Updated Jan 28, 2022

What Is Attrition?

What Is Attrition?

 

A company is a dynamic system of components that must all operate together in order for the company to function properly. Attrition is a business factor that affects both personnel and the company as a whole. Understanding what attrition is and how it affects a company might help you avoid high employee turnover. We'll go over what attrition is, the different form of attrition, the benefits of attrition, and how to calculate attrition rates in this post.

Employee attrition is a metric that measures how many employees depart a company. Attrition is measured as a proportion of the company's total workforce.

 

Attrition vs. turnover

Employee attrition is comparable to turnover, but it differs in a few areas. When an employee retires or when the employer eliminates the employee's employment, attrition occurs. Employee turnover is defined as the number of employees who resign or are fired from their jobs.

Employees leave the company through both turnover and attrition, however with attrition; the corporation leaves the employee's position unfilled or terminates their role. Attrition reduces the size of the workforce in several ways, which can be beneficial or detrimental to a company. If a company is having financial difficulties, reducing the number of employees might assist cut costs. In contrast, with fewer employees, the remaining job requirements will increase the quantity of labour for those that remain.

 

Attrition is caused by a variety of factors.

An employee may quit their position for a variety of reasons. Attrition can be caused by a variety of factors, including:

• Health problems 

• Retirement 

• Promotion 

• Resignation 

• Termination

• The existing post is no longer available.

 

Different types of attrition

There are several types of attrition in the workplace, including:

 

Internal:

Employees leave their existing roles to work in different divisions inside the same organisation, which is known as internal attrition. If an individual is promoted from an entry-level role to a higher-level one within the same organisation, this is an example.

External:

Employees may choose to quit the organisation, which is known as external attrition. An employee may be dissatisfied with their employment or discover that they lack the necessary skill set for the job, thus they choose to resign freely.

Involuntary:

When a corporation decides to terminate employment, this type of attrition occurs. Due to budget constraints, a corporation may be forced to decrease its staff by eliminating some positions.

Voluntary:

When an employee decides to quit their employment for personal or professional reasons, this is known as voluntary attrition. However, in conditional, if an employee chooses to leave their job and retire.

 

Attrition's Benefits

Attrition can be beneficial to businesses in some cases since it allows them to grow and develop. The following are some of the advantages of attrition: 

 

Producing fresh concepts

When older employees quit a company, it makes a trail for the other older employees to acquire unique and to make new concepts and planning. Having a continuous flow of new and advanced thoughts will assist to maintain your business updated and competitive.

Increasing efficiency:

When employees depart, it is sometimes clear that they did not perform well, committed mistakes, or were not as efficient as other employees. Once these people have left, the team can boost its speed, performance, and efficiency, resulting in cost savings and happier consumers.

A workforce that is suited to your needs:

Attrition helps a corporation to adjust its staff to match the demands and corporate culture. An employer must hire the correct individuals for the job in order to develop a successful firm. Every employee must adhere to the company's culture.

 

What is the formula for calculating attrition rates?

Businesses can assess attrition rates monthly, quarterly, or annually to see how many employees they lose on a monthly, quarterly, or annual basis:

 

Attrition on a monthly basis

You may figure out how many employees depart and are hired on average each month by calculating your company's monthly attrition rate. The steps to calculating a month's attrition rate are as follows:

 

Determine the number of employees on the job at the start of the month.

This is where you should begin.

Subtract the number of employees who have left.

This is your deficit, which shows how many employees have left the company or changed jobs, leaving available positions.

[Month’s beginning] - [employees who left] = [deficit]

Add the number of staff who was employed.

Then, multiply the number of employees employed by the deficit number to get the total number of employees your company had at the end of the month.

[Deficit] + [new hires] = [month's end]

Find out how many employees worked on average that month.

Divide the sum of the month's beginning and ending numbers by two. This figure represents the average number of employees at your firm during that particular month.

([month's beginning] + [month's end]) / 2 = average number of employees

Calculate the attrition rate in decimals.

To do so, divide the number of people who quit by the average number of people who quit that month. This is the decimal representation of the attrition rate.

[Employees who left] / [average number of employees] = attrition rate in decimal form

Convert the rate to a percentage.

To calculate the percentage, multiply the decimal form of the attrition rate by 100.

[Attrition rate in decimal form] x 100 = attrition rate percentage

 

How might high attrition rates be avoided?

Attrition rates are business measurements that show how quickly employees leave a company. Employees who leave frequently have a high attrition rate. Low attrition rates indicate that a company is keeping its staff for the long haul.

High attrition rates can have a variety of consequences for enterprises. To reduce attrition, corporate executives must identify the fundamental cause of attrition and devise strategies to prevent it. Businesses can take steps to avoid high attrition rates by doing things like:

 

Enhance the hiring procedure.

Businesses must hire competent and skilled staff in order to keep their employees. Employees must fit their behaviours and values with your company culture in addition to their skill set.

Pay and perks should be competitive.

Employees are more inclined to stay if they are paid fairly and receive health benefits. As an employer, make every effort to provide a pay and benefits package that will keep your employees pleased.

Praise the person.

For doing a good job, all employees can benefit from praise and recognition. Employees who feel acknowledged and encouraged in their tasks have a higher level of morale and productivity, resulting in a more positive work environment.

Allow for advancement opportunities.

Allowing people to grow their careers and achieve their professional goals is critical. Employees might benefit from professional development opportunities and trainings provided by their employers.

 

Be versatile.

Allowing versatile work hours, if possible, can help employees stay focused on their obligations. Employees with a flexible work schedule might change their working hours and possibly their location. As a result, the employee has more autonomy and freedom. Professional schedule flexibility allows employees to match their work responsibilities with their personal obligations. If employers are unable to offer flexible work hours or locations, they may be able to offer flexible lunchtimes instead.

 

Employee Attrition Caused by Various Factors

There are a variety of reasons why employees consider leaving their current employer. The following are some of the primary reasons for employee attrition:

1. Increased income and job opportunities outside of the company.

2. Employees are underpaid or are not recognised.

3. A high attrition rate can be caused by a poor work-life balance.

4. Managerial and peer incivility, resulting un inefficient team management and demotivation.

5. A higher attrition rate can be caused by stagnant career growth and poor work life quality.

6. Lack of motivation due to insufficient and inadequate working conditions.

7. Employees' premature retirement or death while on the job.

 

Conclusion

Understanding attrition is crucial since it can reduce labour expenses without factoring employee losses. The corporation might put a hiring freeze in place as the staffs retire. It indicates that when employees leave the company, they are not replaced.