MAR 26, 2024

Employee Attrition Rate: What’s Normal, What’s Not & How to Improve


Your business’s staff is one of the cornerstones of its structure. The right people with the right skills in the right seats will help create and maintain a business that can become an institute and a pillar of the community it serves. In most businesses, the workforce is relatively fluid; some people stay for many years before leaving, and others move on quickly. Your employee attrition rate is a deciding factor in the lifespan of your business, so let’s look at how employee attrition works and how to manage it. 


Employee Attrition Defined


Starting with the very basics, your employee attrition rate is the rate at which employees leave your business due to various uncontrolled and unpredicted reasons, such as retirement, relocation, and returning to education. Attrition rates are usually calculated as a percentage of your staff; the formula is the number of employees that have left in a period of time divided by the average number of employees your business had during that time period, multiplied by 100.


A certain amount of employee departure is normal; according to the U.S. Bureau of Labor Statistics, throughout 2023 the monthly number of separations (i.e. employees leaving their place of employment) was 5.3 – 5.9 million. However, there’s a difference between normal turnover and a high attrition rate. Turnover refers to the natural, short-term vacancies that occur before a position is filled before much time has passed. Attrition is the long-term vacancies in your business that are left empty for a longer time. 


The Causes of High Attrition


Now that you understand what attrition rates are, you may be wondering “since it’s natural for employees to come and go, what’s an acceptable rate?” Staffing company InsightGlobal estimates an acceptable attrition rate is 10% or lower, though this can vary depending on both the business and the industry. Some businesses, like those in the hospitality industry or agriculture, have significant amounts of part-time or seasonal labor, so a lot of coming and going is expected. Other businesses, like those in administration services or legal services, tend to have small, long-term staff rosters.


Whichever business you’re operating in whichever industry, it’s important to make sure you’re staffed to meet the needs of your customers. There are many reasons why employees leave their jobs, but some of the most prevalent reasons include the following: 


  • Stressful working conditions.
  • Unsatisfactory compensation, including wages, insurance coverage, and benefits.
  • An unwelcoming company culture.
  • Lack of advancement or improvement opportunities.
  • A poor work-life balance. 

Keeping People for The Long Haul


Avoiding a high employee attrition rate is important to the longevity of your business. The solution, while complex in execution, is straightforward in its goal: make your business a place people want to work and don’t want to leave. Doing this will take a variety of approaches; you can alleviate some of the challenge by hiring a third-party HR service provider. 


The first and, arguably, most obvious solution is to make sure you’re competitive in your compensation. Make sure you keep up to date on the industry standards for wages and benefits and make a concentrated effort to meet or exceed these standards as much as possible. When your staff doesn’t need to worry about making ends meet while working for you, that gives them a great sense of security in having you as their employer. 


Another important measure is encouraging inclusivity and open communication. You want your business to be a place where employees genuinely like working with you. Employees appreciate having their thoughts, opinions, and input on how the company operates heard and considered. Have open lines of communication between yourself and your staff and take their input into consideration when making decisions that may affect your business. When you create an inclusive work environment for them, where employees feel respected, appreciated, and listened to, it’ll take more than just a paycheck to lure them away.


Training and career growth are additional, intangible benefits that employees value. You should offer your staff opportunities to learn new skills they can apply in their jobs, as well as offer in-house promotions as positions open up or reveal themselves. Rewarding ambition and initiative will provide employees both a sense of recognition and a reason to invest their time and efforts in your business for the long term. 

Keep Your Staff Together with Payroll Vault


We know the value of keeping good, dependable employees, and we’re ready to help small businesses like yours keep your attrition rates low. We’re a boutique-style service provider that can help you with HR outsourcing solutions, payroll solutions, tax filing, and more. Visit your nearest Payroll Vault location today and find out what we can do for your business.