What Is the Meaning of Employee Attrition?

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Employee movement is an unavoidable aspect of doing business. Workers graduate from school, leave the area or move on to other opportunities better suited to their skills. All of these are signs of healthy employment patterns and are not indicators that your company has a problem with attrition. However, issues can sometimes manifest in the workplace that cause your employees to leave for other reasons.

TL;DR (Too Long; Didn't Read)

The employee attrition definition can be shown in excessive departures unrelated to healthy employment patterns.

What Is Staff Attrition Rate?

Staff attrition rate, or employee attrition rate, is easy to calculate for any given time period. You simply need to know the number of employees who have left the company and your average staff size for that same period of time. Take the number of employees who left and divide that by staff average size. Then, take that number and multiply it by 100 to get your attrition rate.

Example for Annual Attrition:

Number of Employees Who Left = 3
Average Staff Size = 30
3/30 = 0.1 * 100 = around 10 percent attrition for the year

Having these numbers is all well and good, but what they mean is mostly dependent on your industry. Depending on what type of business you run, 10 percent attrition may be good, normal or problematic.

To find out if your attrition rate is reasonable, you can check the Bureau of Labor Statistics or check with an organization such as the Society of Human Resource Management. These entities keep track of employment movement and inform our national employment rate. They break these numbers down by industry as well so you can compare against your industry to see if you have an attrition issue.

Classification Matters With Attrition

Depending on the size of your company, you will have an extensive range of employees and may be unable to provide a simple attrition number. For example, if you own an engineering company with multiple locations, a central HR facility and a roving support team, you may not want to include your administrators, technicians and regional managers in the same attrition statistics. When you want to single out these specific specialties, you can search by that particular industry.

For example, if you want to know your technician attrition rate, you would compare the number against technicians instead of general engineering positions. This would give you a better snapshot of your attrition rate within this specific part of your business. When you drill down to this level, you may notice that there is an unbalanced rate of attrition in one area or the other.

How much attrition hurts you will vary but ultimately comes down to how much it costs to train and hire one group of employees over another. You shouldn’t assume that salary equates to the generation of revenue. In general, you want to keep your revenue-driving employees successfully engaged. This becomes truer the more that these particular employees have cost in training, so the costs of training should always be included when you are dealing with determining employee value.

Addressing Employee Attrition

If you realize that you have an attrition problem, there are a few ways that you can address the issue. Before you do anything, however, you will want to be as specific as possible with your data. To stay with the engineering firm example: If you have trouble keeping your technicians, then you first need to look at the data regionally.

Your regional data may make it clear that your turnover is tied to a specific region. From there, you should be able to keep going deeper into your organization to find glaring retention issues. How you proceed with these retention issues is going to be different depending on how widespread the problem is.

Company-Wide Attrition

When your retention issue is company wide, you will have to look at your basic hiring package. For example, if you realize that you are losing too many of your level two technicians company wide, then you should consider your benefits packages and pay rates and compare those to your competitors. You may see that you are paying significantly lower salaries than what other companies are paying. You may also realize that it’s your benefits package that is lacking.

Unfortunately, if this is the issue, you will have to make sweeping changes or resign yourself to frequently losing members of this part of your workforce. If you do choose to keep your pay and benefits packages the way that they are, be aware that this may cause the employees that do stay to become overworked and stressed, and this may cause them to leave even if they are superficially fine with the pay and benefits offered.

Understanding Regional Attrition

If you find that your issue is regional, you will treat it in much the same way that you treat the retention issue in the larger company. Perhaps when you started hiring in a particular area, it was during a recession. As the economy of that region recovered, you lost your paying edge, and thus you are losing employees as a result.

Perhaps your attrition issue has to do with one specific location more than it has to do with your policies. In this case, you should proceed with some level of caution, as this is indicative of a toxic work environment. You want to be fair to all of your employees, but you also need to have your trained workforce retained. Toxic workplaces are also open to litigation if that toxicity ends up causing illegal activity. Stepping in as soon as possible for a specific team issue is a must.

Handling Attrition in a Team

The most effective way of handling team attrition is to speak directly to that team. If you have access to exit interviews, reviewing them should be your first step. Many times, employees will be remarkably candid as to their reasons for leaving your company. If they agreed to have you reach out to them with future questions, you should not hesitate to do so.

When conducting these extended interviews with your prior employees, it is vital that you listen before coming to the defense of policies or personnel. You want the ex-employees' input on why they left your company. Perceived problems are a valid reason for employees to leave. If that is the case, then perhaps you need to make sure that any misconceptions are cleared up.

Management and HR Techniques

If it turns out that there is an employee who comes up repeatedly as being problematic in your review of exit interviews, then you shouldn’t immediately choose to terminate that employee. Instead, you should take the time to speak individually with each person on your team to get perspective. If your level is too far above that particular employee, you should consult with HR to see if you could get an outside person to assess the problems.

Hiring an outside efficiency expert is an excellent way to get to the crux of your retention problem without making your employees feel as though they cannot speak freely. Once interviews are assessed, then consult with your HR department again to ensure that you are following all of your legal obligations.

If an employee is a problem in that he is contributing to a toxic, possibly law-violating workplace, you do not need to use a performance improvement plan. However, if the offending employee is making mistakes in good faith, you should take the time to put a performance improvement plan in place.