I'd use the following formula for annualized attrition: (Total number of exits - no. of people laid off or terminated)/Average headcount during the time x 12/no.of months x 100 For example: If your headcount was 300 on 31 March 2022 and is 320 as of 1 Feb 2023, no. of people who have exited the system are 40, out of which 18 were laid off and the rest were voluntary leavers, then your annualized attrition rate is: (40-18)/((300+320)/2) x 12/11 x 100 = 7.74% (The headcount would factor in layoffs as well as the hiring done during the period)