Attrition

Factual definition

Loss of employees or customers over time. Employee attrition and customer attrition describe different populations and require separate measures.

Interpreting attrition rates

State the period, population and denominator for each rate. Employee departures can be voluntary or involuntary, and planned or unplanned. An overall departure rate and a rate for one cause answer different questions. Keep employee measures separate from customer measures, and distinguish customer-count losses from revenue losses.

Shayne Fitz-Coy’s definition of Attrition

Attrition is the other side of severance: severance is the planned, priced exit, and attrition is the unplanned one that sends the bill afterward. Price one senior departure honestly, recruiting and ramping a replacement, the cohesion lost with the relationships, the colleagues who follow, and a single seat can cost several multiples of its salary.

On the customer side, Fitz-Coy’s analytic habit is to sort the causes before managing the number: consider a monitoring business whose cancellations are mostly customers moving to assisted living or into a family member’s care. That attrition is structural (no service improvement prevents it) and treating it as a retention failure wastes the intervention on the wrong customers.

How Shayne Fitz-Coy uses Attrition

Separate controllable attrition from structural attrition, for employees and customers both. A customer who dies or moves has not been lost to a competitor.

An employee who leaves for a role the company could never offer has not been lost to culture. Manage the controllable portion.

Price the structural portion. Never report the blended rate as if it were one number.

Severance is the exit you budgeted. Attrition is the one that budgets you.

Why Shayne Fitz-Coy’s perspective on Attrition matters

In an acquisition, the buyer pays for teams and customer relationships, and both can walk. Severance is budgeted in the model.

Attrition appears later, in the gap between the modeled business and the one that arrived.