Attrition

What is attrition?

Attrition, as applied to an organization’s workforce, is a measurement of the reduction of staff during a set period of time. It is generally measured annually. It encompasses all reasons for separation. These include resignation, termination or retirement. If an employee is replaced, the separation is not included in the rate of attrition.

Why is employee attrition important?

The employee attrition rate is an important Human Resources metric. A high rate is expensive for a business because the costs for recruiting, hiring, and training are typically tied to the rate. Employers who reduce their rate can save money on labor costs which can, in turn, reduce operating expenses and increase the profit margin.

What causes the attrition rate to increase?

A high rate can indicate low engagement or poor management. It could also indicate that competing employers are more attractive in the labor market.

Is attrition the same as turnover?

Employee attrition is related to employee turnover, with one key difference. Turnover is a measure of employee separation when the employee is replaced by a new hire.

It’s important for employers to compare their rate to other organizations in their industry. Employers who see an increase can enact programs to mitigate the reasons employees are leaving.

How can a company increase employee engagement to improve retention?

Follow these three steps to create an employee engagement program:

1. Map the employee journey

The employee journey is everything that happens from the moment a job candidate applies to their last day of work. A thousand little things combine to create a positive or a negative journey. Or—as is probably the case—something in between.

By mapping the employee journey, you can determine where your company falls on the spectrum. Of course, the journey isn’t the same for every employee. The employee’s manager, department, and team influence it. Improving the employee journey is the first priority when it comes to employee engagement activities.

2. Conduct ‘stay’ interviews

‘Stay’ interviews will help you find the weak points in the employee journey. Interview each of your employees. This is best done by someone in HR. You want employees to be candid about their relationship with their manager. Determine the weak points so you know where to focus your efforts.

3. Automate HR to remove obstacles to engagement

Companies who automate HR improve engagement. Without fail. Every employee performs administrative transactions continually. They punch in, turn in timecards, and receive a paycheck. Workers request shift trades and vacation time. Plus they enroll in a health plan and use their benefits. An integrated HR system streamlines these processes. It provides transparency for employees, managers, and HR. It allows employees to perform transactions themselves.

HRMS (Human Resources Management Systems) can help employers and HR teams track both attrition and turnover. Plus, the software can demonstrate the effectiveness of efforts to reduce them.

See also

Additional Resources