Attrition Rate
Attrition rate is the proportion of employees who leave over a period, expressed as separations divided by average headcount for that period.
Also known as: turnover rate, employee attrition, churn rate
The formula is simple and the definitions are not. Average headcount rather than opening or closing headcount, because a growing team makes closing headcount flatter the number. And separations means everyone who left — a rate that counts only resignations and quietly omits terminations is measuring something else.
Voluntary and involuntary attrition are worth separating, because they mean opposite things. A rise in voluntary attrition is usually a signal about management, pay or workload. A rise in involuntary attrition may be a hiring-quality signal instead.
Annualising a short period is where most reported figures go wrong: multiplying a quarter's rate by four assumes exits are evenly distributed across the year, and in most organisations they are not — they cluster after appraisals and bonuses.
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Notice Period
Notice period is the time an employee must continue working after resigning, or that an employer must give before terminating, as set by the employment contract.
Full and Final Settlement (F&F)
Full and final settlement is the closing calculation when an employee leaves — everything still owed to them, less everything they owe, paid as one amount after the last working day.
Probation Period
Probation is an initial period of employment during which both sides assess the fit, usually carrying a shorter notice period and reduced access to some benefits until the employee is confirmed.
Performance Review
A performance review is a periodic, documented assessment of how an employee has performed against agreed objectives, usually feeding pay, promotion and development decisions.