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Calculating Cost of Attrition and Retention %

Last post March 30, 2009 23:51 PM by harpal20819. 1 repiles.

December 30, 2008 11:50 PM 1
Total Posts: 18
Join Date: March 14, 2007
Rank: Executive
Post Date: March 30, 2009
Posts: 18
Location: United States

Calculating Cost of Attrition and Retention %

Dear All

I hope all the members here are aware of "Cost of Attrition".

Kindly suggest as how you calculate Cost of Attrition in your Organization. What are the factors and parameters that you consider in calculating Cost of attrition? What all Direct Costs; Indirect Cost and Overhead costs you consider to arriving at actual "Cost of Attrition"?

For beginners, "Cost of Attrition" means Total Cost of Each Separation.

Calculating Retention Percentage

Another query that I have is how you calculate "Retention Percentage" in your Organization?

What period do you calculate, while calculating Retention Percentage?

While Calculating "Retention Percentage" does you also consider those new hires that have joined towards the end of the Period???

For Beginners, "Retention Percentage" is not Opposite of "Attrition Rate". For example, if the attrition rate of your organization is 18% that does not imply that the Retention Percentage is 82%.

Kindly help me in understanding, the way you calculate "Retention Percentage" in your Organization.

Thanks in advance

Sakshi

March 30, 2009 11:512
harpal20819
Total Posts: 1
Join Date: March 14, 2007
Rank: Beginner
Post Date: March 30, 2009
Points: 5
Location: United States

Re: Calculating Cost of Attrition and Retention %

Dear Sikha,

we are calculating the attrition by no. of employess left in the year / total no. of employees as on date in the organisation

means 100 employees left during the year and No. of employees as on March 31st is 1071 the attrition is 9.33 % but generally people calculating retention opposite to the attrition. so here retention is 90.7 %

For retention percentage - we have started to find what percentage of employees are retained after a specific period of time.This is specially to know for our old employees or say such of those who are with us from last 6 months & more - it thus shows, if we could retain this lot for more than 6 months, means no alarming change to be made in our existing HR policies , this may exclude cases of Natural unpreventable attrition.

For this purpose, as an example - we take strength as on 30th June and see how many of the old employees (i.e working > 6months with us or say joined before 30th June) have left during the half year July to Dec.

Because, by doing so it reflects or shows some meaningful data, to introspect/analyze the actual reason as to why we are unable to retain some of our senior employees, if their retention level has droped. I do the same procedure after 6 months for new recruits seperately.

Hope this would solve ur query.
Regards
Harpal