Employee attrition is the term used to describe the loss of employees in an organization. It is a natural process and can have many causes, but is something any HR department should aim to minimize.
Research indicates that this loss of top talent is likely to rise. What can we do to limit the loss of our top employees? While every company has unique attrition rates and factors, a better understanding of the causes allows us to stem the tide.
In this article, we will examine the main causes of employee attrition and the most likely reasons for them. In addition, we’ve compiled some useful tips for boosting employee retention.
What Causes Employee Attrition
There are two types of employee attrition – voluntary and involuntary.
Voluntary Attrition
Simply put, voluntary employee attrition refers to when an employee resigns.
Some employees leave due to life events like starting a family or relocation. Others retire due to age or poor health. More often than not, experienced employees who leave are looking for more competitive salaries, better career opportunities, or a healthier work/life balance.
Involuntary Attrition
Cases of involuntary employee attrition include all those employees who were fired, or retrenched.
In terms of the former, it is often due to the employee’s poor performance or misconduct. The latter is generally caused by economic factors outside their control, but to which management has had to react accordingly.
What Is Your Employee Attrition Rate and Why Does It Matter?
Understanding your employee attrition rate will give you a deeper insight into the health and stability of the workforce and organization.
A high voluntary employee attrition rate highlights a need to work on your employee retention strategy. It may also indicate a deeper problem – a toxic work environment causing good employees to leave.
You can learn just as much from a high involuntary employee attrition rate. If you’re having to dismiss a large percentage of your workforce, ask yourself why.
Do new employees fail to cope with the demands of the job, or lack the skills needed to meet expectations? That may affect employee attrition as you may need to let such employees go.
If this happens on a frequent basis, it could mean that your recruitment team is not finding suitable candidates for your particular work environment. And that your recruitment strategy needs to be revised to attract the right applicants.
Calculating Your Organization’s Employee Attrition Rate
Calculating your company’s attrition rate is the first step to resolving high employee turnover and improving top talent retention. Here is a simple formula to calculate employee attrition.
- Choose the period that you want to analyze, for example, the previous year.
- Determine how many employees you had at the start of that period, and the number who joined during that time, to get the average number of employees.
- Divide the number who left by the average number of employees, and multiply by 100 to get a percentage value.
A promising employee attrition rate is lower than 10%. Anything higher indicates that improvement is needed.
Do this calculation focusing on those who left voluntarily, and then those who were dismissed by the company. Which is higher? Your voluntary or involuntary attrition?
This will tell you where you need to focus your attention – retention strategies, or better recruitment processes that attract the right kind of candidates.
How To Avoid High Employee Turnover
High employee attrition rates carry with them hidden costs like lost productivity and additional recruitment. Here are some tips to ensure that this doesn’t become an escalating problem.
Employee Retention Tips
You may not be able to stop employees from leaving, but you can find out why an employee leaves. In their exit interviews, ask departing employees their reasons for wanting to leave the company.
Is it a better remuneration package or a higher position at another firm? Or do they simply want a change of pace? This will give you clues for reducing employee attrition amongst your other employees.
Improved Work/Life Balance
An unhealthy work-life balance is one of the top reasons why good employees leave.
Many valued employees enjoy working for the company but leave seeking a better work/life balance. Worse still, this may lead to silent quitting, where they do the bare minimum but withdraw more and more from their work life.
This can force you to take action when they underperform. It can often be resolved by restructuring their work schedule or offering them the chance to work from home a few days a week. Less work schedule pressure means more employee satisfaction.
Employee Engagement
Reduce employee attrition by increasing job satisfaction and employee engagement. One of the best ways to achieve this is through recognition and reward programs.
When employees feel valued, appreciated, and rewarded for their efforts, they’re less likely to leave.
Another excellent way to engage and retain employees is through fostering an inclusive and diverse workforce. Too often, employees don’t feel included and don’t speak up about it, leading to demographic-specific attrition.
Upskilling & Remuneration Analysis
Are employees leaving because there’s no room for advancement or they aren’t being offered a competitive salary? A high rate of internal attrition, with employees wanting to move to other departments, shows a need for more work responsibilities or a better work environment.
Implementing upskilling programs and focusing on coaching or mentoring programs will support the career goals of your staff. Do regular job analyses to determine whether or not your employee’s annual salary is fair compensation.
Final Thoughts on Employee Attrition
It’s not possible to entirely control employee attrition. Employee departures are an inevitable part of doing business, and every company experiences it to some degree.
However, high employee attrition rates are often a symptom of a much deeper problem within the organization. By addressing the causes behind it, you’ll improve the work environment for your employees and keep the top talent satisfied at your organization.
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