in particular are at risk of burnout. Often working long hours with many priorities, these individuals may look to depart when their physical and mental wellbeing begin to decline. Be sure to support leaders with the resources they need to help them navigate their challenging roles.

Foster a great workplace culture

Increasingly, younger and new employees joining the workforce want to work with organizations that are environmentally and socially responsible.  In short, ones that share their values.

This is important because ‘living the values’ (e.g. organizations demonstrating their commitment to what they believe in) emerged as a top driver for employees’ intent to stay according to our 2023 Employee Experience Trends report.

So, foster a sense of belonging and value alignment among your employees, and they will:

• Feel like a valued member of the team
• Feel supported in adapting to organizational change
• Believe that they can be themselves at work
• Believe that their company is one where everyone can succeed to their full potential, no matter who they are
• Stay or stay for longer

Offer the best possible employee experience

When your people love working for you, why would they go anywhere else? Your employee experience needs to start the moment a candidate looks at your job ad, until they hand their lanyard in on their last day.

A great employee experience takes into account:

• Work-life balance – to prevent burnout
• Wellbeing – physical, mental and financial
• Belonging – feeling part of the organization
• Purpose – doing meaningful work
• Happiness – enjoying your work
• Vigor – feeling energized and enthusiastic at work

 Set up an employee journey solution to capture everything from work anniversaries to role transitions, to analyze and understand what’s working well, what isn’t, and how to improve those areas.

You can even go beyond the employee lifecycle, when you…

Set up and engage an alumni network

An alumni network creates an extended workforce of contractors and potential return employees. A thriving alumni network is a great advertisement for your organization. Plus, they’re more likely to refer others to your company as new hires.

When you cultivate a positive, inclusive work environment, communicate effectively, enable career development, offer competitive pay and benefits, and care for employee wellbeing, your employees will feel valued, supported, and empowered to contribute to your company’s success – and motivated to stay.

Ensure proper employee benefits and pay

An employee’s annual salary alone is not enough - it’s inadequate compensation. They want benefits and perks that add real value to their lives. The most sought-after benefits include:

• Health insurance
• Paid time off
• Disability and life insurance
• Flexible and remote working options

People working in hard-to-fill positions – who tend to be more readily targeted by your competitors – need to receive competitive compensation in order to ignore those pesky recruiter calls!

Pinpoint why employees leave – with an exit solution

Worried about losing your valuable employees? Now you don’t have to be.

With our exit solution, understand why your top performers leave and take action across the organization to manage attrition.

• Get up and running quickly with a best-in-class employee exit program that’s not only built into the Qualtrics™ XM Platform™, but is also fully customizable and requires no coding
• Access real-time employee exit insights, providing the employee attrition data you need to understand why talent is leaving, and action planning tools to help you close the experience gaps you find
• Create real-time alerts for at-risk staff and use feedback from previous employees to make improvements across the whole employee lifecycle, and monitor the impact of changes

It’s never been easier, or more important to retain your best people.