The Two Causes of Attrition

Did you know that experts estimate the cost of turnover to be three times an employee's salary? This simple statistic alone explains why it's so important to develop strategies to retain good employees. And the first strategy is to find out why people leave your company and to keep track of the reasons people leave.

Attrition is an expected yet dreaded cost of business. However, if you understand why employees leave, you can accept unavoidable turnover and prevent avoidable turnover. Essentially, there are two causes of attrition, which can be grouped into two broad categories—functional attrition and preventable attrition.

1. Functional attrition

Functional attrition is unavoidable, inevitable turnover. Examples include employees who retire, employees who leave for a spouse's job transfer, and employees who leave because of health problems or to care for sick relatives. In other words, functional attrition is caused by circumstances that can't be controlled. You must expect and accept this type of turnover.

2. Preventable attrition

Preventable turnover, on the other hand, can usually be controlled and avoided but often isn't. Poor hiring practices, misguided policies, and inflexible corporate attitudes are some of the preventable reasons people leave companies. Some examples of preventable attrition are listed below.

a) Lack of job satisfaction - Anna is resigning. She wants to advance her career, but her position is a dead end. She's a great employee and likes her company, but her goals don't match with her position's potential. You could have avoided her resignation by moving her into a position with growth potential.

b) Stressful work environment - Stan works long hours with few rewards. He's expected to work 60 hours a week to meet his deadlines. Stan feels undervalued and overworked. He's looking for another job. You could prevent this by setting deadlines that are achievable in a 40-hour workweek.

c) Outside influences - Dawn was approached by a recruiter who said he could find her a job paying twice what your company is paying her and with far better benefits. She'll take him up on his offer. You could prevent this by paying employees what they're worth and having a comprehensive benefit plan.

d) Conflict with a manager - Bruce and his manager just don't get along. Bruce is a valued employee and so is his manager. Bruce wants to resign. You could prevent this by assigning Bruce to another department or working with the manager and Bruce on conflict resolution.

Preventable turnover occurs when your company can change a policy or find a solution to keep employees from leaving but doesn't. People leave companies for a variety of reasons. Below are some examples of employees who have chosen to leave their companies.

Functional - Shirley retired after 15 years as her company's receptionist. This is an example of unavoidable, or functional, turnover. Eventually, employees will retire, and you can't do much about it.

Preventable - Andrew resigned because he considered his work environment to be unsupportive. This is an example of avoidable, or preventable, turnover. If Andrew is a valuable employee who is leaving because he doesn't feel supported, then his company needs to look at ways to fix this problem.

Functional - Ronald left his company to move to the city his wife was transferred to. This is an example of unavoidable turnover. Unless Ronald can transfer to another office in the new city or telecommute, his company can't do much to retain him.

Preventable - Donna left her company because she isn't satisfied with her advancement opportunities. This is an example of avoidable turnover. If Donna, a valuable employee, is leaving because she has no career opportunities, her company should review its career development and advancement strategies. Remember, the first step to managing turnover is to understand why valuable employees leave your company. Once you understand the causes of attrition, you can accept cases of functional attrition and recognize the need to look within your organization for ways to avoid preventable attrition.