Published by MBA Skool Team, Last Updated: May 26, 2020

What is Attrition?

Attrition, in Human Resource terminology, refers to the phenomenon of the employees leaving the company. Attrition in a company is usually measured with a metric called attrition rate, which simply measures the no of employees moving out of the company (voluntary resigning or laid off by the company). Attrition Rate is also referred as churn rate or turnover.

Attrition Rate Formula

Attrition rate refers to the rate at which employees are leaving an organization. This rate can be calculated as:

Attrition Rate (%)= (Number of separations/ Number of employees) * 100

It gives an idea as to how many employees are leaving the company at any given time period. It is an important factor as companies have to prepare to start recruiting for the positions which are critical and cannot be left vacant.

Employee Attrition

Importance of Attrition

High attrition is a cause of concern for a company as it presents a cost to the company. The company loses on the amount it spent to recruit and select these employees and to train them for their respective jobs. The company may also have to spend additional money to fill the vacancies left open by these employees. Hence it becomes critical for a company to keep a tab on the attrition rate which down-sizes the employee base.

Types of Attrition

Broadly, there are two types of attrition which occur in any company.

1. Voluntary- When an employee leaves the company for a better job opportunity or career growth or more pay, and leaves on his own.

2. Involuntary- If an employee is terminated from a job due to some ethical issue or lack or performance. Sometimes, a degrowing business also forces employees to quit the job, which leads to a higher rate of people leaving.

3. Retirement- Once an employee finishes his/her tenure at a company and retires. This is mostly a natural attrition that occurs and companies are prepared with succession planning.

Causes of Employee Attrition

There are several reasons why employees consider the option of moving out of the current organization. Some of the main reasons why attrition amongst employees exist are as follows:

1. Better pay & job opportunities outside the organization.

2. Improper work life balance can cause a high attrition rate.

3. Impolite behaviour of manager and peers & ineffective team management.

4. Lack of employee recognition or limited growth in current role.

5. Stagnancy in career growth & poor quality of work life can lead to higher attrition rate.

6. Inadequate and poor working conditions leading to lack of motivation.

7. Retirement or untimely death of employees when at job.

Steps to Control Attrition

Companies can take several corrective actions in order to ensure that employees stay in the company and can reduce the number of people leaving. Some of the employee retention strategies to control attrition are mentioned below:

1. Motivating employees through a growth plan.

2. Recognize employee accomplishments through rewards.

3. Expose employees to newer roles and promote training and development within the organization which helps them build their careers.

4. Taking constant feedback from employees can help positively engage unsatisfied staff

5. Continuously strategize organizational structure to remove irrelevant job positions to reduce misfit recruitment.

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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