While calculating attrition do we include the employees who were terminated ?
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Turnover is where employees leave a company and are replaced by new hires.
Attrition is the reduction in staff numbers that occurs when employees leave and are not replaced
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Hi Kavitha,
Turnover and attrition both refer to the loss of employees in an organization, but they have distinct meanings and implications:
1. Turnover
Turnover occurs when an employee leaves a company, and the organization actively seeks a replacement to fill that role.
There are two types of turnover – voluntary (when employees choose to leave, such as for a new job) and involuntary (when employees are let go due to performance issues or other factors).
Turnover is typically an indicator of employee satisfaction, engagement, and company culture. High turnover rates can signal issues within the organization that need addressing.
Turnover requires hiring and training new employees, often leading to increased costs and potential productivity loss.
2. Attrition
Attrition refers to the natural reduction of the workforce when employees leave voluntarily (retirement, personal reasons, etc.) and the organization does not replace their positions.
Attrition is usually voluntary and part of a company’s strategy to downsize or restructure without incurring the cost of layoffs or terminations.
Attrition is generally seen as a gradual process, reflecting long-term workforce planning. It can indicate a stable or shrinking workforce, depending on organizational goals.
Attrition helps reduce headcount and can lower payroll expenses. However, if left unchecked in critical areas, it could lead to skill or knowledge gaps.
In summary, turnover involves employee replacements and often reflects immediate organizational issues, while attrition is a natural workforce reduction without replacement, typically part of long-term planning.
Hope this helps.
Regards,
Bhuvana Anand
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