When you run a business, you will inevitably lose some of your employees over time. If you don’t replace those employees, it can lead to employee attrition. Attrition can cause issues like understaffing, low morale, burnout among remaining team members and more. Here’s what leaders should know about employee attrition and how to address it if you’re struggling to fill vacancies left by exiting team members.
Employee attrition occurs when someone leaves a company, for any reason and through any means, and is not replaced by another employee. Regardless of whether the individual left of their own volition, their departure is considered attrition if the position remains unfilled or is eliminated afterward. By itself, attrition isn’t necessarily a negative thing. For businesses that need to cut costs, not filling a vacancy (and having existing employees take on the extra work) can provide some leeway in the budget.
However, problems can arise if attrition levels are too high. Remaining team members may struggle to absorb the additional responsibilities, especially if they lack the necessary training or are already managing high workloads. This can lead to employee burnout and reduced productivity, while adding to a mile-long to-do list of tasks that cannot be accomplished without adequate staffing.
These are the main types of attrition:
While employee attrition and employee turnover are often used interchangeably, there are subtle differences between the two.
If an individual leaves their job for any reason and the employer does not fill the vacancy, this is considered employee attrition. For example, when an organization must make layoffs or restructure departments, this is typically done with the expectation that the positions will be eliminated altogether. Another example of attrition is when someone retires, and the company decides not to hire a replacement for them.
Attrition is not necessarily a negative thing, especially in circumstances that are beyond the employer’s control. However, high attrition rates or patterns in employees leaving may be worth exploring further for underlying causes that need addressing.
Turnover refers to when an individual leaves their position and the employer intends to fill the position. Whether an employee has been fired because of poor performance or they are leaving voluntarily to pursue a different opportunity, this falls under the category of turnover if someone else is hired to replace them.
While employee turnover is often caused by similar reasons as attrition, turnover is often viewed more negatively and can cause more pressing issues. In addition to overburdening existing employees to complete the necessary work, staff turnover can be expensive.
The cost of hiring and training new employees, as well as the inevitable reduction in productivity, can burden an organization’s budget.
Common causes of employee attrition include the following:
>> Learn More: How to Create a Strong Company Culture
Attrition rates vary across industries, subsectors and job titles. However, certain industries experience higher attrition rates than others.
As reported in the Bureau of Labor Statistics’ latest Job Openings and Labor Turnovers (JOLTS) report, these are the 10 industries with the highest number of layoffs and discharges as of August 2023:
While industry trends can be a helpful starting point, business leaders should look within their own companies to understand their attrition rates and how to rectify them.
To calculate your company’s attrition rate over a period of time, take the number of employees who have left (without having their positions filled), then divide that number by the total average number of employees. Multiply this number by 100 to obtain your percentage of attrition.
For example, consider a company with an average of 90 employees year over year. If 11 employees left without a replacement in the last year, the attrition rate calculation would be as follows:
11/90 = 0.12 or 12 percent
When compared to employee turnover, in which vacancies are typically filled, employee attrition has its pros and cons.
On the surface, it may seem odd that there are pros to attrition, but they do exist. Here are a few to consider:
There are also several negatives of attrition to consider:
To address attrition within your organization, start by identifying pain points for high-performing employees and those at high risk of leaving, said Ian Cook, vice president of research and strategy at Visier.
“Analyzing indicators such as team makeup, skill sets, roles, tenure and compensation ratios, combined with performance ratings, helps determine common pain points of high performers so organizations can take steps to address voluntary [attrition] among this group,” Cook told us. “With the right data in hand, employers can then create tailored engagement plans, implement more one-on-one engagement between employees and their managers, and realign with high performers on the specifics of their role — all steps that have a powerful impact on retention.”
Here are a few additional steps you can take to promote employee satisfaction and retention.
Management is a separate skill set that should be cultivated in all company leaders. Investing in management training is a win-win: It gives leaders the confidence and skills they need to effectively manage their team while allowing employees to enjoy a healthy manager-employee relationship that helps them to grow their skills.
Money can often be a deciding factor in both hiring and retaining top talent. Staying up to date on market rates can allow you to offer competitive (yet fair) compensation for your employees.
While exit interviews are commonplace and can give insight as to why someone has decided to leave your company, stay interviews can keep them from leaving in the first place. A stay interview is designed to help leaders understand why employees choose to stay with an organization and which areas can be improved.
The perks that initially drew in your employees may not be the same ones they are seeking now. Revisit your benefits package every few years, considering your staff’s changing needs and any new perks that may be available. For example, younger employees without families may not need paid childcare, but it may be attractive to those same employees five years later if they choose to start a family.
In the wake of most nonessential workers telecommuting during the pandemic, many teams have found that their jobs can be done just as effectively from home as from the office. Offering flexibility in remote work or start hours can help employees better manage their work-life balance, increasing the likelihood that they’ll stay. [Read related article: 7 Ways to Create a Happy and Motivated Workplace]
Prioritizing a positive employee experience, as well as continuously assessing employee satisfaction and making adjustments accordingly, can reduce voluntary attrition rates.
One of the best ways to retain employees is to ensure that you attract the right candidates and clearly share expectations at the onset. When you craft job postings that accurately describe the job’s responsibilities and specifications, you’re more likely to find candidates who are happy to join and stay with your company.
Sean Peek contributed to this article. Source interviews were conducted for a previous version of this article.