What is Employee Attrition? Definition, Types & Examples (2025)

Employee attrition is a persistent issue for businesses, impacting both their workforce and how effective they operate. HR teams can better plan for employees if they understand and recognize different types of attrition.

Organizations that grasp employee attrition can develop strategic plans for employee retention. It can also help them facilitate support for employee performance. 

We created this article to explain employee attrition. We will discuss its different types and show its effects with examples. 

Employee Attrition Definition

Knowing the meaning of attrition is important for HR. It helps organizations identify positive workforce changes versus a concerning loss of talent. This distinction becomes crucial when developing employee experience strategy and managing organizational growth.

What Causes Employee Attrition?

Several factors contribute to employee attrition across different industries and company sizes. The most common causes include:

Low employee engagement drives higher attrition. So, it’s important for HR to continuously monitor the benchmarks for the drivers of employee engagement. 

Engaged employees are more productive, committed, and likely to stay. Meanwhile, disengaged workers increase turnover and harm morale. 

According to Gallup, only 31% of US employees are highly engaged. But notably, companies with engaged employees see a 23% profit increase and a 21% decrease in employee turnover, even with high turnover rates.

Fostering engagement through meaningful work, supportive managers, and ongoing feedback helps reduce attrition. It also helps in building a stronger workforce.

5 Types of Employee Attrition

Different types of attrition require distinct approaches from HR professionals and management teams. Each type presents unique challenges and opportunities for organizational improvement.

1. Voluntary Attrition

Voluntary attrition occurs when employees choose to leave the organization for personal or professional reasons. It represents the most common form of workforce reduction in healthy organizations.

Key Characteristics:

• Employee-initiated departure decisions
• Advance notice periods typically provided
• Often involves career progression goals
• May indicate competitive market conditions

Example: 

A software developer with three years of experience leaves to join a startup offering equity compensation and leadership opportunities. The departure represents voluntary attrition because the employee chose to pursue better career prospects.

2. Involuntary Attrition

Involuntary attrition happens when organizations initiate employee separations due to business needs, performance issues, or restructuring requirements. 

It requires careful review of various factors, including performance management strategies and related legal and procedural considerations. Teamflect makes its monitoring more efficient through its integrated performance management tools. 

Key Characteristics:

• Company-initiated separation decisions
• Often tied to budget or performance concerns
• May involve severance packages or benefits
• Requires documentation and legal compliance

Example: 

A manufacturing company eliminates 10 positions in its accounting department due to automation implementation. The affected employees receive severance packages, but their roles are permanently eliminated, representing involuntary attrition.

3. Internal Attrition

Internal attrition occurs when employees move between departments, roles, or locations within the same organization. While not true workforce reduction, it impacts departmental staffing levels and planning.

Key Characteristics:

• Movement within organizational boundaries
• Retention of institutional knowledge
• Opportunity for career development
• Minimal recruitment costs for receiving departments

Example: 

A marketing analyst successfully transfers to the data science team after completing relevant certifications. The marketing department experiences internal attrition while the company retains valuable talent through internal mobility.

4. Retirement Attrition

Retirement attrition represents the natural workforce exit due to age, tenure, or pension eligibility. This predictable form of attrition allows organizations to plan succession strategies effectively.

Key Characteristics:

• Predictable timing based on demographics
• Significant knowledge transfer requirements
• Succession planning opportunities
• Often involves phased retirement options

Example: 

A 30-year veteran employee in the finance department retires at age 65, creating a planned vacancy that allows the organization to promote internal candidates and reorganize responsibilities.

5. Demographic Attrition

Demographic attrition occurs when specific employee groups leave at disproportionately high rates. This pattern often signals systemic issues requiring targeted interventions.

Key Characteristics:

• Affects specific employee segments
• May indicate cultural or structural problems
• Requires targeted retention strategies
• Often reveals gaps in employee engagement

Example: 

A technology company discovers that all entry-level employees hired in the past year have left within six months. This demographic attrition pattern suggests problems with onboarding, management, or role expectations.

Why Understanding Attrition Matters

HR professionals and business leaders need clear attrition insights to make strategic workforce decisions and maintain organizational stability.

Employee attrition directly impacts several critical business areas:

HR teams can create better employee experience plans by understanding these connections. It helps them proactively prevent issues before they happen instead of fixing them later.

How is Attrition Measured?

Measuring employee attrition requires specific calculations that differ from standard employee turnover rate formulas. Most organizations track attrition monthly or quarterly to identify trends early.

Key Measurement Considerations:

• Time period consistency for accurate comparisons
• Department-specific tracking for targeted analysis
• Voluntary versus involuntary separation categorization
• Demographic breakdowns for pattern identification

With real-time data, HR can proactively boost satisfaction and decrease turnover through responsive workforce management.

Ready to calculate your attrition rate? Use our free calculator and see how you compare to industry benchmarks.