What Is Employee Attrition? Plus 6 Ways To Reduce It

Between costs associated with separation, loss of productivity, recruitment, interviewing, training, and onboarding, the loss of a single employee is estimated to cost businesses 50% of that individual’s annual salary. Replacement costs can be lower for entry-level roles while replacement costs are significantly higher for professional, technical, and supervisory positions.

Online calculators or detailed forms, like this one from the Society for Human Resource Management, can help you pinpoint the financial impact that employee turnover is having on your bottom line.

There are different reasons why an employee might leave your organization. While staff attrition and turnover both cost your organization money, there are subtle differences between the two concepts and different steps to take to remediate the issues.

Attrition is the departure of employees from the organization for any reason (voluntary or involuntary), including resignation, termination, death or retirement.
  1. To start, find the average number of employees. …
  2. Next, let’s work on an average by month.
  3. Now, consider the number of employees who left unfilled positions over the course of the particular month. …
  4. Next, multiply this average by 100 = 8.42%.

Predict Employee Attrition Using Machine Learning & Python

Employee attrition vs. turnover

Employee attrition and employee turnover are often used interchangeably, but they actually refer to two different sets of circumstances. Attrition refers to roles that are vacated, either voluntarily or involuntarily, without being replaced. Turnover is when an employee leaves and the employer chooses to hire someone else to fill that role. The title is the same and the new hire completes the same responsibilities after completing the training.

When employee attrition and employee turnover are combined for review, these two metrics are referred to as employee churn. Reviewing churn can help decision-makers learn how well theyre retaining employees and how they could improve retention.

What is employee attrition?

Employee attrition is the cycle in which team members naturally leave the company. Attrition can happen in three ways:

Another important part of attrition is that the company chooses not to fill the role again once the employee leaves. They could completely remove the duties, or they distribute the responsibilities among other team members.

How to calculate employee attrition

Annual attrition rate measures how many people left the company in a given year compared to the overall number of people that were employed in that same year. If youre an HR professional or other decision-maker who needs to calculate attrition rate, you can calculate it using the following steps:

Ultimately, this metric can be calculated using the following formula.

Attrition rate = number of departed employees / average number of employees x 100

How to reduce employee attrition

Some attrition and turnover is normal within nearly every company. However, lower attrition rates are usually better because it often means youre providing an ideal work environment and good salaries and benefits. If you want to reduce employee attrition, try following these steps:

1. Provide detailed job descriptions

Detailed job descriptions help ensure a focused and deliberate recruiting process. This way, both you and your candidates have a clear set of expectations from the very start of the interview process. Employees who know exactly what to expect from their role may feel more satisfied in their role.

2. Ask for referrals

When recruiting for a position with specific needs, seek recommendations from trusted colleagues and reliable employees in your workforce. This increases the likelihood of a high-quality candidate and builds trust throughout the hiring process. Consider implementing an incentive program for current employees to provide referrals. For example, an employee could receive a bonus if they refer someone who stays with your company for more than 90 days.

3. Invest in training and onboarding processes

Thorough training is the very first way your company can provide new employees with the tools they need to be successful. An employee with a thorough understanding of your company, their responsibilities and their role in the organization is more likely to feel confident and comfortable in their environment over time. Knowledge is a powerful tool, and your employees are more likely to feel valued knowing you took the time to equip them with it.

4. Be present

Employees are much more likely to find efficacy in their work when they know their leadership sees and acknowledges their efforts. Give regular constructive feedback in performance reviews, but also check in with your employees in a personal capacity to ensure that theyre enjoying their work. Make yourself available for any questions or concerns they might have, and when problems are brought to your attention, work to resolve them quickly.

5. Provide room for advancement

Most professionals seek opportunities for growth. Talk with your employees about their career goals and, if possible, work together to make them happen. Mentoring , job shadowing and professional development opportunities can provide qualified employees with new chances to learn and grow within your organization.

If you dont have many chances to give promotions to employees, offer opportunities to lead new initiatives, take on new responsibilities and make an impact in the workplace. These initiatives can help employees find more satisfaction and purpose.

6. Pay competitively

Quality employees are a commodity, and if you want to retain them, its helpful to have wages and benefits that are competitive across the market. If your business model cant sustain comparable pay, find creative ways to compensate your employees with extra vacation time or flexible work-from-home accommodations. A good employee may be willing to forgo the raise they would receive elsewhere if your company offers benefits that make their lives significantly easier.

FAQ

What are the types of attrition?

There are five types of employee attrition that you need to know of:
  • Attrition due to retirement. …
  • Voluntary attrition. …
  • Involuntary attrition. …
  • Internal attrition. …
  • Demographic-specific attrition.

Why is employee attrition a problem?

In other words, it costs the business money every time an employee leaves because it takes even more resources to return to the same level of productivity or level of performance that you had before. On the whole, you’re going to want to prevent turnover as much as possible because of the high costs associated with it.

What is attrition and retention of employee?

What is the difference between attrition and retention? A retention rate is the percentage of employees your business has retained over a specified time period. An attrition rate looks at the exact opposite or retention. The attrition rate shows the percentage of employees you lost and did not replace.

What is an attrition?

Definition of attrition

2 : the act of rubbing together : friction also : the act of wearing or grinding down by friction Stones can be smoothed and polished by attrition. 3 : the act of weakening or exhausting by constant harassment, abuse, or attack a war of attrition.

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