Attrition is the gradual loss of employees over time. It is generally perceived as a negative because of the costs and challenges involved in hiring new employees to take over jobs. However, not all attrition is bad in the long run. Positive attrition results when the loss and replacement of an employee is better for the organization.
The simplest perspective on positive attrition is that if the new employee is more qualified, capable and productive than his predecessor, the change is positive. In some cases, companies hire employees that aren't good talent fits for the company or position. After a while, these employees become engrained and know enough to do basic work tasks. However, when these employees leave, it gives the hiring manager a chance to make a better selection and find someone who can exceed expectations.
Along with talent upgrades, turnover can bring new blood to the workplace and prevent or combat staleness in the company culture. Companies that never have turnover can become set in their ways and be reluctant to consider and discuss new ideas or evolving trends. Losing a longtime employee and gaining a talented, knowledgeable and forward-thinking employee can protect against a company becoming a dinosaur before its own eyes.
The major factor in negative attrition is costs. The process of losing and replacing an employee usually has both direct and indirect costs. Turnover in one position can cost several thousand dollars between exit interviews, job postings, interview processes, new hiring paperwork and training. Plus, you have indirect costs that result from lower production by a newer employee until he settles in to the job. Additionally, newer, inexperienced employees can make mistakes and cost you customers and business.
On the whole, consistent employee attrition can result in knowledge decay in an organization as well as destruction of the work culture. As the total levels of knowledge and experience fall, company production often falls as well. Remaining employees feel stress from the pressure of picking up the slack for new, less experienced workers. This creates internal conflict. Stress, poor results and criticism from leadership can turn a positive workplace into a negative environment.