Most offices today have dynamic structures. We do not live in an age where people prefer stability over higher benefits and stay in a company forever. Employee attrition refers to a reduction in the workforce when employees leave and are not replaced for a certain period time. Attrition is a natural process in which an employee leaves the company, via resignation, retirements, etc. Having high attrition can mean that your employees are getting very tired, their needs and expectations are not met, and people working for you are changing all the time, which puts the structure of the working environment and processes at risk.
Companies use different parameters to measure the change in employee numbers over a certain period of time. To make things clear, we will be differentiating between attrition, turnover, and retention rates.
As we mentioned before, attrition happens when an employee leaves for natural reasons and their position is not filled. The attrition rate is interchangeably used as turnover rate, however, they do not mean the same thing. Turnover (staff turnover) happens when an employee leaves voluntarily or involuntarily, and their position is filled. However, the retention rate is about the number of employees you keep in the company. All three rates are used to decide whether you have enough employees for your business to run smoothly. In the scope of this article, we will stick with attrition rate.
|Attrition rate: Number of departed employees / average number of employees over a period * 100|
|Turnover rate:Number of replaced employees / average number of employees over a period * 100|
|Retention rate:Number of employees who stayed over a period / number of employees at the start * 100|
A high attrition rate shows that many employees are leaving and their positions are not filled. In short, your company loses employee power. If your company is having a high attrition rate for a long time, it can lead to downsizing, which no one would like to face. If the company is doing well, but the attrition rate is high, it probably means that your employees are not happy. However, the range of attrition rates can vary depending on the country, or the sector that the company functions in. So, it is better to examine the relevant data before deciding the nature of attrition.
Attrition usually happens when an employee retires, resigns due to personal reasons or changes career. What companies can work on are resignations. Employees often resign because they are not satisfied with the work and the benefits it brings, because of excessive workload and unpleasant work environment, or because of a really good offer from a competitor. In all resignation scenarios, a high attrition rate suggests that your employees prefer being somewhere other than your company and you are not fast enough to fill their positions. Here are some downsides of attrition:
Replacing a trained employee costs more than keeping them.
The process of looking for a new employee who is equivalent to a former employee is difficult. Especially hiring a senior employee costs more since they have higher salary expectations. Moreover, training a new employee takes time, effort, and money.
It causes the loss of employees with know-how.
Being experienced in a company culture means a lot and what it brings is not acquired easily. Even if the former employee trains the new one, it takes time for the newcomer to adapt.
Attrition increases the workload for those who stay.
When a position is not filled after a departure, it naturally increases the workload of others in the company. In the long run, it affects employee satisfaction and thus works performance. And when the workload overloads the regular shifts of employees, companies need to make an overtime management process and decide how much overtime they need in order to fulfill their organizational goals. You can learn more about it in our Overtime Management article.
It may cause low morale in employees.
When an employee voluntarily leaves, one can think that they are not satisfied enough, or are maybe feeling worn out. So, it is important to review the working conditions and the company culture to detect a possible problem when you see high attrition rates.
It is important to investigate what is happening when an employee leaves their position. Most companies have exit interviews to retain the employee and detect the reasons behind their decision.
Especially in big companies, it is sometimes hard to hear all voices. Conducting regular interviews about satisfaction regarding working conditions, salaries and benefits, and co-workers would give you an idea of how to prevent high attrition rates.
Everyone has different expectations from a workplace. Knowing your employees’ needs will allow you to regulate processes and give them proper incentives to stay with you.
Too much work is old-fashioned. We are living in a century where most processes can be automated, and employees don’t have to get exhausted with effortful tasks. Having an efficient way to work can make your employees feel more valued by letting them focus more on creative parts of the job and it can help you avoid attrition.
If a manager does not have the social and institutional skills to manage employees well enough, employees can get frustrated and their level of motivation may decrease over time. So, it is necessary for managers to be effectively trained in order to form engaging conversations with employees.
The pandemic taught us all that we can both be flexible and do our jobs. Especially younger generations seek flexibility in the working place. If possible, it is best to let everyone work in their most efficient way happily.
A low attrition rate shows that most of your current employees have been there before. Even if it seems like your employees probably like working with you, it can mean that you do not have a dynamic work environment with new talents and possibilities. So, in this case, low attrition puts you in a disadvantageous situation. It is important not to forget that this rate is just a number that leads you to manage your workforce and evaluate it in the context of the company.
With the workforce management software Kolay, you can stay engaged with all your employees by getting 360-degree feedback, and you can easily create competence or goal-based performance assessment reports to help you share your progress in meeting the company goals with your employees. Kolay’s modern HR solutions also let you access your employee records anytime from anywhere, track your company expenses, and manage your workforce’s shifts, compensations, and overtime. Try Kolay now for free, and stop worrying about employee attrition!
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