What is an Employee Attrition Rate and Why it Matters
The success of your business depends on the retention of your personnel, and the attrition rate is the indicator of how successfully you are doing this. You may find out how many employees departed your organization during a specific time frame and learn why they left by measuring and analyzing your attrition rate. After that, you can create retention strategies that are pertinent and efficient in order to lower attrition inside your company.
In order to better understand employee attrition and how it varies from employee turnover, we have written this article. We’ll also look at how to determine staff attrition rates, the main reasons for attrition, and how to stop it.
What is an Employee Attrition?
Employee attrition is referred to as the regular, albeit unpredictable and uncontrollable, reduction in the workforce caused by retirement, illness, or death. The amount of employees who leave a company without being replaced is measured by the employee attrition rate.
Employee Attrition Vs Employee Turnover
Employee turnover and employee attrition are frequently conflated. Both attrition and turnover happen when an employee departs the organisation, but there is a significant distinction. In cases of turnover, the corporation makes an effort to find a replacement for the lost worker, whereas in cases of attrition, the post remains vacant or the employer entirely eliminates it.
You may gauge how well you’re retaining talent by looking at attrition rates. A high attrition rate, for instance, implies that your employees are quitting frequently, whilst a low rate indicates that you are keeping your staff for longer periods of time.
Since a low attrition rate indicates that their employees are happy and they don’t need to spend money on recruiting and training new employees, businesses typically strive to achieve one.
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Why Does Employee Attrition Matter?
To understand where your business is in terms of applicant retention, you must have a comprehensive understanding of your employee turnover rate. For instance, if you discover that your employee attrition rate is high, it may indicate that you aren’t offering your top-performing employees adequate rewards or the ideal work environment.
You may determine the issues you need to address to make sure that your employees don’t leave you by tracking and analyzing your attrition rate.
How to Calculate Employee Attrition Rate
Divide the number of workers who have left your organization by the typical number of workers during a certain period of time to determine your attrition rate (you can calculate this on an annual, monthly, or quarterly basis).
Types of Employee Attrition
There are various forms of employee attrition, and analyzing them can help you figure out why you’re losing workers and whether engagement-boosting steps need to be taken. Employee attrition can take the following forms:
- Attrition that is voluntary occurs when a worker chooses to leave the company. Employees may leave their jobs for non-work-related reasons, such as caring for a family member.
- When a firm terminates employment, it is considered involuntary. This typically occurs when businesses eliminate employment in order to cut staffing expenses or because they decide the position is no longer necessary. This is a typical method used by businesses to manage expenditures.
- External: When a worker departs to work for another organization. Typically, this occurs when an opportunity arises to accept a position that more closely fits the employees’ career path, to receive a greater salary, or for a shorter commute.
- Internal: When individuals accept a new position within the same organization, whether it’s a promotion or a job in a different department.
What Causes High Attrition Rates?
The typical cost to the business of this person is six to nine months wages. As a result, businesses strive to maintain as low an attrition rate as possible.
To do this, it’s critical to comprehend the reasons why employees quit your business. The following are the main reasons for employee attrition:
- Pay: Workers who feel they aren’t getting paid enough are more likely to quit their jobs as soon as they receive a greater salary offer. Having a policy requiring annual pay increases can help to improve retention.
- Employee recognition is a “low-cost, high-impact activity,” according to Gallup, but few companies take this into account, and the majority of workers don’t feel valued at work. It is evident how this affects retention and employee morale.
- Career advancement – the chance for expansion and development is crucial for keeping good personnel. Exceptional performers who feel stuck in their current position are more likely to search for career progression options in other organisations.
- Corporate culture – Maintaining your top personnel requires having a supportive, people-focused company culture. But even before that, it’s crucial to hire the proper individuals and ensure cultural fit.
- Stress – Workers who frequently endure high stress at work or feel overburdened by their responsibilities frequently leave the organisation.