Difference between Employee Attrition and Employee Turnover

What is Employee Attrition?

The Employee Attrition rate is a way for companies to see how many people they lose from their jobs or as customers. Knowing how to figure out the attrition rate can help companies keep track of how long people stay in their jobs and how much it costs to get new people and keep customers. Companies can calculate the attrition rate every month, every three months, or every year to see how things are going.

​Employee Attrition is when an employee leaves a ​company and is not replaced for a long time or at all. This may result in fewer people working for the company because their positions are not filled when they leave.

This often occurs when ​machines replace people because of new technology. For instance, a ​car factory used to need workers to do things like put wheels on or install windshields. But now, machines can do those tasks, so fewer people are needed on the ​assembly line.

Examples of Employee Attrition

*It describes the rate of employees leaving an organization voluntarily in most cases.

Suppose a company experiences a scenario where several employees voluntarily resign due to personal reasons, retirement, or pursuing other opportunities. Additionally, a few employees are laid off due to restructuring. The overall reduction in the workforce, encompassing both voluntary and involuntary departures, but their position is not refilled, represents employee attrition. The company’s total headcount diminishes over time due to a combination of different factors contributing to attrition.

Note: Employee Attrition mainly happens voluntarily, but involuntary is also part of Employee Attrition.

• Voluntary Resignation: Voluntary Resignation due to several issues like Job relocation, health issues, joining a new organization for better payment, etc.
• Retirement: Retire from work, like fulfilling the duty at a certain age.
• Involuntary Termination: Laid off employees due to organization restructuring.

Pros and Cons of Employee Attrition

Pros:

1. Reduce Expenses: It reduces organizational costs and cuts expenses if the company is facing any financial distress and also helps an organization plan the future according to employee attrition rate.
2. Friendly Process: The process of attrition is more considerate, friendliness or amicable, and cordial.
3. Natural Evolution: Attrition is a natural part of workforce evolution, allowing for the infusion of fresh talent and perspectives.
4. Opportunity for Restructuring: Attrition provides opportunities for organizational restructuring, allowing for the reallocation of resources and the adjustment of roles.

Cons:

1. Loose Sincerity: There might be a radical reduction in the strength of the workforce. The employees might lose interest and sincerity. When employees leave, it is important to be open and kind to them. They should be given the support they need and treated with respect. If this doesn’t happen, people may feel insincere, and a bad environment can be created.
2. Work Overload: The remaining employees might face an increase in the workload and feel stressed about it.
3. Loss of Institutional Knowledge: Attrition may result in the loss of institutional knowledge, as experienced employees with valuable insights leave the organization.
4. Disruption in Workflow: Frequent attrition can disrupt workflow and team dynamics, impacting productivity and project continuity.

What is Employee Turnover?

The Employee Turnover rate measures the percentage of employees who leave the workplace during a specific period. Employees may leave an organization because of various factors such as lack of recognition, unfair treatment, unhealthy work environment, reduced compensation, lack of development and growth opportunities, and unchallenging work. These measures can change depending on the kind of job, where the job is, and things like how many people are available to work and how many jobs need to be done.

When people leave a ​company, it can make it harder for the company to reach its goals. There are different reasons why people leave, and sometimes the company can’t do anything to stop it.

One reason is that a lot of older people are retiring. In 2020, a record number of ​baby boomers retired. At the same time, younger people, like ​millennials, don’t stay at their jobs for as long as older people do. The ​government says that older workers stay at their jobs for almost 10 years, while younger ones only stay for about 3 years.

Another reason is that there aren’t enough people with the right skills to fill certain jobs. This is a problem for jobs like ​doctors, scientists, engineers, and IT experts. Even when there are a lot of people who don’t have jobs, there still might not be enough of the right people for these roles.

Lastly, people want more than just money from their employers. Even older workers are looking for jobs that have a purpose. People want to work for companies that inspire them, and they value flexibility, time off, and career advancement opportunities.

Examples of Employee Turnover

*It describes the rate of employees leaving an organization voluntarily, or involuntarily.

In a specific time period, let’s say a year, 20 employees leave a company voluntarily or involuntarily. During the same period, the company hired 20 new employees to fill the vacant positions left by those who departed. The turnover rate, in this case, would be 100% because the number of employees leaving (20) equals the number of new hires. Employee turnover specifically focuses on the replacement aspect, measuring the flow of employees in and out of the organization within a defined timeframe.

• Voluntary Resignation
• Involuntary Termination
• Job Relocation
• Retirement

Pros and Cons of Employee Turnover

Pros:

1. New Insights: Gaining fresh insights and innovations from employee Turnover can bring in new ways of thinking and new ideas. This can lead to positive changes and creative thinking in the organization.
2. New Opportunity: Providing other staff, the opportunity to grow and develop by fulfilling the empty place of ex-employees.
3. Losing Unskilled Employees: Losing employees who are not adequate or invested, when lots of workers who are not very good at their jobs keep leaving, it’s called high turnover of less skilled employees.
4. Skill Diversification: New hires can bring diverse skill sets that complement existing team members, enhancing the overall capabilities of the workforce.
5. Promoting Staff: Recruiting internally and promoting existing staff means that the company wants to promote and hire people already working there instead of bringing in new people from outside. Want to give current employees opportunities to grow and fill open positions. This way gives the existing employees a chance to grow with the organization.

Cons:

1. Losing Skilled Employees: Losing engaged and hard-working staff, when lots of workers who are very good at their jobs keep leaving, can cause problems for companies because organizations have to keep finding new people to replace the ones who left. It can also make it harder for the company to get things done and stay stable.
2. Increase Expenses: Rehiring time and expenses increase due to expenses in training the new employees and in the onboarding process.
3. Dissatisfaction in Employees: Indicating existing staff’s dissatisfaction and unhappiness due to seeing their colleagues go. The morale of employees is going down because they are not happy seeing their colleagues leave. This is making everyone feel less satisfied and content at work.
4. Disruption in Productivity: The onboarding process for new hires can disrupt productivity as they acclimate to their roles and the organizational culture.
5. Delaying in Plans: Delaying other business plans and developments due to employee reduction. When some employees leave, it can slow down or stop certain projects. This happens because the company needs to find new employees or change its plans.

Difference between Employee Attrition and Employee Turnover

Basis	Employee Attrition	Employee Turnover
Voluntary/Involuntary	It can be voluntary (e.g., resignation, retirement) or involuntary (e.g., termination, layoffs). It includes all forms of employee departures.	Turnover includes both voluntary and involuntary separations, providing a comprehensive view of all employee’s exits.
Management Intervention	In Employee Attrition employees leave a job, and it can happen without any management intervention.	It can be influenced by organizational decisions, policies, and management actions. It might be about planning for the right people or making changes based on what the business needs.
Measurement Focus	Attrition Rate to understand when people leave a company or organization.	Turnover Rate to understand how many people leave a job, whether they choose to leave voluntarily or involuntarily.
Nature of Departure	Mainly when people gradually leave their jobs for personal reasons, they may not always be unhappy or dissatisfied with their jobs.	When people leave a job, either because they planned or not. It can happen for different reasons, like when a company changes how it works, when they have to lay off some people, or when employees themselves decide to leave.

Conclusion

Employee Attrition and Employee Turnover are similar but not the same, Employee Turnover takes into account all terminations, including positions that are refilled, while Employee Attrition includes all long-term vacancies and position eliminations. Employee attrition is usually beyond your control, whereas you can actively work to limit employee turnover. In terms of cost, employee attrition is commonly seen as a form of financial savings.

“​Employee Attrition” and “Employee Turnover” are often used to mean the same thing, but they have different meanings. Attrition is when the number of workers naturally goes down over time because of things like people retiring or leaving. Turnover is more about replacing people who leave within a certain time. It’s important for companies to understand these differences so they can make good plans for managing their workers, keeping them, and planning for new ones. Knowing these terms helps companies deal with the changes in their workforce better.