What is Employee Attrition and Turnover? Types, Rate & Reduction Practices

Adie Marais

The migration of employees to and from a business is natural. According to LinkedIn, employee turnover is the highest it’s been in a decade, with approximately a third of the workforce job hunting. These unusually high rates of employee attrition and turnover can understandably be a concern for companies.

There are a variety of reasons for both attrition and turnover, many of which might be unknown or misunderstood by employers. With so many possibilities and opportunities out there, modern employees are ready to abandon ship if they’re not fully satisfied. Or, perhaps they’re simply looking for greener pastures.  

This can reflect badly on the company, who then must invest more time and money into recruitment. Ultimately, high rates of turnover are unsustainable in the long term. So, how do you reduce the rates? Well, keep reading to find out! 

What Is Employee Attrition?

The Cambridge dictionary defines attrition as “gradually making something weaker and destroying it, especially the strength or confidence of an enemy by repeatedly attacking it”. 

With this in mind, employee attrition refers to organizations that don’t replace employees who resign. Ultimately this diminishes the size of a workforce as they are leaving the workplace at a faster rate than they are being hired. Thus, it makes a company weaker and gradually destroys it - just like the definition says. 

There are multiple reasons why an employee might decide to leave a company. For example, they might be unhappy in the work environment or feel there is a lack of professional growth. Equally, they might be losing confidence in the company’s market growth or feel there are weak leadership and management styles. 

The reasons for employee attrition could be voluntary or involuntary. So, it’s often considered one of the unavoidable costs of doing business. 

Employee Attrition vs Turnover

Many people confuse the two terms, and there is indeed a certain amount of overlap. The key difference is reflected in the size of the workforce. 

A company experiencing attrition is not filling the newly arising vacancies fast enough to maintain the size of the workforce. On the other hand, employee turnover is addressed immediately through rehiring. 

What Is Employee Attrition Rate?

What Is Employee Attrition Rate?

The employee attrition rate is a measure of how many left a company compared to the average number employed that year. This is reflected in a simple equation: (Number of Attritions/Average Number of Employees) x 100. 

How to Calculate Annualized Attrition Rate of Employees?

If you wish to calculate your employee attrition rate, complete the following steps.

  1. Calculate how many employees your company had at the start of Q1
  2. Monitor how many left the company for any reason throughout the financial year
  3. Keep track of how many individuals were hired that year
  4. Conduct a final headcount at the end of Q4
  5. Calculate the average number of employees for that year by adding the initial headcount to the final one and dividing by two
  6. Take the number of attritions and divide them by your number from step 5. Multiply this by 100 to acquire your employee attrition rate as a %

According to Gallup and a LinkedIn analysis, the normal employee turnover rate is approximately 10%. However, this varies depending on the industry sector, with technology, retail, and media experiencing notoriously high turnover rates of 13.2%, 13%, and 11.4% respectively. How does your business compare?

Different Types of Employee Attrition and Turnover

Different Types of Employee Attrition and Turnover

A survey of HR leaders showed that improving employee retention was a priority for 87% of respondents. To be able to improve retention, companies must first understand the reasons behind attrition.

So, here are the 5 different types of employee attrition

Attrition Due To Retirement

Attrition Due To Retirement

As an employee reaches the end of their professional life, they will retire and leave a company. This is natural and is to be expected. So, in small numbers, the loss is usually statistically too small to count under attrition.

However, the loss of employees to retirement shouldn’t be ignored. If you lose a sizable number of employees in one go, this will impact your attrition rate. 

There could be a number of driving factors behind this that are not always related to age. While some people may have to retire early due to involuntary reasons such as illness, many are choosing to do so because they could afford to. For example, in the UK, out of 3.6 million who retired early, 26% of them did so because they had saved enough to be able to.  

Another reason could be that after having acquired decades of experience, an employee might choose to pursue a career as an independent consultant. This is becoming a common trend among senior professionals, who are looking to use their industry knowledge while having more flexibility.

Voluntary Attrition

Voluntary Attrition

The employee initiates the exit in the case of voluntary attrition. It is therefore the most common type of attrition. The employee simply decided to leave the company on their own accord. Perhaps they didn’t like the work environment or felt overworked and underappreciated. 

Some employees simply choose to leave because they don’t know what they want to do in life yet and are still ‘job hopping’ and experimenting with their careers. This is especially the case with millennials. They’re looking for job-fulfillment and aren’t afraid to jump ship if they don’t get it. 

Luckily, there are things you can do to prevent this and keep your employees more engaged and satisfied. 

Involuntary Attrition

Involuntary Attrition

On the other hand, involuntary attrition is a decision made by the company rather than individual employees. There are a variety of factors that might drive a business to do this. 

These may include but are not limited to: 

  • Mergers and acquisitions 
  • Structural reform
  • Layoffs
  • Reduction in workforce
  • Job position elimination

In some cases, a certain employee may have demonstrated workplace misconduct. Following this, it can reflect badly on the company to keep them on so they are asked to leave.

Internal Attrition

Internal Attrition

Internal attrition can be at the hands of a company or the individual. In this case, employees are quitting their jobs in one department to join another within the same business. 

If one department has experienced a high rate of attrition, it can be cause for concern. This might indicate that the team is failing in certain respects and merit an investigation. Is the manager inadequately skilled? Is there a hostile environment? Are they failing to meet their targets? This is something your HR department can investigate and identify solutions for.

However, in certain cases, this can be a positive progression for a company! It might be re-routing talent towards more profitable areas. Also, it can lead to improved employee-job fitment in the long run.

Demographic-Specific Attrition

Demographic-Specific Attrition

This is of particular concern to companies. Diversity leads to innovation, and innovation leads to growth. An equal-opportunities workplace should therefore investigate if large quantities of a particular demographic are resigning. This includes employees such as women, ethnic minorities, veterans, older professionals, or people with disabilities.

In such a case, an investigation should begin immediately to identify the root cause of the problem. No one should feel uncomfortable in the workplace due to their demographic, and, if they do, it can reflect badly on the company. 

A simple solution like working towards a more positive and inclusive workplace culture might be all you need to address the problem.

How to Reduce Employee Attrition and Turnover?

 Check out the "Data Backed (Damn Good) ways of Reducing Employee Turnover"

Optimize Recruitment

Optimize Recruitment

From the get-go, a company should set out clear and specific requirements of the job. Set goals, and outline tasks and responsibilities. This way, you can avoid disappointment as employees know precisely what to expect from a job. Then, fewer resources are wasted on continual recruitment. 

According to Gallup, it can cost between half to two-thirds of the role’s salary to recruit and train new employees following the loss of a high-value employee!

So, making sure that your recruitment strategy is on point and that there are no unclear expectations from either party will help you to hire the right candidates and improve retention. 

Improve Work Conditions

Improve Work Conditions

Top performing companies provide development opportunities, benefits for employees, and positive working cultures. This type of working culture is arguably one of the most important deciding factors as to whether an employee will stay at or leave a company. 

So, invest in providing these for your employees to ensure that their needs feel accommodated and respected. Consider flexible working schedules, remote work privileges, and assistance programs. 

You could also implement benefits and incentives as a retention tactic. This will improve employee motivation as they feel valued and recognized.

Employee Engagement

Employee Engagement

If your talented employees don’t feel like they have opportunities to progress professionally and expand their skill set, they might look elsewhere. This is one of the key causes of attrition, with 22.2% of employees in a 2018 survey citing this as their reason for leaving. 

Ensure that you provide training and constructive feedback so that they can improve their working style and see more professional success. 

Without engagement strategies, employees will feel bored and unproductive in the workplace. You must therefore make sure that you’re doing everything you can to create a positive, open work environment where your employees can collaborate and develop their skills. In turn, fewer employees will resign due to feelings of being under-appreciated.

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Conclusion

Employee migration and turnover are natural. It only becomes an issue in the case of attrition as this usually indicates a flaw in the system somewhere. Investigating this is crucial for the root cause is not always obvious. 

You can then come up with solutions to directly tackle the problem. The golden rule is to communicate and engage with your employees. A respectful, happy workplace is one that is unlikely to see a high loss of talent!

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