Employee Attrition: Everything You Should Know

Reasons for Employee Attrition

Attrition is influenced by several factors, some of which are within your control and others which are not. Here are a few examples:

• Unemployment is low

  Unemployment has a lot to play when it comes to staff attrition. However, even if you wanted to, you might be unable to replace employees who leave if your area or industry has low unemployment rates. Therefore, you have three options: leave the positions open (attrition), lower your hiring standards, or broaden your search.

• Toxic work environment

  It may be challenging to keep positions filled if your company is not a good place to work. You may want to reduce your attrition rate, but you’re finding it difficult because people leave quickly and your company’s reputation as a toxic employer spreads. Listen to your online reviews and your employees during exit interviews. If your Glassdoor reviews are negative, pay attention to them and work to improve your situation.

• Relocating a company

  It might make sense for your company to relocate from California to Texas, as Elon Musk recently announced. However, many will decline even if you offer to cover all relocation costs for your employees. Furthermore, it will take time to find suitable replacements. Hence, frequent relocation of office premises leads to staff attrition.

• Poor job-to-employee compatibility

  We’ve all seen employees join a company with great enthusiasm and then leave after a month or two. This could indicate that the job was not a good fit for the candidate in the first place. You can reduce attrition caused by this factor by improving your job descriptions and onboarding procedures. Employees will know exactly what to expect, and attrition from new hires will be reduced.

• Motivation in the workplace

  This is where HR can make a big difference in reducing attrition. Employees may leave because they believe there aren’t enough opportunities for advancement in your company. This is the case in several technology firms, where technical talent is forced to compete for managerial positions as they advance up the corporate ladder. Take a page from Microsoft’s playbook, which established a long-term technical track to prevent professional attrition.

Is employee attrition always a bad thing?

Attrition, it turns out, isn’t always a bad thing. For the following reasons, turnover can be beneficial to a business in many cases:

• Employees who perform poorly leave your company, lowering costs and making room for new talent.
• Attrition can enable diversity in one-dimensional workplaces (for example, tech companies with a disproportionately large number of men).
• It weeds out employees who aren’t a good fit for their job and were probably hired in the first place.
• Because the same employees with the same perspectives haven’t been running the company for decades, it helps to create a dynamic workforce.
• It’s necessary when making structural changes, such as pivoting to a new business direction or running out of money.

When analyzing your employee attrition rate, keep these possibilities in mind. The impact of attrition on your business will vary depending on the type of talent lost and why they left.

How to calculate employee attrition rate?

You should monitor your attrition rate regularly to ensure you are not losing more employees than you need. (Sometimes, businesses seek high attrition rates to reduce their workforce.)

The attrition rate is calculated using the following formula:

However, before you can calculate, you must first gather your data.

Consider the following scenario:

To begin, determine your average headcount. We’ll use a month-by-month average to make things easier. For example, let’s say there are 95 people on the team.

Then you look at how many employees left unfilled positions in December: 8. Divide 8/95 (average headcount) = 0.0842.

0.0842 X 100 = 8.42 percent.

This figure also assumes that you will not be filling those eight vacant positions in December. So, if you’re going to fill three of them, your attrition rate is going to be high.

5/95 = 0.056

0.056 * 100 = 5.6 percent.

You’ll notice that this number isn’t the same as your turnover number, which considers replacement.

Number of Terminations/Average Headcount*100 = Turnover. It’s possible to have a turnover rate of more than 100% if many people leave and are replaced. It’s impossible to have a rate of attrition higher than 100%.

Attrition rates may vary by department or site. One site may lose workers while another gain, offsetting each other. If Paris is increasing while London is shrinking, you may need to alter London management or investigate.

Larger companies need to group information more. Is one group’s attrition higher than others? The more information you need to break down into groups, the more your company becomes considerate.

How Can You Lower Your Attrition Rates?

Here are a few key steps to take to improve candidate retention and lower employee attrition at your company:

• Find and hire the best people

  Finding the right fit in the first place can help you reduce the number of resignations. Hiring the right people for your company can help retain employees and reduce attrition. Predictive assessments are an excellent way to see if a candidate is a good fit for your company and the position they’re applying for. Instead of wasting time searching for a unicorn candidate, concentrate on finding someone who can and wants to do the job.

• Provide competitive pay and benefits

  Employees value being fairly compensated as one of the most critical aspects of their jobs. Make sure your compensation policy is competitive, and don’t forget to include good benefits. Flexibility is one of the most valuable benefits you can provide to your employees. Allow them to set their hours or work from home a few times a week or month.

• Encourage employee participation

  Employee retention is also dependent on employee satisfaction. Make an effort to keep your employees interested. Regularly, ask them for feedback on management or the workplace, and create a positive environment where they feel valued and heard. Do this only if you’re willing to listen to your employees and make changes based on what you learn. If you keep these and fail to act on all the information gathered, you will irritate your employees.

• Show appreciation for employees

  Whenever possible, let your people know how well they’re doing and congratulate them on their accomplishments. They will be more motivated and committed to their work if they feel appreciated. Get your managers the training they need to manage their employees effectively. Remember that management is not the same as doing. If you want to reduce attrition, invest in management training. This will aid in the retention of both managers and employees.

• Provide opportunities for advancement in your career

  Your employees will be more engaged and confident if they see that their boss cares about their development and gives them opportunities to achieve personal goals while helping the company achieve its mission. In addition, career paths can improve morale, career satisfaction, motivation, and productivity throughout the organization.