Attrition

What is Attrition?

Attrition is when an org gradually loses its human resource assets due to resignation, downsizing, and retirement.

What is Attrition Rate?

The employee attrition rate is the rate at which the employees leave a particular organisation. (Here, the employees may leave through resignation, downsizing, or retirement.) If there is a total of 200 employees working at your organisation and 20 of them leave within the year, the attrition rate will be 10%.

(20/200 x 100) % = 10%

How to calculate Attrition rate?

The attrition rate will be calculated as:

Number of people leaving / Original number of employees x 100

The above formula will help you calculate the annual attrition rate.

To calculate the average attrition rate, you can use the formula mentioned below:

Number of employees leaving within the month / Average number of employees x 100

What are the reasons of Attrition?

There are many reasons that contribute to attrition. There are two most common reasons being retirement and downsizing but something like resignation at scale could be because of something like:

• Low pay scale
• Poor employee benefits
• Lack of skill growth
• Poor workplace environmental conditions
• Impractical work-life balance, and
• Relocation

What are the types of Attrition?

In accordance with the reasons, attrition can be categorized into two types:

1. Voluntary Attrition: When employees choose to leave an organisation as per their own will, the instance is known as voluntary attrition. True voluntary attrition happens when people resign to pursue a new job or to relocate.
2. Involuntary Attrition: When the employer or the hiring organisation decides to let go of employees, the instance is one of involuntary attrition. Downsizing is the most common reason for this sort of event.

What is Customer Attrition?

Customer attrition, unlike the ones you’ve learned about above, is when multiple customers leave a business all at once. Be it a long-term, loyal customer, or a new one, customers eventually start to cut ties with a business. The event of customer attrition is also known as customer churn, customer turnover, customer defection, and customer cancellation.

What is the difference between Employee Attrition & Customer Attrition?

As the names clearly suggest, employee attrition refers to the instance where there is a flush out of employees from the company whereas customer attrition refers to the instance where there is a considerable deficit of customers from a business.

Is Attrition good or bad?

Attrition is generally a bad thing for the concerned organisation. As the company loses valuable assets, it can mean a significant deprivation of funds and deliverables. However, it can also be a good thing at times. If the workforce is leaving to pursue a place where they would get better growth opportunities and a better work environment.

How to Stop Attrition?

There are actually a lot of things you can do to avoid attrition. (Of course, most of these action points are for the long run and won’t work while the process of attrition is in action.) Here are some examples:

1. Keep the employees engaged.
2. Deploy better employee benefits and perks.
3. Prepare an awards and recognition plan.
4. Appreciate the employees and celebrate milestones.
5. Offer flexibility within policies.
6. Provide compensation wherever you can.
7. Implement a better feedback structure.