What is the standard method used to compute Attrition rate

L

lonewulf

#1
:)

Hi, I am new to this place and the very fact that this forum is very active is itself great.

:confused: Well, I have seen lots of websites give different interpretation of the term Attrition rate. And to add to the troubles, we have this as a process measure.

Anyone ps. tell me what is the standard method used to compute. Is it calculated monthly, quarterly or yearly??

regards,
Bala
 
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Marc

Hunkered Down for the Duration with a Mask on...
Staff member
Admin
#2
Attrition rate as it applies to what? Employee turnover?
 
B

Bill Pflanz

#6
I have done some data analysis work on employee attrition and the numbers came from Human Resources. They did the calculation monthly using the number of people on the payroll and the total number who left through voluntary or involuntary termination, retirement and even death during the month. Since it would be unusual for workers to leave and come back within the same month, it would account for those workers over time but not within a given month. Even in a historical high turnover industry like fast food, weekly attrition seems excessive. If there is very little turnover it probably is not worth tracking.

If you start doing some analysis on attrition, it will be important to also gather information on why they left. Through root cause analysis and corrective action, the idea would be to reduce the number of lost employees. I was looking at employee attrition in order to correllate it with client attrition.

HR usually has some idea on what it costs to replace workers and can be used for the economic value of retaining employees. The next step would be to correllate the attrition rate with the cost of quality which may be significantly more than the recruiting and training costs. Unless an economic value can be placed on the attrition, it may not be a useful process measure. If you are tracking attrition, it may be valuable to control chart the rate to determine what is normal variation, what are special causes and what system changes would be need to achieve a new level of performance.

Bill Pflanz
 

Jim Wynne

Staff member
Admin
#7
Bill Pflanz said:
If you start doing some analysis on attrition, it will be important to also gather information on why they left. Through root cause analysis and corrective action, the idea would be to reduce the number of lost employees. I was looking at employee attrition in order to correllate it with client attrition.
It's important to distinguish between the terms "attrition" and "turnover." The former generally relates to loss of employees through means other than involuntary termination, such as retirement, resignation and transfer. The latter connotes replacement of one employee with another in the same position. We'll often hear of "downsizing," for example, wherein the strategy is to reduce headcount by attrition--not replacing employees who leave on their own.
Care needs to be taken with the term "correlate" as well. There's a difference between simply comparing two variables in search of a potential relationship and finding a correlation, which suggests a causal relationship between two or more variables. In other words, A and B might happen concurrently or in succession, but that doesn't mean that there's a causal relationship between them.
 

Bev D

Heretical Statistician
Staff member
Super Moderator
#8
a measure of attrition that I have used effectively in the past is more along the lines of the time from hire to departure. While this approach provides a better (statistically meaningful) measure of the attrition rate and any trends, it is a lagging indicator (plotting the cumulative attrition % of previous years (or quarters) of hire and comparing the curves along with a mean time to departure for each period provides a comprehensive look at departure rates. For example I once worked on a retention problem for engineers, the baseline data clearly demonstrated that 50% of all engineers resigned within 3 years of hire regardless of their experience, salary, job position or the fact that their 401k matching didn't vest until 5 years. At the 5 year mark, fully 85% of the hires hasd resigned...)

A metric of the % of individuals that depart in any given month provides a good gross indicator that is obviously faster to pick up large changes (but may also be overly sensitive). Nothing ever perfect is it?
 
T

toki27

#9
hi! in john castillo... i want to ask you something about on how to compute the man and machine ratio, and headcount... pleas give me some examples.. thank you'
 
T

toki27

#10
Attrition rate as it applies to what? Employee turnover?
hi! in john castillo... i want to ask you something about on how to compute the man and machine ratio, and headcount... pleas give me some examples.. thank you'
 
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