After 20 years of service as a stenographer in a legal services organization, Avik is on the verge of retirement. After his departure, the organization intends to eliminate the position and use technology to serve their transcription needs. This is a classic instance of employee attrition in an organization. But, what is the meaning of employee attrition? What are its causes and types? Let’s find out.
Employee Attrition Meaning
Employee attrition refers to a reduction in the number of employees or staff members in an organization. It occurs when an employee leaves and isn’t replaced at all or for a significant amount of time, resulting in a reduction of the workforce. Employees may leave an organization through retirement, voluntary resignation, layoffs and professional or personal issues.
While both employee attrition and employee turnover indicate a declining workforce, there’s a difference between the two terms. Employee attrition is a natural process in the cycle of employment. Vacant positions due to employee attrition typically remain unfilled or are removed. In case of employee turnover, organizations seek to immediately fill the gaps through rehiring.
Employee Attrition Rate
The employee attrition rate measures how many employees have left an organization over a specified time frame and haven’t been replaced. There’s a simple formula organizations use to calculate their employee attrition rate: (number of employees who left / average number of employees) x 100.
A diminishing workforce can spell trouble for an organization. It can overburden existing staff members, increase hiring costs and affect the organization’s overall performance and growth. Calculating the employee attrition rate is, therefore, essential for organizations to analyze the current state of their workforce and make hiring or retention plans accordingly.
A high attrition rate means an organization is frequently losing employees, while a low employee attrition rate indicates that employees are staying on for a long time. The implied meaning of a high attrition rate is that organizations need to look into the reasons behind employee attrition and brainstorm ways to lower attrition rates.
Causes Of Employee Attrition
To fully understand the meaning of employee attrition, we need to examine the various factors responsible for it. Here we look at a few common causes of employee attrition:
One of the most common causes of employee attrition is retirement. Attrition due to retirement can become a significant concern for organizations if a large proportion of their workforce belongs to the same age group. Employees may also choose to take voluntary retirement on medical grounds or for other professional or personal reasons. It’s essential for organizations to maintain and nurture a diverse talent pool to prevent knowledge and skill gaps.
2. Poor Job Satisfaction
Job satisfaction is another significant factor that affects employee attrition. When employees don’t enjoy their job roles, are forced to work in unfavorable working conditions or aren’t clear about their responsibilities, job satisfaction takes a hit. Organizations must focus on employee engagement, equip employees with the proper tools, ensure the right jobs go to the right people, regularly offer and ask for employee feedback and implement clear onboarding processes to minimize attrition due to poor job satisfaction.
Sometimes an organization may opt to transfer employees to a new location or relocate their offices. Relocation is a common consequence of mergers and acquisitions. But, when such relocations become difficult for employees to manage, they may decide to quit. Organizations must effectively examine their relocation decisions and plan ahead to avoid losing high-performing employees in the process.
Apart from these, poor compensation, lack of employee recognition and growth opportunities and micromanaging seniors also emerge as significant causes of employee attrition. Employees may also choose to leave their organization if they’re overworked or mistreated.
Types Of Employee Attrition
Now that we know the meaning of employee attrition and its various causes, let’s look at a few prominent types of employee attrition:
1. Involuntary Attrition
Involuntary employee attrition happens when an organization opts to let the employee go. This can happen due to an employee’s misconduct, poor performance, when the organization decides to eliminate a particular job role to curtail costs or as a result of mergers and acquisitions.
2. Voluntary Attrition
The most common type of employee attrition, voluntary attrition, occurs when an employee decides to leave an organization on their own accord. For instance, employees may switch to a new job or leave because of health issues.
3. Internal Attrition
When employees leave a particular position to join another in a different department within the same organization, it’s known as internal employee attrition. Internal attrition can offer organizations insight into the workings of various departments. If the employee attrition rate for a particular department is high, organizations need to analyze the problem areas within that department.
4. Demographic Attrition
Demographic employee attrition occurs when employees from a specific group such as women, ethnic minorities and people with disabilities start leaving an organization. This attrition is a strong indicator for an organization to review and revise its rules and policies.
While high employee attrition has its drawbacks, it can also introduce dynamism within the workplace. The inherent meaning of employee attrition is that the same people don’t keep operating in the same positions in an organization for years on end.
Teamwork and effective collaboration between employees and all segments within an organization are key to keeping the employee attrition rate down. Harappa’s Managing Teamwork course will equip you with the tools to build a healthy team culture and collaborate with people with diverse work styles using emotional intelligence.
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