Attrition formula is a calculation of the number of items or individuals that move or vacate out of a larger, collective group over a particular time frame. Attrition rate is also generally referred to as churn rate. A word often used by human resources professionals to determine an organization’s ability to retain employees, attrition rate formula is more and more used in the marketing world to get a figure that points to the organization’s ability to project the number of new sales necessary to maintain the status quo or to retain customers, accounting for customer attrition or customer churn.
How to calculate the attrition rate is shown in many websites with examples. Attrition in a company can mean the decrease in staff and employees in the company through normal means, such as resignation and retirement, the loss of clients or customers to old age or to grow out of the organization's target demographic. Changes in company structure, administration style, or other aspects of the business might cause employees to leave the company willingly, resulting in a higher attrition rate. Another possible cause of attrition is when an organization eliminates a job completely.
The Attrition rate calculation is simply a ratio between the average number of employees who left the organization in a single year and the weighted average number of employees who were employed by the organization in a single year.
Assume that 4,500 workers left during the previous year.
For the weighted average, assume that a corporation had 40,000 employees for the first half of the year and 50,000 employees for the second half of the year. The weighted average would be (40,000 x 0.5) + (50,000 x 0.5) = 45,000 workers.
In this example, the attrition calculation is (4,500)/ (45,000) = 10%.
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