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Attrition: Why Does Employee Attrition Matter?
What is attrition and why does it matter? Employee attrition is a key area of concern and focus for many organisations, but sometimes it can be difficult to put your finger on what it is, how it reveals itself, and why it tangibly matters for your business (so you can make the case for curing it).
This article is your definitive guide to employee attrition. In it, we offer a breakdown on what it is, how it occurs, and how it can affect your organisation. We hope you enjoy the read!
What Is Attrition?
Attrition is the inevitable departure of employees from your organisation. Whether they leave on a voluntary or involuntary basis, attrition covers employee departures and all that comes with it.
What Are Examples Of Attrition?
While we may think of employee departures as something negative, we need to balance both sides when we think about employee attrition. Sure, an employee may choose to leave due to conflicts with management or dissatisfaction with their own work, but there are other reasons at play, too.
That is why attrition is often seen as an inevitability. Life happens, and as such, an employee may choose to leave an organisation through no fault of their own or of the organisation. They may leave due to retirement, illness, death, or simply moving to a new location.
Is Attrition Good Or Bad?
If we keep the above in mind, employee attrition is neither good nor bad: it simply is. The departure of employees is something that happens in every organisation, so it helps to understand departures on a case-by-case basis, and not simply as an either-or indicator.
What Is The Most Common Cause Of Attrition?
Many HR leaders agree that staff departures are most common when it comes to two major topics: compensation and job profile. While compensation may be difficult to change for an organisation, due to budgetary concerns, there are two major levers when it comes to the second (job profile). These include:
The first way to mitigate voluntary departures is to tighten up your recruiting processes. That means hiring the right person for the role, from the very beginning. This typically entails having a rigorous requirements profile, recruiting process, and asking the right questions in the interview process.
The second concerns employee development. Attrition can be reduced by putting development in focus, which includes hosting performance reviews, looping in automated performance cycles, and ensuring that employees are often reaching new heights.
When it comes to the most common source of employee departures, these two areas of focus can help a great deal.
How Does Attrition Affect An Organisation?
That said, even if attrition is a bit of a nebulous concept, it can still have a tangible effect on business. After all, when an employee leaves, things change. Let’s consider some of the following:
Let’s say that a high-ranking manager makes the difficult decision to retire. They are trusted with a wide array of responsibilities and knowledge, and now it is up to the organisation to try and replicate that knowledge or pass it on to someone else (a succession plan may be helpful here).
Or, let’s say that two employees in similar roles decide to move cities and quit within the same period of time. In this case, there may now be an immediate skill gap in their team. In a case like this, it would be helpful to consider your workforce planning tools to try and alleviate the situation.
Lastly, let’s think about involuntary attrition: An employee has been caught making decisions that led to a data breach in your organisation, now they are being let go on top of causing problems that the entire organisation needs to address. Not only are you down an employee, but you have a host of issues at hand.
This, again, speaks to the nuanced nature of the topic. Employee departures are not one singular concept, but a collection of factors, context, and consequences that each departure creates with it.
Can You Calculate Attrition?
Of course you can! The most popular way to do this is through your company’s attrition rate. Thankfully, we have written about this topic at length in another post, entitled "What Is Your Company’s ‘Attrition Rate’ Telling You?” You can read this post by clicking the link.
HR Best Practices For Attrition
What can HR leaders do to better prepare and mitigate the potentially costly effects of staff turnover? Let’s break it down in two buckets: ‘strategic’ and ‘ operational’ best practices:
Incorporate attrition into workforce planning.
Identify candidates for succession, pre-attrition.
Develop a people strategy to mitigate voluntary attrition.
Keep a running report on attrition rates in your organisation.
Build a strong and automated off-boarding program.
Revisit your performance cycles and development initiatives.
Look into overall workforce demographics.
Ensure your hybrid working model squares with employee satisfaction.
These are just some of the things that HR leaders can address to help along the topic of attrition in an organisation. That said, there is so much more that a team can do.
How Can HR Software Help?
HR software can help with attrition by reporting on it! Your HR software should be able to instantly report on employee attrition and turnover, so that your leadership team can see how things are developing (especially if your company is growing rapidly or changing in meaningful ways).
Click the link below to learn more about calculating attrition rates and keeping a single dashboard for all of your HR analytics with Personio.