Attrition is the term used in HR management to describe the departure of employees from an organization for any reason (voluntary or involuntary), including resignation, termination, death, or retirement.
Attrition is a natural process within companies, measured and monitored through the employee attrition rate, which can be calculated by:
- Taking the average number of employee departures during a given timeframe
- Dividing that number by the average number of employees in that same time bracket
- Multiplying the resulting number by 100
Employee attrition vs. employee turnover
Employee attrition and employee turnover are different workplace events and should not be used interchangeably. They both showcase the rate of employees leaving the organization, with one big differentiator.
- Employee attrition refers to long-term vacancies and unrenewed positions. It is used to measure the gradual reduction of the workforce over an extended period of time.
- Employee turnover refers to positions and vacancies that should be filled again. It is used to measure how effectively an organization retains talent and onboards new employees.
Understanding different types of employee attrition
Different types of attrition can affect companies in various ways. Each type should be addressed proactively to ensure the business is unaffected.
The first step to effectively addressing attrition is understanding what type of attrition a company is faced with. There are three main types of employee attrition.
Voluntary attrition takes place when employees decide to leave their job. Voluntary attrition, especially when it affects top talent or becomes a common occurence, should prompt an HR team to take action, as it can be a sign of underlying issues. Its causes can often be controlled and addressed.
Involuntary attrition is initiated by the company when, for various reasons, an employee is let go. Although usually planned ahead of time, HR teams should know how to address the potential adverse effects on company morale that can come with layoffs or terminations.
Retirement attrition involves members of the workforce leaving their roles due to retirement. This is a natural form of attrition and is not usually cause for concern, though it should be monitored. It can highlight the need for a more diverse age range for future hires or for mentorship programs, to ensure valuable knowledge is not lost as employees retire.
Spotting common causes of employee attrition
- Insufficient compensation
- Lack of professional growth opportunities
- Poor company culture
- Lack of focus on DEIB
- Poor work-life balance
- Excessive staff turnover
- Better job opportunities elsewhere
- Personal reasons
Involuntary attrition is driven by business needs, and HR teams are usually involved in processes that cause it.
Common causes for involuntary attrition include:
- Mergers and reorganizations
- Downsizing of departments or the company
- Automation efforts
- Outsourcing of work
- Terminations (due to underperformance, breach of contract, or other reasons)
- External events, such as a pandemic or recession
Controlling employee attrition
As mentioned above, attrition is a natural part running a business. However, understanding how to control and act on it is improtant. As long as the HR teams are working on it proactively, a company can address headcount changes and ensure the best team members are retained without damaging morale.
When planning to improve employee attrition management, there are several factors HR professionals should keep in mind.
Don’t burn bridges
It’s important not to see attrition as a definitive event. Ensuring the end of employment is a positive experience for both parties will mitigate potential risks to your reputation as an employer and your company culture. To facilitate this positive approach to attrition, consider:
- Focusing on clear and transparent communication
- Investing in onboarding and offboarding processes
- Maintaining relations with former employees
- Welcoming back boomerang employees
Keep evolving your work culture
Attrition is a great learning opportunity for HR professionals and people teams. Analyzing data and insights from employee attrition can help inform new company culture initiatives and improvements. You can boost the impact of these learnings by:
- Analyzing what leaving employees highlight in their exit interviews
- Holding HR retrospectives after attrition occurrence
- Incorporating the findings of your analysis into cultural practices and documentation
- Making sure offboarding is a core part of your employee experience design
Avoid unplanned attrition
An attrition rate you planned for and are prepared to deal with will not influence your ability to retain top talent. Unexpectedly high attrition rates, however, are not as manageable and may negatively affect employee satisfaction across the company.
You can keep a healthy attrition by:
- Facilitating internal mobility
- Investing in continuous training
- Providing ongoing development opportunities
- Enabling alternative career paths
- Having annual salary revisions
- Understanding the value of perks and benefits