In every industry, it is common for personnel to leave and return. Gallup claims that if given the chance, one in two workers would be willing to leave their company.
A better job opportunity may be the reason why certain employees quit their current position. Others depart because they are retiring, have been fired, or are unwell.
Employee attrition and turnover are not the same thing, despite their frequent interchangeability.
What is it, though? How does this affect your company? Furthermore, what are your options?
Here’s a detailed look at employee attrition and how your company may handle it.
What is Employee Attrition?
The loss of employees is known as employee attrition. You don’t replace your employees when they retire, quit, or are laid off.
Employees quitting their jobs happens on a daily basis. Even the term “employee lifecycle” refers to the fact that it eventually comes to an end. Employees don’t stay on forever.
“Unwanted attrition”, the loss of highly valuable, talented, and high-performing personnel for avoidable reasons, makes employee attrition a corporate nightmare.
Also Read: Rethinking Equity Compensation in a Hybrid World: What HR Leaders Must Consider Now
What Causes Employee Attrition?
Many people quit their jobs for personal reasons. More than 50% of American respondents in November said they were considering changing employment, which is the largest percentage since 2015.
However, it might be quite important for a business to comprehend ‘leaving patterns’ and habits. This is frequently the first action taken to stop future employee attrition.
Let’s examine six typical causes of employee churn:
1. Low pay and job satisfaction
Pay and job satisfaction are linked. Few will be happy in their job without a competitive salary, even though job satisfaction isn’t just about pay.
Salaries haven’t kept up with inflation, expectations or both for many people. Pay is more than just the money an employee gets at the end of each month. Bonuses, annual raises and other financial incentives are also part of it. Financial stability is a big part of financial wellbeing and all these factors contribute to it.
From an employer’s perspective, it’s important to consider the huge cost of replacing an employee. Replacing one employee can cost anywhere from half to twice their annual salary.
2. Insufficient job prospects
Opportunities for career growth keep workers engaged in committing to the company over the long haul. Employees get concentration, a sense of purpose, and something to strive for.
However, the reverse is also true. Employees may depart in quest of better opportunities if their employers do not support their career development.
You can provide sabbaticals or reskilling opportunities in place of internal career prospects because they aren’t always feasible.
3. A bad culture at work
Employee attrition is significantly impacted by workplace culture.
Every company has its own culture shaped by its own set of written and unwritten rules, attitudes and values. An employee will leave if the company culture doesn’t match their values.
For this reason, a business needs to establish its culture early on.
4. A lack of drive among employees
Employee happiness and drive to succeed in their role and duties are influenced by workplace motivation. A motivated team has several advantages.
- Employee attrition among employees who lack motivation
- Motivated staff members enhance retention and decrease absenteeism.
- It can strengthen the bonds between staff and management.
5. A poor balance between work and life
Employees will be more satisfied with their jobs when they believe they have a healthy work-life balance. They are therefore more likely to remain with their organization.
People are happier when their work and personal lives are balanced, and it also fosters mental health and fitness. This balance must be a key component of any company’s human resource strategy.
6. Feeling a sense of belonging and not fitting in
We are all social creatures, even though many of us are paid to work and live. We want to fit in, belong and be part of a community.
According to research, creating a sense of belonging at work can reduce turnover by 50%. As per another survey conducted by Harvard Business Review, businesses see significant financial gains when employees feel like they belong. A significant 56% improvement in job performance, a 50% decrease in the probability of turnover, and a 75% decrease in sick days were all associated with high belonging. A corporation with 10,000 employees would save over $52 million a year as a result.
Employee Attrition vs Employee Turnover
Despite the fact that both attrition and turnover entail individuals leaving the company, they are not the same thing.
When workers quit and are replaced by new hires, either internal or external, this is known as employee turnover. There are still the same amount of employees. It is computed as the proportion of workers who depart from a company within a predetermined time frame.
Because it isn’t losing employees, a business might have a high turnover rate and yet be expanding.
A certain amount of staff turnover is normal, but too much churn costs a business a lot of money in rehiring, onboarding, and ramp time.
Only lost vacancies are taken into consideration by employee attrition; refilled openings are not. Even when a company is filling one out of every three open positions, attrition is still happening for the two open positions.
While they are different, employee attrition and turnover have one thing in common: both attrition and turnover data tells you why people are leaving and you can make changes to keep your people.
The Limits of Traditional Attrition Metrics
Most organizations rely on traditional HR metrics, turnover rates, exit interviews and employee engagement scores to track employee movement. While these metrics give a general sense of attrition levels, they don’t get to the root causes of employer attrition.
● They’re Reactive, Not Proactive
Traditional metrics measure what has already happened. Turnover rates and exit interview data only come into play once an employee has already decided to leave. By the time these insights are reviewed, the damage, financial and cultural, is already done. This reactive approach makes it hard for organizations to address issues before they contribute to talent loss.
● Data is Often Incomplete or Biased
Exit interviews, one of the most commonly used tools, are full of limitations. Employees may not give honest feedback, especially if they fear burning bridges or don’t think their input will lead to change. As a result, organizations may misinterpret the real reasons for attrition and can’t take corrective action.
● Surface Level Analysis Misses Deeper Issues
Engagement surveys and HR dashboards focus on broad themes, job satisfaction or compensation, without capturing the nuances of the workplace like leadership style, team cohesion or organizational values misalignment. These deeper, more personal experiences are the real drivers of employer attrition but go untracked.
● Lack of Contextual Intelligence
Many metrics don’t consider critical variables like the employee’s role, career stage, reporting manager or team structure. Without contextual analysis, organizations will draw flawed conclusions, like assuming attrition is due to compensation when the real issue might be a lack of internal mobility or bad management.
● No Real Time Insight
Annual or quarterly reporting cycles are too slow to keep up with today’s fast paced work environment. By the time leadership detects a trend in attrition, the organization may have already lost high value talent and momentum.
Why Should HR Leaders Care About Employee Attrition?
Six out of ten millennials, known as the ‘job-hopping generation,’ are open to new employment prospects. Human Resources leaders can take advantage of the high rate of attrition that occurs organically in the workforce and embrace the trend of employment flexibility. HR managers can create a committed, engaged, and productive team by being aware of and comprehending the current attrition realities.
How to Control Employee Attrition?
Some of the most effective strategies for reducing employee churn are listed below:
1. Assure staff appreciation
Staff members want to feel valued and that their efforts are acknowledged. Employee engagement and morale are raised by meaningful appreciation. Employees that are engaged are less inclined to hunt for other employment options.
2. Provide programs for training and development
Fostering professional development is crucial, and workers are less likely to quit if they believe their employer has made an investment in them.
3. Pay attention to the well-being of employees
Every organization is significantly impacted by employee wellness. Taking care of employees has the power to change their lives and increase their happiness, productivity, and level of stress.
4. Ask for and provide feedback
When workers feel heard, they also feel valued. Employee satisfaction is increased by proactively seeking out and providing feedback (in a constructive, positive manner).
5. Support professional development and planning
Fostering growth and making investments in workers’ futures encourages loyalty and lowers attrition. An employee’s future is highlighted when a career plan that incorporates the organization is created, provided they stay on board.
6. Assure appropriate benefits for employees
Workers desire more than a wage. They seek bonuses and advantages that truly improve their quality of life. The most desired advantages consist of:
- Health coverage
- Paid time off
- Life and disability insurance
- Options for remote and flexible working
7. Develop adaptable work arrangements to maintain important talent in some way
Flexibility has become the new buzzword, and remote work has altered our perception of working hours.
With a little ingenuity, developing a flexible working paradigm can also lower attrition. For instance, you can retain senior employees as trainers or mentors on a part-time basis. Alternatively, you might offer more inventive on-ramp and off-ramp choices to welcome back working mothers.
8. Perform comprehensive exit surveys
Doing in-depth exit interviews gives you more information about what didn’t work and why an employee is leaving. It’s the best method for learning from errors and giving leaders the knowledge they need to fix problems so they don’t happen again.
9. Establish and interact with an alumni network
An alumni network generates a larger pool of independent contractors and possible rehirees. An active alumni network serves as a powerful marketing tool for your company. Additionally, they are more inclined to recommend your business to others as potential employment.
Final Thoughts
Although attrition is inevitable, it shouldn’t negatively impact your business. You should put retention-boosting tactics into practice to reduce turnover. But without the necessary resource, achieving this on a large scale can be difficult.
Organizations must adopt more comprehensive, data-rich strategies that capture employee emotion, relational dynamics, and prediction trends in real time in order to successfully handle employer attrition.
