Employee attrition and retention are like peas in a pod—attrition is the peas, retention the pod. While they’re not the same, they need to be addressed as a package deal.
When employee retention is low, we have a problem: employee happiness is down, engagement is off, or maybe the economy is strong and people are leaving for greener pastures. When employee attrition is high, however, we might not have a problem—but we do have something to address.
Let’s go into:
- Attrition vs. retention
- Calculating employee attrition
- What high attrition says about your business
- How HR leaders can address attrition
Attrition vs. retention
Retention is a complex metric that, on its own, doesn’t tell us much about organizational health. To understand the nuances, we have to look deeper into retention data, including turnover and attrition.
While retention tells us how many people are leaving, employee attrition tells us what that means for the organization. Because attrition isn’t a measure of headcount—it’s a measure of strength.
How to calculate employee attrition rate?
In a business context, attrition measures churn. For HR, it’s a measurement of how many employees leave, voluntarily or involuntarily, and aren’t replaced.
To measure employee attrition, you divide the average number of departures in a given period over the average number of employees in that period and then multiply by 100 to get the percentage.
What this shows you is the number of employees left after departures. In other words, how much manpower you’re losing. Because attrition isn’t measuring retention or turnover—it’s measuring how quickly and efficiently your organization is able to replace employees who have left, or if they’re able to at all.
What employee attrition rate say about your business?
Attrition isn’t always a bad thing—and, more likely than not, it’s only telling you what you already know. High employee attrition rates mean that talent is leaving your organization faster than you can replace them, which usually points to downsizing or layoffs.
Attrition differs from employee turnover because, while a high turnover often reflects poor company practices, can cause setbacks, and lead to a need for new hires, attrition occurs inevitably, due, for example, to employee retirement or resignation. A robust company can withstand such minor employee reduction and probably won’t seek immediate staff replacement.
HR leaders can help their companies benefit from attrition by incorporating these practices:
- Plan for varied employment. HR leaders can adapt to the nature of the job market by researching and collecting data to plan for different types of employment within the company. Perhaps essential core workers can become full-time employees, while others can work as contingent workers or independent contractors. HR leaders should consider, as always, the company’s and the employees’ needs.
- Retain employees crucial to company success. After identifying the most influential and essential employees for company growth and advancement, HR leaders can focus on engaging and retaining them. Through providing competitive compensation packages, opportunities for personal and professional growth, and establishing a company culture based on trust, appreciation, and respect, HR leaders can increase the chances of keeping valuable employees.
- Incorporate a warm offboarding program. HR leaders can integrate an offboarding program that allows employees to leave on good terms. It’s important to send off departing employees with gratitude and well-wishes for the next step in their professional journey. This way, employers exemplify integrity, and employees can serve as positive ambassadors for their ex-employer.
- Leave the door open for employees to return. HR leaders can work with managers and executives to develop policies and a company culture that welcomes boomerang employees. High-quality employees who leave a company and later decide to return have the potential to contribute their valuable knowledge, experience, and enthusiasm.
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Don’t be afraid of attrition
Attrition is a natural part of the employee lifecycle. High employee attrition rates mean that there’s room to grow—not that you’ve been doing anything wrong.
By tackling attrition’s causes, you’ll be able to keep your business strong in the face of employee departures.