Understand the loss

attrition means that the company does not replace employees who have retired or left the company voluntarily。One of the possible reasons why companies decide not to fill open positions is financial stress。As a result, staff turnover may be a sign that the company is experiencing financial difficulties。

However, economic hardship is not the only driving force behind consumption。Companies may allow staff turnover in preparation for mergers or transfer resources from one department to another; they can also replace jobs with technology solutions so that no new employees need to be hired。

Business churn can also be when a company loses customers naturally over time and is unable to recruit as many new customers as it loses。

For instance

For example, a company has a software solution called "Product X" that is nearing the end of its life cycle。The company has hired a team to develop and support the successor to Product X.。When employees working on Product X retire or leave the company, the company chooses not to replace them because support for Product X has come to an end。Turnover occurs because the company does not replace employees who have left the company.。

What isLoss？

Natural churn is the process by which a company reduces the total number of employees by not filling vacancies, and is the percentage of employees who leave the company compared to those who are still with the company。

The reasons behind the loss vary。First, for attrition to occur, employees must voluntarily leave the company。For example, employees may retire or leave to find new job opportunities。

To avoid turnover, companies must choose to replace departing employees。If the company hires new employees to replace these employees, then no turnover will occur。

A related use of churn is when a company loses more customers than it gains through natural processes over a period of time, such as when the number of users of a service decreases beyond the target population, known as "customer churn."。

What does loss do?？

In general, businesses want to replace employees who are no longer with the company。However, in some cases, the company may choose to retain the position, resulting in staff turnover。

For example, companies undergoing a merger can often share management functions。New efficiencies reduce the number of people needed to get the job done。Therefore, after the merger is completed, some tasks will be redundant。When a merger is expected, companies may not replace departing employees because the number of positions will soon be reduced。

Staff turnover may also occur as a result of the company experiencing financial difficulties, such as declining revenues or profits。

As long as the company does not fill vacancies and does not add an equal number of different positions, staff turnover will occur。

What are the types of loss?？

In terms of staffing, natural attrition is caused by employees leaving the company voluntarily, and this category includes retired employees as well as employees who have resigned。

Another type is customer churn。Customer churn occurs when a company naturally loses customers faster than it acquires new customers。Customer churn may be because the company's loyal users are gradually disengaging from the consumer base and are unable to attract new customers。

What is the churn rate？

The churn rate is a mathematical description of how many customers or employees a company has lost at the end of a period of time, it is useful for comparing companies and themselves over different periods (e.g. years or quarters), and can also be an important indicator of comparing the performance of different companies。High churn rates may indicate companies are cutting jobs to save money。

How to calculate？

You can calculate the churn rate by subtracting the number of employees at the beginning of the period from the number of employees at the end of the period; then divide by the number of employees at the beginning of the period; and finally, multiply the resulting number by 100 to get the churn rate。

For example, a company has 100 employees at the beginning of the year and only 80 at the end of the year.。The formula is as follows:

[(Number of employees at the beginning of the year - number of employees at the end of the year) / number of employees at the beginning of the year] * 100

((100-80) / 100) * 100 = (20 / 100) * 100 = 20%

As a result, the company's employee turnover rate this year is 20%。

What is the beneficial staff turnover？

Turnover is often the result of a company seeking to streamline operations, and in order to achieve this goal, it may freeze hiring。Thus, there is no objectively good or bad churn rate。However, if the employee turnover rate is high, it may indicate that the company is significantly laying off employees and may be in trouble in terms of productivity and performance in the future。

"Turnover" is sometimes confused with "turnover"。The "churn rate" describes the number of open positions that a company must fill in a specific period of time, also taking into account the situation of new employees and comparing it with the company's average number of employees。

Because employee turnover can be costly, it is generally considered more advantageous to keep turnover low。Many companies strive for employee turnover of 10% or less。However, in some industries, this number is much higher.。

What is the difference between attrition and layoffs?？

The difference between attrition and layoffs is that attrition is usually achieved through the voluntary departure of employees, while layoffs are when the company lets employees leave。

attrition is often used to reduce staffing while avoiding layoffs。

What is the difference between natural loss and turnover rate？

Both natural churn and turnover are measures related to employees leaving the company。The attrition rate relates only to employees who have left the company and the company has not filled their previous positions; the turnover rate relates to the number of employees replaced by the company during the same period and the number of new positions。

The flow rate can be calculated using the following formula:

[Number of employees who voluntarily or involuntarily leave / (Number of employees at the beginning of the period) + (Number of employees at the end of the period / 2)] * 100

attrition occurs only when the company has fewer employees at the end of a period than at the beginning of that period。However, turnover can occur even if a company hires more employees than it loses over a period of time。

Turnover often occurs as companies seek to cut costs, often a sign of financial stress。

However, turnover occurs in almost every company, and very few businesses do not have employees to resign.。Thus, by itself, the movement of people is not a signal that a company is experiencing financial difficulties。

If a company's turnover rate is unusually high in the industry, it may be a sign that the company has other problems。High turnover may indicate poor working conditions or uncompetitive pay。If the pay or working environment is better, more employees will stay in the company。

However, people sometimes get confused with "natural churn" when discussing turnover.。Importantly, turnover occurs when the company does not fill open positions。As people move, companies may or may not fill seats and may even hire more。