Employees come and go whatever industry they are in! There is no stopping them because they move on to better job opportunities or other issues such as retirement, sickness, or misalignment with leaders and achieving the flexibility they desire.

According to Gartner, the total annual employee turnover is likely to jump by 20% from the pre-pandemic annual average.

All companies face employee attrition on some or the other day. The questions that arise are:

- What is employee attrition?
- How to calculate employee attrition rate?
- What are the types of employee attrition?
- How can you manage or reduce employee attrition?

All your questions will be answered!! Go through this quick read where we have talked about employee attrition, employee attrition rate, and tips for managing employee attrition.

What is employee attrition?

Employee attrition, also known as employee churn, happens when the number of employees leaving an organization exceeds the number of replacement employees. It is often beyond the employer’s control to retain such employees.

A high attrition rate indicates that something is majorly wrong in your organization and you need to fix it ASAP to increase your productivity.

Employee attrition affects the workforce and talent pool of your organization and needs attention on priority if it is exceeding a certain percentage.

Now you must be thinking, What is a good attrition rate? What is the maximum percentage where employee attrition can be ignored? How to reduce attrition of employees? Scroll to the next section to get your answers. Now let us learn how to calculate employee attrition rate!

How to calculate employee attrition rate?

Employee attrition rate can be calculated by a simple mathematical formula. Wondering why is it important to calculate the employee attrition rate.

Well…it is important because employee attrition analysis shows why your employees are unhappy and leaving at an alarming rate and what you can do to manage employee attrition.

The simple formula for calculating employee attrition rate is:

What is a good Employee attrition rate?

The attrition rate is the percentage for the calculation of employee attrition.

Is there something like a good attrition rate? To answer this question, yes, there is!

A good attrition rate for your company is dependent upon the sector you are in and also the season, for some companies hire temporary employees in their peak seasons.

Employee attrition rate above 20% (on average, considering all sorts of sectors) can affect your company and reduce productivity. Sprinting back to the main question, 20% is a good and healthy employee attrition rate.

Employee churn is expensive and replacing those employees can put a giant financial strain on your organization. You must eye the attrition rate at your company to avoid this problem happening to you.

What are the types of employee attrition?

Now, there are five different types of employee churns that take place. Let us delve into the details of the types:

1. Voluntary Attrition

When an employee leaves the company on their own whim, it is voluntary attrition. The most common reason for employee attrition that you might have heard of is to join a new company, move across the country, or have health reasons.

However, attritions due to toxic work environments, no employee-friendly policies, and biases also fall under voluntary attrition. If the company plans to replace the vacant position with another employee, it is known as employee turnover.

2. Involuntary Attrition

In my opinion, it is the worst kind of attrition where the employee is laid off from an organization. There can be multiple reasons for such type of employee churn such as ethical misconduct, elimination of the position for cost-cutting, or filtering out non-performing employees.

Talking about the other side of the story, involuntary attrition is good for companies as it reduces costs and sifts the talent pool for the best employees.

3. Retirement Attrition

Retirement attrition is already a self-explanatory term. To concise, it includes the attrition of employees who have reached their retirement age.
Retirement attrition is usually not too bad for companies, however, for example, if a company has a large chunk of same-age employees in the same department, the attrition rate will reach sky-high at one point of time and reduce productivity.

4. Internal Attrition

Internal attrition is a positive type of attrition where an employee either changes to another department of the same company or gets promoted.

You must be wondering if the employee is not leaving the company, how is it a type of attrition? Well, in easy terms, it is not attrition for the whole company but a particular department is surely affected.

5.Demographic Attrition

This type of attrition happens when people of the same age, sex, minority, older professionals, and specially challenged people are leaving in groups.

This is a cultural phenomenon that happens all the time in organizations. As a company, you should try to maintain an environment that is conducive for all your employees.

Reasons for employee attrition

What causes employee attrition? You must have already figured out the reasons for employee churn, but let's make a list of the top reasons for employee attrition for a quick recap.

Poor Salary Compensation: If you cannot manage to keep your employees satisfied with the compensation, the attrition rates for your company are definitely going to peak. We are living in the 21st century which is highly oriented towards growth, there are umpteen opportunities floating in the market, that your employee can bag and leave your organization.
No Work-Life Balance: The most common reason for employees leaving is failing to maintain a work-life balance. If you overwork your employees, they will not be happy and feel greatly unsatisfied, thus being more prone to leaving.
No Growth Opportunity: When an employee feels like the work ladder at your organization is stagnant and there are no more steps to take, they will explore better opportunities and leave your organization.
Underappreciation: Humans are innocent creatures who require a little appreciation for their morale boost. If you are unable to give little treats to your employees even on minor successes, the attrition rate is bound to increase.
Toxic Culture: Apart from work-life imbalance, toxic culture is another leading cause of employee churn. Bias, low minority representation and not feeling a sense of belonging often pushes valuable employees to resign.

How to manage employee attrition to foster a pleasant work environment?

How to reduce attrition of employees? Employee attrition analysis has brought out the top 7 tips that can be applied for managing employee attrition.

A Good Compensation Policy: As discussed in the reasons for employee attrition, a well-revised and yearly increase in the compensation policy can keep your employees satisfied and not force them for exploring other options.
Work on Employee Benefits and Perks: Providing employees with health insurance, life insurance, flexible working hours, monthly office outings, and small perks such as bill reimbursements will make the employee think twice before leaving your organization.
Upskilling and Reskilling: Employees often start feeling obsolete and wish to move to other companies for upskilling. Conduct training sessions and webinars for employees so that they can learn new skills within your organization and foster your work environment. Skill assessment tools have been in the market for a few years now. They have tools that can analyze the skill gaps of the employees and upskill them accordingly.
Ask for Feedback: An appreciated and motivated employee is likely to be well-pleased with their organization.
Give Appreciation: Apart from work-life imbalance, toxic culture is another leading cause of employee churn. Bias, low minority representation and not feeling a sense of belonging often pushes valuable employees to resign.
Recruit the Right People: Often due to a shortage of time, companies tend to compromise in their hires which leads to employee churn. Take time and hire the right people for reducing employee attrition.
Pay Attention to Employee’s Career Growth: Sketching out a career path for your employees will make them invested in your company and reduce their chances of leaving.

Conclusion:

The bottom line is that employee attrition is bound to happen, but you as a company can play a small role in preventing the churn. Keeping your employees content, fulfilled, and accomplished will definitely lower the attrition rate for your company!

Top 7 Tips for Managing Employee Attrition