What is



A human resources term, attrition refers to employee departure rates for any reason, voluntary or involuntary. Read the Borderless glossary definition.

Employee attrition is a persistent challenge for many organizations. The term refers to the rate employees leave voluntarily and involuntarily over a given period. High attrition rates can have detrimental effects on businesses. Your company may face increased hiring costs along with lower productivity and employee morale. 

Let’s delve into the causes of attrition, its impacts on organizations, and potential solutions to address this persistent issue.

Defining Employee Attrition

Attrition refers to the rate at which employees leave an organization. Calculating the attrition rate is the way to measure attrition. The rate checks the percentage of employees who leave the company voluntarily or involuntarily, typically within a specified time frame (e.g., annually or quarterly).

Attrition can occur due to various reasons. Employees may resign, retire, or be terminated. They may also choose not to renew their employment contracts. Attrition doesn’t account for layoffs or downsizing. 

Attrition can have a significant impact on an organization. High employee attrition rates can lead to increased recruitment and training costs. It may also cause organizations to lose institutional knowledge and cause workflow disruptions.

Causes of High Attrition Rates

There are many reasons why employees leave organizations. Some attrition is perfectly normal. But when the attrition rate starts to get above average, there is usually a reason for concern. 

Lack of growth opportunities
The absence of growth and professional development is one of the primary reasons employees leave a company. When individuals feel stagnant or believe there is limited potential for advancement, they may seek greener pastures elsewhere.

Inadequate work-life balance
Workers are increasingly valuing better work-life balance. Employees who consistently feel overworked, experience burnout, and fail to maintain a healthy work-life equilibrium, may be more likely to leave their current job.

Poor management and leadership
Managers and leaders play a crucial role in employee satisfaction and engagement. Employees who feel undervalued, micromanaged, or subjected to poor leadership are more inclined to seek alternative employment.

Compensation and benefits
Competitive compensation and attractive benefits packages are essential for onboarding and retaining top talent. If companies offer compensation below industry standards, they will likely see their star employees leave to pursue other opportunities.

Organizational culture and values
Employees enjoy working for companies whose values align with their own. Toxic work environments, lack of recognition, and insufficient employee appreciation can contribute to attrition rates.

Impacts of Attrition

Losing a few employees may not seem like a big deal. But attrition can have significant negative effects on an organization. 

  • Financial costs: Attrition can impose significant financial burdens on organizations. Recruiting, onboarding, and training new employees can be quite expensive. 
  • Loss of productivity: When employees leave, there is a temporary or permanent loss of productivity. Hiring and training new staff members takes time while placing additional burdens on existing employees. 
  • Disruption to team dynamics: High attrition rates can disrupt team cohesion and synergy. Constant turnover can make it challenging for team members to establish effective working relationships, resulting in decreased collaboration and low morale.
  • Knowledge and skill drain: Every departing employee takes their knowledge and skills with them. Losing experienced employees can deplete institutional knowledge and expertise.

5 Ways to Address Attrition

There are many ways in which organizations can create a more positive, dynamic, and encouraging work environment. From compensation and benefits to leadership and company culture, here are some ways to reduce employee turnover. 

1. Focus on employee development
Providing employees with growth opportunities can boost engagement and employee retention. Organizations should invest in their employees' professional development to demonstrate a commitment to their long-term success. Such programs can include training, mentorship, and clear career development paths. 

2. Improve work-life balance
Encourage your employees to achieve a healthy work-life balance. You can implement flexible working arrangements, promote time off, and ensure reasonable workloads. This will help reduce burnout and increase employee satisfaction.

3. Enhance leadership and management skills
Organizations should invest in developing their managers' and leaders' abilities to create a positive work environment. This includes fostering open communication, providing constructive feedback, and recognizing employee achievements.

4. Offer competitive compensation and benefits
Regularly review compensation structures and benefits packages to ensure they remain competitive. Recognize and reward high-performing employees for demonstrating their value to the organization.

5. Foster a positive organizational culture
Your company should aim to cultivate a supportive and inclusive organizational culture. To do so, engage your employees, recognize their achievements, and promote general well-being. How you do this will depend on your organization's size and type. However, creating platforms for employee feedback and suggestions is an important aspect of doing this.

Retain Your Best Employees with Borderless 

Managing a global, remote team can be a challenge. At Borderless, we are experts in international employment. 

Our expertise spans over 170 countries worldwide, where we can help you craft the perfect benefits packages and compensation strategies. We also help you understand the different work cultures across the globe. 

Book a demo today to find out how we can help.