The 5 key things to know about Employee Attrition to keep your company competitive and interesting in the eyes of candidates.
Employee attrition: what does it mean?
The term employee attrition refers to the process by which employees leave their jobs, typically for personal reasons or because they are close to retirement, and are not replaced by new resources, leading over time to a reduction in the number of employees.
Employee attrition is a process that sometimes is inevitable, but which must be carefully measured and monitored to intervene with effective solutions before it can pose a threat to the business. It occurs when the workforce shrinks in size over time, for personal or professional reasons that lead people to leave the company: in practice it means that employees leave the company faster than new ones are hired, with the risk that the process will come out of management's control.
5 fundamental things to know about employee attrition
- It does not only depend on "natural" reasons
Among the causes that lead to employee attrition there are not only natural retirement or personal reasons that require leaving from the workplace (health conditions, transfers of one's partner, family changes), but also professional reasons. In fact, we must distinguish between voluntary abandonment (due to changes in private life, retirement, professional dissatisfaction), involuntary abandonment (dismissal), for internal mobility (going to fill another position within the company) or linked to demographic factors (in case the abandonment is related to factors such as gender, age or ethnicity, for example). For this reason, if staff reduction is not a planned process or part of a broader business reduction strategy, it is necessary to implement an effective employee engagement and employer branding strategy, to ensure that the company always has skills and necessary know-how available for its results.
- Employee Attrition and turnover do not represent the same phenomenon
It is important not to confuse the two concepts, especially in the context of HR analysis or people analytics. The turnover rate is a metric expression of a short-term phenomenon, to be immediately addressed and which takes into account all terminations, even the positions that are re-filled. Employee attrition, precisely because it includes natural factors of distancing or structural changes that result in eliminated positions, so it allows vacancies to remain vacant even for long periods. The turnover rate can be high even if a company is growing. On the other hand, a high employee attrition rate most likely indicates that the workforce is actually shrinking.
- Employee Attrition can affect the entire business or only some parts of it
It is important to pay attention to this phenomenon and measure it not only if it impacts the entire company but also because it can be limited to some specific areas of the organization. When not under control, such a process can jeopardize the possession of certain specific skills and company know-how on particular issues, as well as indicate an alarm bell with respect to the real skills of the leader or to some actual obstacles related to the working place.
- Employee Attrition can bring benefits to the company
Employee Attrition does not only have negative effects. There are many cases in which it can bring benefits: when less talented employees leave the company or those who fill positions for which they are not suitable, the balance can be positive, leading to cost savings and freeing up space for new hires and for the search for new talents, while promoting diversity in very closed working environments. It can also be a temporary solution to be adopted in the event of structural changes or unavailability of economic funds to cover all personnel costs, as well as supporting in the creation of a dynamic and proactive workforce.
- Understanding the reasons for attrition can help to better understand the organization
A high rate of unforeseen employee attrition can be analysed and can help to better understand some organizational mechanisms, or problems to be solved within the teams. First of all, it is important to know that employee attrition can significantly differ and, as we said in point 1, it can be influenced by uncontrollable external factors, such as transfers, family changes, personal and health circumstances not related to the company. What is important, however, is to understand, in cases where employees have left the workplace for a professional reason, what is the reason in order to be able to manage and solve it. Some reasons may be, for example, the inadequate managerial style and poor leadership skills, the negative atmosphere and the absence of team spirit, insufficient recognition/reward policies, low level of work-life balance or a poor corporate culture in terms of diversity and inclusion: understanding what are the weaknesses is essential to implement an adequate retention plan or act on some strategic levers such as corporate wellbeing or the review of remuneration/reward plans to avoid other unexpected abandonments.
This is how Glickon Glow, with its simple and effective solutions, can help to create a unique and unrepeatable Employee Experience, at the basis of a motivated and satisfied workforce of their company.