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.

Do Managers play a major role in causing attrition?

If you're losing good people, look to their immediate supervisor. More than any other single reason, he is the reason people stay and thrive in an organization. And he's the reason why they quit, taking their knowledge, experience and contacts with them. Often, straight to the competition. "People leave managers not companies," write the authors Marcus Buckingham and Curt Coffman. "

But i would like to cite an exception. Indians constitute a major chunk of the workforce (both blue collar and white collar) in Gulf Countries. In the past, blue collar workers have been the majority but over the past few years, the percentage of white collar workers have gone up. Many of the people work under tyrannical supervisors or managers but still they stick with the same employer for years. For them, compensation is the only priority and they are willing to undergo any hardship. So why is there an aberration? I invite readers to give their comments..

Attrition Blues

Hema was skilled, punctual and efficient and had the right qualifications for the job, so she was hired to do it. By the third week, she began to look for a new spot. Despite the work being what she wanted to do, the pay being just right and the company feeling she was doing it well enough, something irked her enough to put in her papers within six months. The company management still doesn't know why she left and is busy looking for her replacement.

It's a fact that it's people that add value to organizations. It's also a fact that humans are a restless species who, unlike the immovable Banyan Tree, cannot stay rooted in one place. People need to move on for one reason or another and the organization stands to lose. Attrition is inevitable but a high rate of employee turnover spells `Unproductivity' in capitals. If a company gets associated with the Here today, gone tomorrow syndrome, it will be inferred that there is something wrong with itself and not with those ships that have passed in the night!

Agony of Attrition

Apart from causing the company a monetary loss and breaks in their day-to-day operations, attrition contributes to knowledge transfer, which is a loss that is horrific and adversely affects business. In the war for talent, the company suffers many casualties and requires focused strategy to keep workers on the job. Why employees are jumping the ship is a matter for concern - is something wrong with the ship, the captain or the weather?

Attacking Attrition

To deal with employee turnover, the first step is to find out what's making them leave and what can be done to stop them from leaving.

Money matters: Could it be the pay? Maybe the organization did not follow up on the promised appraisal and salary hike. Maybe it's time to raise the bar for the green-circled employee and win his loyalty. Maybe it's time to lay on the perks.

Pressure levels: Too much or too little to do? Some employees just can't take the pressure. Others leave because they are underused. Match performance expectations with ability. Create opportunities for those who can scale up but avoid overloading the scales.

Growing pains: What are the growth prospects you offer? Make sure that the employees are learning and building experience. They should have the experience of adding to their skills through work, training and responsibilities.

Ego massage: Self- esteem is a big key and HR should focus on giving credit to achievers. Employees feel they are valued and build organizational loyalty. Have in-house counseling and workshops on soft skills to increase effective communication and build self-awareness.

The battle against attrition should start from every employee's first day of work. A wise company could begin with a flower in a soda bottle as a welcome and carry it forward with performance appraisals, mentoring programmes, counseling, smart training and appropriate incentives and rewards. It's all about instilling a sense of loyalty and drive in employees to keep them on the job.