The different types of attrition depend on how the person leaves the organization. Few people start and finish their careers in the same company. Most people leave after a while, or the corporation pushes them to leave through forced termination.
Attrition is an inevitable component of running a business. An employee will eventually desire to quit your organization for personal or professional reasons.
But it becomes a matter of concern when attrition passes a given level. Attrition within minority employee groups, for example, might harm your firm's diversity. Or, attrition among senior executives may result in a major vacuum in organizational leadership.
Certain types of attrition are inescapable, like if a staff member is retiring or relocating to another city. But after a particular limit, attrition can make a big dent in your organization's bottom line and culture. This article explains all you need to know about employee attrition, including how to quantify it correctly.
What Is Employee Attrition?
Employee attrition happens when an employee leaves an organization for any reason, including voluntary departures, illness, failure to return following a leave of absence, layoffs, or death. Employee attrition happens when someone leaves a company for whatever reason and does not get replaced for an extended period (if ever).
Employees are departing the workforce faster than they are being hired, which is frequently beyond the employer's control. Assume you've recently established a new office identified as your company's Sales Hub. Every salesperson must work out of this office; nevertheless, a few individuals cannot relocate and have chosen to leave the organization. This is a common reason for staff turnover.
However, there are additional reasons for attrition, such as a lack of professional development, an adverse work atmosphere, or waning trust in the company's market worth. Another element that contributes to employee churn is poor leadership.
Figure 1: Common Reasons for Employee Attrition
Employee Attrition vs. Employee Turnover
Although these words are frequently used synonymously, the main distinction is that employee turnover counts all job terminations, even those filled again. Attrition takes into account long-term vacancies or total post-eliminations.
Your business is contracting if your attrition rate is high. High turnover rates have their place if a company is steady or growing. For instance, even as the business expands, turnover rates in restaurants and retail are frequently high.
What Are The Different Types Of Attrition?
You need to be aware of these five types of employee attrition:
1. Retirement-related attrition
If only two or three employees retired from your organization this year, statistically speaking, this employee group is too tiny to be included in attrition. However, attrition may occur if a substantial portion of your team departs at the same time.
Your senior professionals may retire prematurely or become freelancers for reasons unrelated to age; thus, attrition due to retirement shouldn't be ignored.
2. Voluntary attrition
Employees who leave their positions voluntarily represent the most prevalent kind of attrition. Voluntary attrition can occur for various reasons, most of which are under your control (more on later).
High-value talent voluntarily attrition should be aggressively avoided as it might gradually reduce productivity. For instance, it is cause for concern if a corporation notices that its marketing professionals are leaving various business units.
3. Involuntary attrition
In this case, the firm, not the employee, is the one that starts the leave process. For instance, the worker may have engaged in workplace misconduct, a common cause of involuntary attrition. Attrition could also result from structural issues. A flurry of involuntary attrition frequently follows mergers and acquisitions.
4. Internal attrition
Internal attrition can be advantageous in some circumstances since it directs talent toward more lucrative fields. Additionally, it guarantees greater job-employee fit. Employees in this situation are leaving one department to work in another.
However, it is worth examining if a certain department has experienced a high turnover rate in a year. Does the job still need something? Is the management lacking in abilities? HR should investigate the replies to these queries.
5. Demographic-specific attrition
Demographic-related attrition is a major challenge for progressive businesses attempting to create an equal-opportunity workplace. Demographic-specific attrition occurs when a particular group of employees, such as women, members of underrepresented racial or ethnic groups, veterans, or senior professionals, leave the organization in large numbers.
To find the main reason for demographic-based attrition before it impacts your workplace culture, you must launch employee surveys immediately. The epidemic of quitting might be treated with a positive culture.
What Causes Employee Attrition?
Attrition is influenced by several factors, some of which are in your purview while others are not. To name a few:
Minimal unemployment: Even if you wanted to, you might be unable to replace departing staff if your industry or region has low unemployment rates. You can let the posts go unfilled (attrition), lower your hiring standards, or broaden your search.
Workforce demographics: If the majority of your workforce is made up of Baby Boomers, their impending retirements may leave you with a staffing gap that is difficult to fill.
Toxic workplace: It may be difficult to fill roles if your company is unpleasant for current employees. Although you may want to reduce your attrition rate, you may find it difficult when employees depart rapidly, and word of your company's toxic workplace culture spreads. If your attrition rate is high, this is one of the first things you want to consider. Pay attention to your internet reviews and employee feedback during exit interviews. Take note of any unfavourable Glassdoor evaluations and attempt to make the necessary improvements.
Business relocation: As Elon Musk recently announced, it would make sense for your company to relocate to another area where necessary. Even if you agree to cover all employees' relocation expenses fully, many will decide not to follow you. Finding replacements will take time.
Covid-19 closures: This has been a particular issue in 2020. Many firms had to lay off staff when the government ordered all non-essential businesses to close. Even open enterprises might have experienced a decline in business, necessitating the firing of staff.
Reorganizations/restructuring: These corporate reorganizations aim to reduce attrition. To never replace them, positions are methodically and intentionally destroyed.
How to Prevent Voluntary Attrition
If you're having difficulty hiring and retaining staff, resulting in high attrition rates, you can attempt to resolve the issue using the below:
- Provide your managers with the expertise they need to manage employees effectively. Keep in mind that management is distinct from doing. If you want to reduce turnover, invest in management training. This will assist you in retaining both managers and employees.
- Conduct a compensation survey and compare all your salaries against your target market. It can be challenging to retain employees if you pay below-market wages.
- Hold stay interviews. Only do this if you want to listen to your staff and are willing to make adjustments based on what you discover. Employees will become resentful if you hold these and fail to act on all the information gathered.
- Review your rewards and perks to ensure they appeal to your staff. As your employees' needs change, you may need to do this regularly. For example, if your company's employees are mostly young, they won't be as concerned about taking time off. However, as your employees mature and if you keep them, they are more likely to have children and prefer additional child-friendly bonuses.
- Consider providing greater flexibility in start times or remote working. 2020 taught many firms that many jobs could be done just as well from home as they did in the workplace.
- Take care to hire the proper individuals from the start. You should not waste time hunting for a unicorn candidate; instead, focus on finding someone who can and wants to execute the job. Finding the proper fit early in the selection process can help to reduce resignations.
- Have up-to-date job postings. This helps to attract people who are eager to work for your organization. Many organizations, for example, offer jobs as "remote" but intend to bring those individuals into the office. Increased attrition is probable due to this form of bait and switch.
- Always promote from inside. Yes, it is time-consuming. However, if you use strategic workforce planning and succession management to ensure that skills/leadership gaps are filled, you can promote individuals and prepare for the organization's future even when your staff members retire or leave for other reasons.
There are also methods for dealing with involuntary attrition. For example, carefully planned recruiting plans will assist you in avoiding overstaffing and then having to let employees go when your business does not expand as planned.
Recent Trends in Attrition - Google Example
The degree of attrition differs between professions, employment positions, and sub-sectors, as is to be expected.
According to LinkedIn's 2018 Talent Turnover Report, the three industries with the highest turnover rates are technology (13.2%), retail and consumer goods (13%), and media & entertainment (11.4%). However, if you focus on the media & entertainment industry, marketing professionals have a far higher quit rate (19.8%) than the typical worker in the technology sector.
Take these trends carefully and thoroughly examine your business to find the most pertinent KPIs. Google did that in its 2018 Annual Diversity Report, which includes a distinct section on staff attrition. This is what Google discovered:
- The attrition rate among black and Latinx personnel was significantly higher than that of other demographic groups and the corporate average.
- Approximately 2.5% of Google's U.S. workforce is black. Only a small percentage (3.6% more) of workers are Latinx.
- A large portion of the workforce is made up of white and Asian workers.
This Google case study demonstrates the importance of tracking, assessing, and dealing with attrition. By shining light on its employees, the corporation helped pave the path for a future marked by more equity.
Is Employee Attrition Always Bad?
While having a large number of employees leave can be undesirable, attrition doesn't always have to be bad if an organization needs to reduce roles to remain financially viable.
While having people leave in droves might be detrimental, if a firm needs to reduce roles to remain financially viable, attrition does not have to be bad.
When your company is struggling, it may be easier not to replace workers who leave voluntarily rather than eliminate roles. (Depending on where your company is located, you may be compelled to pay severance or pay for extended notice periods if you decide to eliminate jobs proactively.)
However, you may face major challenges if your attrition rates are excessively high. There can be a lack of consistency, training gaps, and institutional expertise. It may require a long time to fill posts (especially specialist responsibilities), and if these positions go unfilled, they can be difficult to fill later. These gaps can lead to employee fatigue and poor overall productivity, resulting in dissatisfied customers.
Hiring freezes are often implemented by businesses to increase attrition. Work stops being done, or management reshuffle personnel to fill gaps. If an employee leaves, the remaining employees must pick up the slack.
Even if the attrition is unintentional and the product of well-planned layoffs, you should be mindful of the future. If you fire all your salespeople today because product sales are low, you won't be able to recoup. Without salespeople, there will be no sales; without sales, there will be no company.
Because recruiting, employing, and training new personnel is expensive, you should consider not dismissing someone and not removing that position if you need it again. It might make greater sense to cross-train the staff member for a while and keep them.
Many businesses only look at staff turnover rates, but this can leave out important information. You need to know if your organization is losing staff, why, and what you can do to fill skill gaps. Understanding the reasons for employee attrition in your business and having a snapshot of your attrition rates can allow you to implement long-term personnel planning strategies to control attrition so that it does not negatively impact your firm.