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Employee Attrition Rate: What Is It and How Is It Calculated?

Mar 25, 2025
9 min read
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Many companies have seen the warning signs: Job hopping and absenteeism are on the rise, leading to more turnover. New hires sometimes only stick around for a few months, and they’re voicing the same complaints in their exit interviews.
These subtle — and sometimes not-so-subtle — shifts usually indicate a high attrition rate. Addressing the issue starts with understanding what attrition rates are and identifying the factors causing them to increase.

What’s an attrition rate and why does it matter?

Attrition rate is an HR metric that measures the percentage of employees who leave a company over a specific time period without being replaced. High attrition is usually a sign of deeper issues, like unmet employee needs, a lack of competitive benefits, or problematic company culture. Left unchecked, a high attrition rate can disrupt team dynamics and hurt the business’s overall productivity.

Attrition versus turnover: An important distinction

Unlike employee turnover, which tracks all departures regardless of whether a company fills the position later, attrition rates focus on the permanent loss of staff. If a worker leaves and their role is eliminated, for example, that’s employee attrition — not turnover.
Distinguishing between employee turnover and attrition helps employers assess the long-term viability of their workforces. While turnover is sometimes just a reflection of temporary churn, attrition is a symptom of systemic challenges. 

Types of attrition

To pinpoint workforce challenges and brainstorm ways to address them, companies need to understand some popular types of employee attrition and how each impacts an organization. Here’s a breakdown:

Voluntary attrition

Voluntary attrition happens when employees leave a company on their own, often to pursue better opportunities or improved work-life balance. Employers can’t avoid every voluntary departure, but if employees are willingly leaving at a high rate, it’s likely that benefits, financial stress, or limited growth opportunities are to blame. 

Involuntary attrition

Involuntary attrition is the percentage of employees who leave due to performance issues, layoffs, or restructuring. Like voluntary attrition, involuntary rates will never be perfect. Still, frequent involuntary attrition often points to problems like poor hiring practices, insufficient training, or unclear performance expectations — all factors that can hurt the morale and productivity of staff who remain.

Internal attrition

Internal attrition happens when employees move to different roles within the company via transfers or promotions. While this isn’t a loss of talent, it can create gaps in certain departments.

Demographic-specific attrition

This occurs when a specific group of employees (e.g. by age, gender, or experience level) leave at a higher rate than others. Demographic-specific attrition often highlights broader issues, such as a lack of inclusivity, limited career growth opportunities, or inadequate support for diverse employees. Failing to keep this particular attrition rate low can damage your brand over time and weaken company culture and hinder innovation.

Retirement attrition

Retirement attrition occurs when employees leave a company due to retirement.This type of attrition is expected as part of workforce aging but can still create challenges, especially if key roles are left vacant or institutional knowledge is lost. 

How to calculate an attrition rate

Regularly calculating a company’s attrition rate reveals trends affecting its workplace. 
Here’s the attrition rate formula: 
Attrition rate (%) = (Total number of employees who left / Average number of employees) x 100
To apply this formula, follow these steps: 

1. Start with the total number of employees at the beginning of the period

Note how many employees were on the payroll at the start of the time frame being evaluated, whether it’s a month, quarter, or year.

2. Count how many employees left and were hired during the same period

Include all employees who left the organization — voluntarily or involuntarily. Be sure not to double-count employees who moved internally, since they don’t count as losses to the workforce. Also document the number of new hires to calculate the ending headcount. This shows how replacements factor into the overall workforce trend.
To find the total number of employees left at the end of the period, take the number of employees at the beginning, then subtract those who left and add those hired.

3. Calculate the average number of employees

To find the average workforce size, add the starting and ending numbers of employees, then divide by two to get a baseline for calculating percentages.

4. Apply the attrition rate formula

Divide the total number of employees who left by the average number of employees. Multiply that number by 100 to find the percentage of workers who left during the given period.
Example calculation: 
If the average workforce for the quarter was 200 employees and 20 employees left, the quarterly attrition rate would be: 
(20 / 200) x 100 = 10% attrition rate

What influences employee attrition?

There’s rarely one root cause for a high attrition rate. It’s more commonly a combination of factors that affect employee satisfaction and overall workplace experience. Here’s a look at some of the common causes:

Compensation and benefits

When employees feel underpaid or lack access to meaningful benefits, they are likely to seek opportunities elsewhere. While raising salaries isn’t always feasible, offering cost-effective benefits like EarnIn’s on-demand pay can make a difference. Providing employees with access to their earned wages helps ease financial stress, increase job satisfaction, and reduce the likelihood of turnover — allowing businesses to retain talent while supporting their workforce. 

Growth and development opportunities

A lack of clear growth paths, training programs, or opportunities for skill development can leave employees feeling stagnant and disengaged. This can prompt them to leave for roles that better support their ambitions.

Company culture

Employees thrive in environments where they feel respected, valued, and connected to their colleagues. When they perceive that communication is poor or that their company's values are misaligned, morale declines and employee turnover increases.

Stress and employee burnout

Burnout from excessive workloads, unrealistic expectations, or insufficient support drives attrition. When employees work too much, the prolonged stress can lead to attrition, which impacts the productivity and well-being of the people who stay.

Lack of work-life balance

Employees who prefer a certain work-life balance eventually leave for roles that prioritize flexibility. Many companies now offer flexible scheduling and hybrid or remote work options, so it’s a good idea to keep up.

What’s considered a high attrition rate?

A 2023 survey showed an average attrition rate of 12.5% across different industries, so anything more than that could be considered high. However, attrition rates vary by sector, so companies need to look at industry averages to see where their rates stand. In general, a high attrition rate is one that strains an employer’s workforce, which depends on the situation.

6 best practices to limit employee attrition

Reducing employee attrition starts with understanding the workforce and addressing their needs. These retention strategies can help:

1. Understand why employees are leaving

Conduct exit interviews and anonymous surveys to uncover the root causes of departures. Use this feedback to address recurring issues and improve the employee experience for the people still on the team.

2. Review compensation package

Companies should make sure their pay rates and benefits are competitive within their industry. Research average salaries in the area and what competitors are paying to adjust base pay accordingly, and add relevant benefits to total compensation packages.

3. Reward employees

Recognize and reward employees, whether it’s through financial bonuses, promotions, or simple gestures of appreciation like public acknowledgment.

4. Encourage development

When employees see a future at a company, they’re more likely to stay. Support that vision by investing in training programs, mentorship opportunities, and clear career paths.

5. Implement employee well-being programs

When employees feel supported in their physical, mental, and financial well-being, they are more likely to stay committed to their roles. Consider offering mental health resources or a perk like EarnIn’s on-demand pay, which gives employees greater financial flexibility. With no integration required and no employer cost, EarnIn is easy to offer.

Keep employees happy and engaged with EarnIn

Tracking attrition gives employers the information to improve their workplaces and offer employees what they need to stay. One key factor driving turnover? Financial stress. 
When employees struggle with their finances, it impacts their well-being, engagement, and job satisfaction. EarnIn helps alleviate financial stress by giving employees access to their earned wages when they need them. 
With Earned Wage Access from EarnIn, employees can access up to $150 per day, with a max of $750 per pay period,1 helping them with everything from day-to-day expenses like gas and groceries to unexpected costs. They can transfer funds within minutes starting at just $2.992 or opt for a free transfer in 1-3 business days. 
Beyond access to earnings, EarnIn offers additional financial wellness tools to help employees avoid overdrafts3, monitor their credit scores4, and save for the future4. Best of all, EarnIn is easy to offer and quick to launch, with no cost to employers and no integration with payroll, time and attendance, or HRIS systems required. It’s a benefit employees love, and employers do too. 
Request a demo today to see how EarnIn can help improve productivity, attract more applicants, and support retention efforts.  
Please note, the material collected in this post is for informational purposes only and is not intended to be relied upon as or construed as advice regarding any specific circumstances. Nor is it an endorsement of any organization or services.
EarnIn is a financial technology company not a bank. Banking Services are provided by Evolve Bank & Trust, Member FDIC. The FDIC provides deposit insurance to protect your money in the event of a bank failure. More details about deposit insurance here.
1
A pay period is the time between your paychecks, such as weekly, biweekly, or monthly. EarnIn determines your daily and pay period limits (“Daily Max” and “Pay Period Max”) based on your income and financial risk factors as outlined in the Cash Out Maxes section of our Cash Out User Agreement. EarnIn reserves the right to adjust the Daily Max and Pay Period Max at its discretion. Your actual Daily Max will be displayed in your EarnIn account before each Cash Out.
EarnIn does not charge interest on Cash Outs or mandatory fees for standard transfers, which usually take 1–2 business days. For faster transfers, you can choose the Lightning Speed option and pay a fee to receive funds within 30 minutes. Lightning Speed is not available in all states. Restrictions and terms apply; see the Lightning Speed Fee Table and Cash Out User Agreement for details and eligibility requirements. Tips are optional and do not affect the quality or availability of services.
2
Lightning Speed is an optional service that allows you to expedite the transfer of funds for a fee. Depending on the product, the fee may be charged by EarnIn or its banking partner. Lightning Speed is not available in all states. Restrictions and terms apply. See the Lightning Speed Fee Table for details.
3
Balance Shield provides free alerts when your bank account balance drops below the threshold you set in your EarnIn account. You can also enable automatic transfers ($100/day -subject to your available earnings- with a limit of $750/pay period), if your bank account balance falls below your set  threshold. If your available earnings are insufficient to transfer the $100, the transfer will not be completed.You choose the speed of these automatic transfers. Standard speed is available at no cost and the transfer typically takes 1-2 business days. Lightning Speed is available for a fee [see Lightning Speed Fee Table] and the transfer typically takes less than 30 minutes. You will also have the option to set a tip for automatic transfers. Tips are optional and can be $0; however, if you choose to set a tip, it will be applied to each automatic transfer. Whether you tip, how much, and how often you tip does not impact the quality and availability of services. You can cancel the alerts and/or transfers at any time in your EarnIn account settings. See the Cash Out User Agreement  for more details. While Balance Shield can help you avoid overdrafts, it does not guarantee protection from third-party fees, and its effectiveness depends on your usage and bank activity.
4
Your VantageScore 3.0 from Experian® indicates your credit risk level and is not used by all lenders, so don't be surprised if your lender uses a score that's different from your VantageScore 3.0. Learn more.
5
Tip Yourself Account funds and Tip Jars are held with Evolve Bank & Trust, member FDIC and FDIC insured up to $250,000. Tip Yourself is a 0% Annual Percentage Yield and $0 monthly fee service deposit account. For more information/details visit Evolve Bank & Trust Customer Account Terms. The FDIC provides deposit insurance to protect your money in the event of a bank failure. More details about deposit insurance here.