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Attrition rate: There is no standard formula to calculate the attrition rate of a company.This is because of certain factors as:

The employee base changes each month. So if a company has 1,000 employees in

April 2004 and 2,000 in March 2005, then they may take their base as 2,000 or as1,500 (average for the year). If the number of employees who left is 300, then the

attrition figure could be 15 percent or 20 percent depending on what base you take.

Many firms may not include attrition of freshers who leave because of higher studies

or within three months of joining.

In some cases, attrition of poor performers may also not be treated as attrition.

Calculating attrition rate:

Attrition rates can be calculated using a simple formula:

Attrition =(No. of employees who left in the year / average employees in the year)

x 100

Thus, if the company had 1,000 employees in April 2004, 2,000 in March 2005, and 300 quitin the year, then the average employee strength is 1,500 and attrition is 100 x (300/1500)

= 20 percent. Besides this, there are various other types of attrition that should be takeninto account. These are:

Fresher attrition that tells the number of freshers who left the organization within

one year. It tells how many are using the company as a springboard or a launchpad.

Infant mortality that is the percentage of people who left the organization within

one year. This indicates the ease with which people adapt to the company.

Critical resource attrition which tell the attrition in terms of key personnel like senior

executives leaving the organization.

Low performance attrition: It tells the attrition of those who left due to poor

performance.

Attrition CostsOne of the best methods for calculating the cost of turnover takes into account expensesinvolved to replace an employee leaving an organization. These expenses are:

A. Recruitment cost

The cost to the business when hiring new employees includes the following six factors plus10 percent for incidentals such as background screening:

Time spent on sourcing replacement

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Time spent on recruitment and selection

Travel expenses, if any

Re-location costs, if any n Training/ramp-up time

Background/reference screening

B. Training and development costTo estimate the cost of training and developing new employees, cost of new hires must betaken into consideration. This will mean direct and indirect costs, and can be largelyclassified under the following heads:

Training materials

Technology

Employee benefits

Trainers Time

C. Administration costThey include:

Set up communication systems

Add employees to the HR system

Set up the new hires workspace

Set up ID-cards, access cards, etc.

Answer

{(The formula and correct logic behind calculation of ATTRITION RATE)}

((no. Of attritions x 100) / (Actual Employees + New Joined)) /100.

Examples:

1) Actual Employees No. Of people left No. Of Joined Total Employees

(Opening BAL) (Attritions) (Current Headcount)

150 20 25 155

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So according to the formula: ((20 x 100) / (150 + 25)) / 100

Which comes to 0.1142 i.e. 11%

Now as you had 150 previously and now 25 joined so it makes 150 + 25 =175

Now if you calculate 11.42% of 175 i.e. 175 x 0.1142 = 20

Which clearly shows that 175 - 20 = 155, which is your current headcount and at thesame time you can say my attrition is 11.42% that shows you lost 20 employees of 150

and 25 more joined which makes count to 175.

2) Actual Employees No. Of people left No. Of Joined Total Employees

(Opening BAL) (Attritions) (Current Headcount)

100 50 0 50

This is the special case where we are considering attritions only keeping into mind thatnobody has joined in particular month.

So according to the formula: ((50 x 100) / (100)) / 100

Which comes to 0.5 i.e. 50%

Now as you had 100 previously and now 0 joined so it makes 100 + 0 =100

Now if you calculate 50% of 100 i.e. 100 x 0.5 = 50

Which clearly shows that 100 - 50 = 50, which is your current headcount and at the sametime you can say my attrition is 50% that shows you lost 50 employees of 100 and 0

joined which makes count to 50.

3) Actual Employees No. Of people left No. Of Joined Total Employees

(Opening BAL) (Attritions) (Current Headcount)

500 200 100 400

So according to the formula: ((200 x 100) / (500 +100)) / 100

Which comes to 0.3333 i.e. 33.33%

Now as you had 500 previously and now 100 joined so it makes 500 + 100 =600

Now if you calculate 33.33% of 600 i.e. 600 x 0.3333 = 200

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Which clearly shows that 600 - 200 = 400, which is your current headcount and at the

same time you can say my attrition is 33.33% that shows you lost 200 employees of 500

and 100 more joined which makes count to 400.

4) Actual Employees No. Of people left No. Of Joined Total Employees

(Opening BAL) (Attritions) (Current Headcount)

8000 5000 500 3500

So according to the formula: ((5000 x 100) / (8000 +500)) / 100

Which comes to 0.5882 i.e. 58.82%

Now as you had 8000 previously and now 500 joined so it makes 8000 + 500 =8500

Now if you calculate 58.82% of 8500 i.e. 8500 x 0.5882 = 5000

Which clearly shows that 8500 - 5000 = 3500, which is your current headcount and at thesame time you can say my attrition is 58.82% that shows you lost 5000 employees of

8000 and 500 more joined which makes count to 3500.

Read more:

http://wiki.answers.com/Q/What_is_the_HR_attrition_rate_formula#ixzz1LHCcgnd7

An attrition rate, also known as achurn rate, can be a measure of two things. It can be a measure of how many

customers leave over a certain period of time or how many employees leave over a certain period of time. An

attrition rate can also be a combination of these two factors.

An attrition rate is typically used in connection with a subscription service. Whether it is a magazine, cell phone

or Internet provider, all depend on stable relationships with current customers in order to protect and grow the

bottom line. However, the term can be applied to other types of companies as well.

An attrition rate is a good way to measure growth for subscription services. If the growth rate is more than the

attrition rate, then the company has a net increase in growth. The opposite, of course, is also true and a negative

rate of growth could signal some type of change is needed.

Dear Friends,

Can any one help me in understanding how attrition % is calculated. I'm trying to understand the processwhat we follow is as per industry or not.

We calculate as follows:

Formula : Attrition for the month/Total Headcount * 100

http://wiki.answers.com/Q/What_is_the_HR_attrition_rate_formula#ixzz1LHCcgnd7http://www.wisegeek.com/what-is-the-churn-rate.htmhttp://www.wisegeek.com/what-is-the-churn-rate.htmhttp://www.wisegeek.com/what-is-the-churn-rate.htmhttp://wiki.answers.com/Q/What_is_the_HR_attrition_rate_formula#ixzz1LHCcgnd7http://www.wisegeek.com/what-is-the-churn-rate.htm

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Ex : 3012 Headcount for the month (Last month Headcount 2812 + 200 new joinees) 65 resignations for themonth.

65/3012 * 100 = 2.15% I'm not convinenced with the formula......

We recruit every month 200 - 250 members (continuous recruitment), should we include new joinees while

calculating attrition % ? if so, we will not know correct % any time.

Regards,

Prashant Thakkar