Attrition can be a natural and healthy part of business operation, but when it harms your bottom line, it’s time to sit up and take notice.
Monitoring employee attrition is one way to spot poor practice patterns. It’s also an opportunity to determine why your staff is leaving and what you can do to straighten those matters.
What is employee attrition?
Employee attrition is when workers leave their jobs due to everyday life circumstances. It’s the cycle of employment. Turnover refers to those who quit because they’re unhappy or feel they could do better elsewhere.
Retirement is a normal part of the employment cycle, but if you’re losing more staff than usual, they could be leaving due to factors other than their age.
It’s imperative that you find out why staff are leaving their jobs voluntarily. If it’s for personal reasons out of your control, then there isn’t much you can do about that. If they’re moving on to better things, there’s a problem with the job, the environment, or other members of your staff, then that’s something you can work on.
Employees will often switch departments; they quit their job in one and gain a role in another. Yes, it can reroute strong talent into preferable positions, but it can also leave weaker departments struggling.
This is an area of great concern in equal-opportunity environments. Where there are numerous departures made by a single group, you need to investigate. Women, ethnic minorities, those with disabilities, veterans, or older employees—if you can spot a pattern, it’s likely there’s a reason behind it.
Is employee turnover and attrition the same?
Attrition is based on the more acceptable reasons for your loss of staff. Employees could be moving house or city, or it could be time for them to retire. Sadly, some will die, and others will pursue new avenues, such as choosing to further their education or changing industries and sectors—all considered natural reasons for moving on.
Employee turnover is more often the result of poor choices or behaviors. Managers may be guilty of employing the wrong staff, creating a hostile working environment, or there may be acts of discrimination resulting in such a bad atmosphere, your employees feel as though they have no other option than to leave.
Terminations, leaving for a better job, or better prospects—each of these create a need to refill empty positions, where attrition terminates those roles that perhaps don’t.
Reasons for employee attrition
Staff who aren’t comfortable in their new roles won’t last long—many will leave before completing their first year. Better training can remedy this. If training gets rushed to place staff into roles too quickly, they won’t perform as well as they would with all the right tools for the job.
Being happy at work plays a huge part in role retention. Good management goes a long way to keeping your teams happy. There’s far too much truth in the adage of ‘employees leave managers, not jobs.’
You might not think it’s up to you how your staff manage their lifestyle and financial responsibilities. Still, one of the main reasons employees consistently leave roles is to pursue higher wages.
Are they living beyond their means? Are you paying fair rates? Could you afford to pay a little more if it meant hanging on to your key players? Or maybe a little education with a financial wellness program wouldn’t go amiss?
Financial stress also affects your employee’s functionality and efficiency in the workplace. Even if you don’t lose them, they might not be operating at their best for you.
A lack of opportunity for growth and advancement
The latest wave of Gen Xers and their Millennial predecessors have changed the way the current market views employment. They put far more emphasis on job satisfaction, and the right role with better benefits can often win out over higher-salary roles. They want to feel like they’re achieving something and moving forward.
Too many employees leave good jobs purely because they’re stagnant, bored, or can’t see a way to grow or advance up the career ladder.
What is good attrition and bad attrition?
There are, as there are with most things in life, positives and negatives to employee attrition. Where possible, a natural cycle of staff turnover creates opportunities as well as issues.
Many of the staff who choose to leave their roles will have been unhappy. If they weren’t up to the job, or they were better suited to working elsewhere, then your business gets an organic removal of a poor performer.
However, losing your best players because they’re bored, unhappy with their managers or their working environment, or they’ve been tempted away by more forward-thinking companies—well, that’s bad news.
Especially when you consider, with a little observation and a few changes, you could have retained them and saved yourself not only the problem of finding an equally strong performer but also all the associated costs.
Employee attrition statistics
There are masses of valuable facts, findings, and figures in the 2019 Retention Report related to attrition and turnover. One of the biggest lessons was why employees quit.
The report found that 3 out of 4 employees leaving their jobs could have been saved. Think of the difference that would make to the annual costs of hiring replacement staff! You could quarter your annual hiring spend.
Hiring a new worker in the US costs around $4k, or a quarter of the yearly salary in many cases. That’s a huge saving and a beneficial impact on your budget and figures.
How to reduce employee attrition?
The following suggestions boil down to respecting your employees as the valuable elements of your business. Let’s face it—without them, you don’t have a business. However, brilliant your ideas are, and hard a worker you might be, you need your team to realize those dreams and operations.
You might not have the appropriate promotion opportunities in your business that your staff would hope to work their way up, but that doesn’t mean you can’t offer them an alternative ladder to climb. Monitoring your teams will show you which ones are getting bored, and in such cases, you can think of tougher, more engaging projects that wouldn’t just benefit your staff but the business.
You might not have the resources to offer pay-rises and promotions, but could you offer bonuses, rewards, or new titles to show how appreciated your employees are?
Pay competitive rates or offer desired alternatives
We looked at lifestyle earlier on, and if you’re not automatically competitive on salary, you’re leaving yourself wide open to lose staff. Even if they’re happy at work, they’ll consider moving if they spot a better paying job.
When your employee’s personal life changes direction, there’s nothing much you can do about that. But engaging in detailed exit interviews, you may have a chance to understand where and when there could be an opportunity to lure them back in the future. Your investment into them so far might not all have gone to waste after all.
Ensure the right employees for the job
Too many employees leave positions because they’re not the right job for them. That isn’t always their fault. Is your hiring and interview process failing you? Are applicants coming from avenues that aren’t providing the level of worker you need?
Your onboarding process also has a lot to do with new employees settling into new roles. Get these aspects of your hiring system right, and you could stand to save a bundle.
Improve working conditions and environments
This is an extension of the earlier discussed job satisfaction. The role is paramount, but the environments your teams work in play their part too.
Nobody wants to work in a dark, dingy office. Just look at the lengths businesses like Google and Apple went to create unique environments and spaces, providing the type of workplace their employees find so hard to leave behind.
Monitor employee performance and satisfaction
The only real way to find out where you’re getting it right and going wrong is to ask. You can do this in many ways, so why not try them all?
Appraisals and interviews are great, and anonymous questionnaires will highlight areas that your staff might not feel safe discussing in an open conversation. Where there are problems, resolve them quickly to everyone’s benefit.
Employee attrition costs
It’s not all bad news. Employee attrition can be a positive way to reduce costs. A business might have to perform layoffs to reduce their annual spending, or when non-essential workers leave of their own accord, it can save on redundancy payments.
On the flip side, employee turnover creates roles that need filling. Advertising, interviewing, hiring, and training all additional costs that could be avoided.
That’s not all; other losses include reduced productivity costs from losing not only an extra pair of hands but also the knowledge they provided and the motivation and confidence they induced in your team. Then there is the temporary staff you may need to recruit while filling the role permanently—it all adds up to far greater losses than just covering interview costs.
How is employee attrition rate calculated?
Keeping a record of your employee hires and losses provides you with essential data. The deeper your data studies are, the better equipped you’ll be. By measuring your average employee count against losses through attrition and turnover, you’re better prepared to see when you’re achieving and which of your plans has turned a poor pattern around.
Average number of employees / number of employees who leave x 100
What is a good employee attrition rate?
Attrition rates vary from one industry to another. Some are more prone to attrition and turnover than others. According to a survey by Zenefits.com, rates can range from under 10% to almost 30%.
The only rate you should be interested in is yours—and how you can lower it.
As with so many easily ignored business practices and their data, you are working on your employee attrition, and turnover rates can significantly improve your budget and financial performance. It should also help you create and hold onto the strongest teams and players possible.
It makes sense to make it part of your regular HR and management practice. Improving your ROI isn’t always to do with marketing and sales, after all.