Attrition rate is a method used to calculate the level of employees that leave the company in any given period of time. While often used interchangeably with ‘turnover’, the attrition rate specifically measures employees who leave and are not replaced, typically leading to a reduction in the company’s total headcount. Understanding this metric is the first step to improving employee retention and protecting your bottom line.
In this post, we will look at what the terms mean for you as an employer, how to calculate attrition rate, and why employee retention is so important. We will also look at the effect employee satisfaction can have on attrition and retention rates, and what you can do to improve numbers in your organisation. Finally, we will discuss how software solutions can help you better manage and track employee morale and performance to help you obtain optimum attrition rates at your company.
Key Facts
- Definition: Employee attrition rate is the measure of employees leaving a company who are not replaced over a specific period, expressed as a percentage of the total workforce.
- UK Benchmark: According to a 2026 report, the average attrition rate in the UK was 19% in 2025, significantly higher than the European average of 17.4%.
- Financial Impact: The cost of replacing an employee can be up to 33% of their annual salary, making high attrition a significant financial drain on UK businesses.
- Retention Goal: While rates vary by industry, research from Gallup suggests a healthy or desirable attrition rate for most organisations is around 10% or lower.
Table of Contents
- What Is an Attrition Rate?
- How Can You Calculate Your Attrition Rate?
- Why Does the Attrition Rate Matter for HR?
- What Is the Link Between Attrition and Retention?
- Reasons for a High Attrition Rate
- What Strategies Can Reduce a High Attrition Rate?
- Performance Management
- Try Factorial’s Performance Management Software!
- FAQs
What Is Attrition Rate?
The attrition rate, often called the churn rate, measures the percentage of employees who leave a company over a period and are not replaced. It provides a critical insight into workforce stability. Unlike the employee turnover rate, which tracks all departures, including positions that are refilled, the attrition rate specifically focuses on the roles that are eliminated or left vacant. Understanding this metric helps detect underlying issues within the organisation, enabling you to reduce staff losses, improve retention, and boost overall performance.
The first step is understanding the different types of attrition in a company:
- Attrition due to retirement: when a sizeable number of employees retire at the same time.
- Voluntary attrition: when employees voluntarily hand in their notice (most common type of attrition).
- Involuntary attrition: when you dismiss an employee for whatever reason (misconduct, structural reasons, etc.).
- Internal attrition: when employees quit their jobs to join another department within the company.
- Demographic-specific attrition: when notable rates of employees from a single group (women, ethnic minorities, people with disabilities, older professionals, etc.) leave the company.
How Can You Calculate Your Attrition Rate?
To calculate your company’s employee attrition rate, you divide the number of employees who left during a period by the average number of employees over that same period, and then multiply the result by 100 to get a percentage.
The attrition rate calculation formula looks like this:
Attrition Rate (%) = (Number of Leavers in Period / Average Number of Employees in Period) x 100
For example: You want to calculate the attrition rate for last year. Let’s say your company started the year with 100 employees. Throughout the year, 20 employees left the company (voluntary and involuntary), and there were 4 new hires.
The first step is to calculate the number of employees at the end of the year:
100 – 20 + 4 = 84
Then calculate the average number of employees for that year:
(100+84) / 2 = 92
You can now calculate the attrition rate for the whole year as follows:
Attrition rate (%) = (20 / 92) x 100 = 21.7%
A high rate means that your employees are leaving frequently, while a low rate indicates that you’re keeping your employees for longer periods of time.
Why Does Attrition Rate Matter for HR?
Most employers want a low attrition rate because it means that employees are happy, and happy employees perform better. Lower attrition rates also convert into higher retention levels. This results in reduced training and onboarding costs. It also means that you can focus on building your business rather than recruiting, onboarding and training replacements.
In the UK, poor employee engagement, a key driver of attrition, is estimated in 2026 to cost the economy £257 billion annually in lost productivity. This highlights the substantial financial incentive for businesses to maintain a stable and motivated workforce.
Attrition in HR is an important metric for detecting weak areas you may need to address to increase employee retention. This is especially true when it comes to voluntary attrition, as it is your job to find out why people have resigned from their post. You might discover that there is a high rate of attrition at a senior level, or perhaps you discover an alarming rate of demographic-specific attrition in a certain department, which could be down to a hostile work environment.
As an HR professional, the best way for you to improve attrition and retention rates is to nurture and motivate happy employees. Conduct detailed exit interviews and collect feedback from employees using surveys. Are you providing employees with sufficient training and career development opportunities? Could there be any gaps in the employee experience? If your rates continue to be high, consider fine-tuning your job descriptions and reviewing your recruitment and onboarding processes. This will help you find candidates who are better suited to the job.
What Is the Link Between Attrition and Retention?
The retention of employees is important for a number of reasons. Firstly, having a high rate of turnover can be time-consuming and costly. For every new recruit, you must review CVs, screen candidates and conduct interviews. Once you have made an offer to a candidate, you need to onboard and train them. Not to mention all the paperwork and costs involved when someone leaves your company, such as exit interviews and severance packages. There is bound to be a drop in productivity while you find someone to take over the departing employee’s tasks.
A high rate of employee retention boosts reputation, which helps to attract and retain more qualified talent. Consistent staff changes can also make it hard for your employees to develop positive working relationships with their co-workers. Employees who stay at a company for longer are often less stressed, more committed to the long-term success of the company, and more productive.
A structured onboarding process is a powerful tool for retention. Companies with strong onboarding programmes see 50% higher retention rates for new hires. Furthermore, 69% of employees are more likely to stay with a company for three years if they experienced great onboarding.
Reasons for a High Attrition Rate
Several factors can cause a high attrition rate. Recent UK data provides clear insights into the primary drivers:
- Lack of Career Growth: The single biggest reason for leaving, cited by 41% of UK employees in a 2026 study. When staff see no path for advancement, they look elsewhere.
- Inadequate Compensation: While not the top reason, feeling underpaid remains a significant factor. Data shows that about 34% of UK workers considering a job change in 2026 are motivated by pay and recognition.
- Poor Management: A negative relationship with a manager is a powerful catalyst for attrition. Employees’ commitment to stay can be as high as 94% with a great manager, but drops to just 19% with a poor one.
- Work-Life Imbalance & Wellbeing: High stress levels contribute significantly to attrition. SD Worx data from 2026 found that 42% of UK employees do not feel physically or mentally well at work, and 24% took time off for mental health reasons in the past year.
- Poor Company Culture: A toxic or unsupportive environment drives employees away. Stribe research shows a lack of recognition is a key part of this, with 79% of employees stating it’s a major reason for leaving their job.
What Strategies Can Reduce a High Attrition Rate?
We’ve discussed how employee retention benefits the business, so how can you reduce your high attrition rate? Here are six tried and tested strategies for encouraging your staff to stay.
- Offer Competitive Compensation: Regularly benchmark salaries and benefits against industry standards to ensure your packages are competitive. With many UK workers feeling underpaid, this is a foundational step.
- Prioritise Career Development: Since a lack of growth is the top reason employees leave, create clear internal promotion pathways. Invest in training, mentorship programmes, and upskilling to show employees a future at your company.
- Foster a Positive Culture of Recognition: Build a culture where appreciation is central. Employees who feel recognised are 45% less likely to leave within two years. Train leaders in emotional intelligence to improve team dynamics.
- Promote a Healthy Work-Life Balance: Offer flexible schedules and hybrid working models where possible. With UK sickness absence at a 15-year high, driven by mental ill-health, supporting employee wellbeing is crucial for retention.
- Improve Onboarding and Exit Processes: A great onboarding experience can improve retention by over 50%. Conduct detailed exit interviews to gather honest feedback and identify patterns in why people are leaving.
Performance Management
Effective performance management is key to reducing unwanted attrition. It’s crucial to understand not just who is leaving, but also their performance level. Losing a top performer has a much greater impact on productivity and morale than losing an underperformer. A robust system is needed to correlate attrition data with performance metrics. This allows you to identify if your best talent is at risk. Furthermore, tools that regularly measure employee satisfaction can help you proactively identify trends and issues before they lead to resignations. This is where modern HR software becomes invaluable, providing the data needed to manage and monitor both performance and satisfaction effectively.
With our performance management feature, you can gain insight into every level of your workforce. You can simplify your performance management process with automated and centralised performance reviews. Set individual and team goals that are in line with the aims and values of your company, and motivate employees with the strategic development of their skills. You can also use the feature to manage all your employee satisfaction surveys. Automated cycles request recurring feedback on a monthly, yearly, or customised basis. This is the best way to keep your finger on the pulse of employee morale so that you can retain more employees and maintain lower attrition rates. And the lower your rate, the stronger your workforce will be.
FAQs
What does attrition rate mean?
The attrition rate, also known as the churn rate, measures the percentage of employees who leave a company over a specific period and are not replaced. It is a key metric for understanding how well a business retains its workforce.
What does a 5% attrition rate mean?
A 5% attrition rate means that, on average, for every 100 employees, 5 have left the company over a specific period. This is generally considered a low and healthy rate, indicating strong employee retention and satisfaction.
Is a high attrition rate good?
No, a high attrition rate is generally considered negative for a company. It indicates frequent employee departures, which can increase recruitment costs, cause knowledge loss, and negatively impact the morale of the remaining team members.
Is 10% attrition high?
While an attrition rate of 10% or lower is often considered healthy, there is no universal benchmark. It’s more important to understand the specific causes of attrition in your organisation and track trends over time, as acceptable rates vary by industry and role.
What is a healthy attrition rate for a company?
While a “healthy” rate varies by sector, a general UK benchmark for annual employee turnover is around 15%. However, “healthy” doesn’t just mean a low number; it means a balance where you retain your top performers while allowing for natural “fresh blood” to bring in new ideas.
What is the average attrition rate in the manufacturing industry?
In the UK, the manufacturing sector currently boasts some of the highest retention levels in the country. Recent data shows that overall turnover in manufacturing fell to 10.85% in 2024, its lowest level in over a decade.
