# How to Calculate Attrition Rate – The Formula

In this article we look at how to measure and calculate attrition rates in the contact centre.

## What Is Attrition Rate – Definition

Attrition is the rate at which members of staff leave the workforce over a given period of time. It is also known as ‘employee turnover’, or ‘employee churn’, although in the contact centre industry, ‘churn’ tends to refer to the flow of customers rather than staff.

Attrition is high in contact centres (particularly in the BPO sector) compared with other industries. A 2016 report by ContactBabel found that one in five UK contact centres have an attrition rate of over 30%.

These results come from the ContactBabel report: The UK Contact Centre HR & Operational Benchmarking Report 2016/17

In addition, advisors seem to leave the industry after a very short period of time. In fact, some studies indicate that half of the advisors who leave the profession do so within their first 90 days of employment.

## The Attrition Formula

The equation for attrition which is highlighted below often catches contact centre professionals out, although it seems relatively straightforward.

$$\text{Attrition Rate (%) = } \, \large\frac{\text{No. of employees that}\\\text{left during period}}{\text{Average number of}\\\text{employees for period}}\normalsize\times100$$

The part that catches people out is that you must divide the number of employees that left by the ‘average number of employees for the period’ instead of the total number of employees for the period.

The figure can be reached by taking the starting number of employees for the period, adding that to the finishing number of employees for the period, and dividing the result by two. For most, the period is a year.

So, for a company that began a year with 6,500 employees and ended the year with 6,380 employees, the calculation for average employees would be (6,500+6,380) / 2 = 6,440.

However, while the period is one year, it doesn’t mean that attrition rate is a metric that should be tracked only once a year. Instead, according to Dougie Cameron, Director of addzest consulting, it is better to calculate the metric on a rolling, week-by-week basis.

Dougie says: “The key is to have a moving average trend. So, one week you would calculate the attrition rate for the past 52 weeks and then, in the next week’s calculations, the oldest week would drop off and the new one adds on.”

It’s all about gaining actionable insight, and attrition rates can be really spiky. So, looking at weeks or even months in isolation may give you a false picture, while longer-term trends will give you much better insight.

Dougie Cameron

“It’s all about gaining actionable insight, and attrition rates can be really spiky. So, looking at weeks or even months in isolation may give you a false picture, while longer-term trends will give you much better insight into what caused the attrition, as opposed to just looking at an overall figure at the end of the year.”

“For example, a big spike in one week could easily be dismissed as a big push on performance management, whereas a longer trend can give you a better idea of whether there are systemic problems impacting attrition.”

So, by measuring attrition on a weekly basis, you can immediately identify and address what caused a spike. If it was avoidable, the contact centre can learn directly from the experience, so it doesn’t happen again.

## What Is the Value of Calculating Attrition?

The danger with attrition is that it becomes just another percentage that managers occasionally pass their eyes over. Yet, in terms of real value, high attrition represents huge costs to organisations.

There are high costs in recruiting and training new staff; these are the direct costs of attrition. But that is not all.

Dougie tells us that he did work in a contact centre dealing with customer subscriptions, and he found the consequential costs of attrition to be about ten times greater than their direct costs.

Dougie says: “We analysed the cost of attrition in a great degree of detail. For example, we looked at metrics like sales conversion, and compared the performance of a new employee and an experienced employee and worked out the differential until they reached similar levels of competence – which was, on average, eight weeks.”

If you value the costs of staff turnover, just look through recruitment costs, you’ll definitely be understating them.

Dougie Cameron

“The impact of attrition depends on the nature of the product being sold, the complexity of the sales process and its margin, but if you value the costs of staff turnover, just look through recruitment costs, you’ll definitely be understating them.”

Dougie Cameron

“When the cost of attrition is properly valued, it really gets everyone’s attention. It escalates the opportunity cost of losing people from a tens-of-thousands-of-pounds decision to a multi-million-pound decision.”

“Presenting attrition to the leaders of an organisation as a percentage has a ‘so what?’ factor to it. What is the right percentage? What happens if we improve it? However, people understand cost and its impact in the context of the business’s profitability. This captures the leaders’ attention to focus effort on retaining employees, reducing attrition, lowering cost and improving profit.”

This helps when putting forward a business case for support in building a better contact centre culture, which, according to Dougie, is one of the keys to reducing attrition. The others, he believes, are workable shift patterns and flexibility in working hours.

## Calculating New Employee Attrition Rate

The first six weeks of an employee’s tenure is the most expensive, and an advisor will usually draw more value than they add for several months. However, the first six weeks is the period of time within which advisors are most likely to leave the contact centre.

So, you want to find out what is causing advisors to leave in that first six weeks. This cannot be done using the conventional equation for ‘new employee attrition’, which is:

$$\text{New Employee Attrition Rate (%) = } \, \large\frac{\text{No. of employees who have}\\\text{joined in the past 12 months}\\\text{AND left the company}}{\text{No. of employees who have}\\\text{joined in the past 12 months}}\normalsize\times 100$$

While this may give you some insight, you need to take a closer look at attrition rates in the first six weeks of the advisor “lifecycle”, to help identify the moment when advisors tend to leave. This will help you to identify where you need to improve the induction process.

As Dougie says: “Define the period that you want to have a look at, whether that’s three months or six months, and then examine the trend.”

“More important than the period analysed are the key touchpoints in the life cycle of an employee. Look at the drop-out at every stage – form filling on arrival, day one at the training office, when they’re in the classroom, when they start taking supervised calls, when they are introduced to their team leader and when they are left on their own.”

It’s important to understand each of the distinct stages of the early life cycle, not just the duration of the early life cycle – because you can draw the wrong conclusions from that.

Dougie Cameron

“It’s important to understand each of the distinct stages of the early life cycle, not just the duration of the early life cycle – because you can draw the wrong conclusions from that. What is the data pointing towards for further investigation?  Is recruitment giving the wrong impression of the company/role? Is classroom training uninspiring? Are the trainers good enough? Are advisors being left unsupervised too quickly?”

In addition, it can be good to measure advisor satisfaction when onboarding new staff. This can highlight what you are doing well, so you can then look to replicate this during other parts of the induction process.

## Voluntary and Involuntary Attrition Rates

Another couple of ‘nuances’ of the attrition metric are voluntary and involuntary attrition rates. When advisors leave of their own accord, this is known as voluntary attrition.

Alternatively, involuntary attrition – which is also known as intentional attrition or planned attrition – is where somebody is asked to leave the company. This is typically for performance-related (e.g. disciplinary) reasons and also due to redundancy.

Involuntary attrition is normally excluded from attrition calculations and is calculated using the formula below:

$$\text{Involuntary Attrition Rate (%) = } \, \large\frac{\text{No. of employees that were}\\\text{terminated during period}}{\text{Average no. of employees}\\\text{for period}}\normalsize\times 100$$

However, excluding involuntary attrition from the overall attrition figure is a practice that Dougie Cameron disagrees with.

“I’ve worked in contact centres where management have told me ‘it’s involuntary so it’s fine’ and we’ve chosen for those people to leave. But I don’t think it’s fine because it is a cost to the business and it’s indicative of there being a problem somewhere.”

“Whether it’s a recruitment problem, a management problem or a coaching problem – whatever the case – whenever somebody leaves the company, it should lead to a moment of soul-searching.”

Failures that could lead to involuntary attrition are: recruitment failures, lack of adequate coaching and poor planning. So, it’s not a case that all voluntary attrition is bad and involuntary attrition is alright.

It’s not a case that all voluntary attrition is bad and involuntary attrition is alright.

Dougie also urges us to remember: “Some voluntary attrition may be OK, as the advisor leaves for a job prospect that they couldn’t have got otherwise and they leave as an advocate of the business.”

## What to Watch Out For

Taking all of this into account, here are three mistakes that you should avoid when calculating attrition.

Don’t present attrition rate as just a percentage to the wider business –The wider business will become much more interested in helping you to reduce attrition when you attach a cost to it. That’s not just recruitment and training costs, but other things like vacancy costs, the costs of the team spending time to help out new recruits, and so on.

Don’t calculate attrition on a yearly basis – Only calculating attrition rates once a year will not provide you with insights as to what caused the attrition. Being able to look for spikes on a week-by-week basis will.

Don’t separate involuntary attrition from overall attrition rates – Involuntary attrition may still be indicative of a business failure. Can you really leave it out of attrition rates when it’s a cost for the business and perhaps suggests a problem elsewhere?

## What Is the Key to Tackling Attrition?

There are many things that contact centres can do to help reduce attrition. These include offering a clear pathway for progression, improving the work environment and, of course, increasing salaries.

However, there are two other key factors that you need to get right in order to really reduce attrition: culture and shift patterns.

#### Culture

The old saying goes: people leave managers not companies. But, as Dougie points out, “aren’t managers the ‘product’ of a company?”

“Bad managers don’t exist in isolation, they’re part of a culture. So, either a culture exists that hasn’t moved these bad managers out of the business or a culture exists that encourages their behaviour which is making people leave.”

To avoid either of these scenarios, you need to do more to build a positive culture, and you can start by getting the basics right.

Talk to your frontline advisors and listen to their needs. Acting on advisor feedback and recognising their ideas, as well as their good work, is step one. This recognition is a key part of creating a good contact centre culture.

Dougie says: “People want to be recognised, not necessarily rewarded, but they want to feel they’re doing a worthwhile job and feel respected.”

For more on contact centre culture, visit: What Is the Best Model for Contact Centre Culture?

#### Shift Patterns

In many contact centres, some shift patterns have higher attrition than others, according to Dougie Cameron.

“However, whenever you speak to a WFM person – as I have been doing – they’ll say: ‘what can we do? We have to schedule to business demand. We need people on a Saturday evening’, for example.”

One solution would be that everyone has to do one Saturday evening every four weeks, and this seems a fair way to spread an unfavourable shift. However, this isn’t a system that is popular with everyone.

Dougie worked in a contact centre that employed this shift pattern and he says: “People hated it. It’s a rotational shift pattern, but nobody has a rotational life and so this shift had disproportionately high attrition rates.”

Don’t recruit people who want to work weekdays to work on a Saturday night! Find people who want to work on a Saturday night and build a shift pattern around that, because they are much less likely to leave.

Dougie Cameron

“So, don’t recruit people who want to work weekdays to work on a Saturday night! Find people who want to work on a Saturday night and build a shift pattern around that, because they are much less likely to leave.”

“There are demographics for every shift. For any customer care service, finding people who ‘care’ is the important thing. So, maybe the right target demographic for recruiting is from professions like social care and nursing, who are feeling undervalued, want a change and have the right empathetic skills.”

“As well as being ideal candidates for the job, people from these professions are used to working shifts and unfavourable hours.”

“The best win–win situation is to find a way to match customer demand with shifts that people want to work. Vacant posts through attrition and no-shows through absence leave the customer call unanswered and all the resource planning to fill the schedule has gone to waste.”

Dougie’s comments highlight the importance of ensuring that advisors have a good work–life balance. This is because if work and life don’t fit together well, people will go somewhere where they can find a better match.

Alternatively, the advisor may think that if they are going to have to work weekends, they might as well move on and gain an extra pound an hour somewhere else.

For more ideas of how to reduce attrition, read our article: Top 20 Ways to Reduce Attrition in Your Contact Centre

## Summary

While attrition may seem like a simple equation, it is easy to fall into traps, like only calculating the metric one year at a time.

However, it is best to calculate overall attrition on a weekly basis, using a moving average. This will give you the most actionable results.

Also, there are a number of nuances of attrition, like new-employee, voluntary and involuntary attrition, which can all be useful in the contact centre.

Each of these needs to be measured in a way that provides insight as to why advisors are leaving, because the cost of losing an advisor is much greater than you might think, perhaps ten times greater.

Published On: 12th Sep 2018 - Last modified: 19th Mar 2020
Read more about - Call Centre Planning, , , , ,

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1 Comment
1. Good To see

Pankaj Singh 18 Sep at 6:41 am
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