What is the Difference Between Attrition & Turnover?

Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

The difference between attrition and turnover can be seen in the aftermath of an employee leaving a company. In this lesson, you'll find out what that means and how it separates the two types of workforce categories.

Saying Goodbye

Tom and Tammy are both nearing the end of their respective jobs with T&B Services, but under very different circumstances. After 20 years with the company, Tom is retiring, and no one is coming in to replace him. Tammy, on the other hand, has been terminated from her role in the company's warehouse department and someone will be needed to replace her.

Both employees are saying goodbye to their colleagues at T&B, but the company's human resources department will categorize their departures quite differently. Why? While Tom is part of the company's attrition, Tammy is considered part of the company's employee turnover. Let's take a closer look at these two classifications of unemployment.

What Is Attrition?

In the business world, attrition is one method of reducing employee or staff numbers. Attrition can happen when an employee leaves through a retirement or resignation, or as the result of a company eliminating positions. In attrition, an employer will not fill the vacancy left by the departing employee, or may eliminate that particular role altogether.

Attrition can be beneficial to companies that are struggling because it reduces costs. For example, if the company is experiencing financial distress and considers eliminating a position, they may wait until an employee like Tom retires in the not-too-distant future and then simply leave Tom's role vacant.

Generally speaking, attrition is much easier on employee morale because no one is being fired or forced out. However, it can create more work for the employees left behind, who must step up and assume the tasks that would have been part of the now-empty position's responsibilities.

The reasons for attrition are as numerous as you might imagine. It could be a retirement like Tom's, layoffs or even a firing. So long as the company doesn't plan to fill the vacated position(s), it's considered attrition.

What Is Employee Turnover?

On its surface, employee turnover may look pretty similar to attrition since it occurs when an employee leaves his or her job. But in this case, the vacancy must be filled.

Employee turnover is generally not considered a good thing, even though people leave jobs for a variety of reasons, such as moving or make a career change. In fact, you may sometimes hear someone refer negatively to a company by saying, ''they have a lot of employee turnover.'' This is because turnover can sometimes be indicative of a problem with leadership or culture within the company, which drives people away.

A company's turnover rate can be determined by dividing the number of departing employees by all of the employees for a specified period of time. For example, calculating the fictional business ABC Suppliers' turnover rate for 2017 might look like this: 2 employees departing divided by 10 total employees equals 0.2. That gives ABC Suppliers a turnover rate of 20 percent.

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