Over the last two years with the COVID pandemic, organizations have experienced the Great Resignation where millions of workers across the U.S. have been quitting their jobs every month. In August of 2021, according to the U.S. Bureau of Labor Statistics, over 4 million Americans quit their jobs.

As HR professionals and leaders of organizations, it’s now more critical than ever to learn how to attract and retain talented employees. Are you attuned to your organization’s attrition rate and retention rate? If not, don’t worry. We’ll explain how to use HR data to start tracking and analyzing this key information. 

What is Workplace Attrition

Workplace attrition is when employees leave an organization, no matter what the method. Employees leave by voluntary resignations, layoffs, not returning from a leave of absence, retirements, transfers, terminations, illness, or even death. 

The attrition rate is the measure of employees who have left an organization either voluntarily or involuntarily over a period of time. The rate is a percentage typically used as a metric for retention. The higher the percentage, the more difficult an organization faces keeping up with business goals.

Let’s be clear, however, what the difference is between attrition and retention.

They sound similar but are different concepts that require different methods and strategies to handle. Simply put, attrition is the percentage of employees an organization has lost over a certain amount of time while retention is the percentage of employees an organization has kept over a certain amount of time.

Why Attrition Rate is Important to Track

Over the last couple of years, we saw many companies needing to eliminate positions to simply stay afloat and in business. So, their attrition wasn’t necessarily a negative thing. When a business struggles, a good strategy may need to be to not replace people who leave voluntarily rather than eliminate positions. 

On the other hand, we also saw many companies that experienced attrition levels that were much too high, and it caused devastating problems, such as training gaps, loss of institutional knowledge, and a lack of continuity from position to position. 

We’ve also seen the trend of taking organizations an extraordinarily long time to fill positions. This has resulted in employee burnout, taking on extra roles and responsibilities, and lower productivity. In the end, this can negatively affect customer service levels and customer satisfaction.

If the attrition rate is high, it means the company is shrinking. The formula for attrition rate is as follows:

Attrition Rate (%) =# of Employees who have left, and position remain unfilled,
in a given period
_________________________________________________ x 100
Average # of employees in the same given period
(The line represents a division)

Causes of Employee Attrition

Not all factors affecting attrition are under an organization’s control, while some are. Here is a list of a few common characteristics:

  1. Low Unemployment: The location or industry of your organization may have unemployment rates. Even if you wanted to, you may find it impossible to replace employees that leave.
  2. Toxic Work Environment: Your company may have a few bad managers or staff that make your workplace a bad place to work. That causes a challenge for HR to keep positions filled.
  3. Business Relocation: Your leadership or business owner might make the decision to move from one state to another for better financial reasons. Not all employees will make the chance to move, so this will take time to hire replacements.
  4. COVID-19 Shutdowns: Over the last two years, your business most likely needed to layoff or terminate employees when governments required non-essential businesses to close or reduce in-person interactions with customers.
  5. Restructuring: Typically, attrition is the goal of a company when they restructure. Positions are typically eliminated and not refilled.

Tips to Prevent Voluntary Attrition

If your organization is experiencing difficulty hiring and retaining employees, which results in high attrition rates, then here are some tips to try as solutions:

  • Provide training for managers to lead teams effectively. This will help you maintain managers as well as staff.
  • Conduct a salary survey on high attrition positions or teams. If you’re paying below-market rates, it can be difficult to retain staff.
  • Revisit your benefits packages as your employees’ needs change. For instance, if you have employees with young children, they will more likely favor benefits with children in mind, such as daycare subsidies and flexible schedules to accommodate school activities.
  • Allow more flexibility in schedules. During the pandemic, employers had to adjust to allow for remote work from home.
  • Hire the right people for the job. Make sure your selection process is thorough so that you find someone who can do the job and wants the job.
  • Promote internally. Ensure you have succession plans and strategic workforce plans in place to promote people as you grow in the future.

Workforce Planning Strategies

We’ve found that many companies solely focus on their employee turnover rates. But as you’ve read, your company needs to understand why you are losing people and what you can do to slow attrition down. By understanding the causes of employee attrition at your organization and having an overview of your attrition rates, you can employ long-term workforce planning strategies to manage attrition so that it doesn’t hurt your organization. To learn more about HR data and analytics, check out Employee Cycle’s HR analytics dashboard. Schedule a demo today to learn more.