ATTRITION Definition:

The unpredictable and uncontrollable, but normal, reduction of work force due to resignations, retirement, sickness, or death. 2. Loss of a material or resource due to obsolescence or spoilage. Read more: http://www.businessdictionary.com/definition/attrition.html#ixzz2ZVhSRiZC The meaning of attrition in a work environment refers to a reduction or decrease in the size or strength the work force, or a gradual reduction in labor occurring through means other than firing employees. Both of these explanations can be applied to activities addressed by human resources, and both can have positive and negative ramifications for a company. Human resources teams factor attrition rates into their department budgets to account for potential losses in productivity and the costs associated with replacing departing employees.

Reasons for Attrition

Attrition can be encouraged when it is part of a strategic business maneuver to reduce costs. It can also manifest itself when employees voluntarily leave their jobs. This can happen for a variety of reasons: employees may move or retire, take another job, be illsuited to the position they were hired to fill, or want employment that offers a more equitable work-life balance. Others may experience a lack of the freedom or autonomy they require to perform at expected levels. Human resources professionals inadvertently encourage attrition when they condone or ignore maltreatment of employees by management.

Upside of Attrition
Some business strategies use attrition as part of a restructuring plan. Rather than carrying out traditional layoffs, some businesses choose to reduce their workforce through the more gradual means of attrition. This is less consequential to a workforce that contains employees approaching retirement age. When they leave the company, a replacement is not hired to fill the vacancy, and the job position may be retired. Some business owners and managers work with their HR professionals to create equitable positions into which remaining employees can potentially be promoted. This creates positive employment options that did not previously exist.

Downside of Attrition
When attrition occurs, the remaining duties and job responsibilities can burden employees and managers with additional duties with no increase in pay. Even if HR staff members distribute the extra workload throughout other departments, they may witness managers moving on to other companies. The potential for employment promotion may no longer exist when positions are retired due to attrition. Employee morale can suffer, a situation that HR should work to remedy before it becomes unmanageable.

Attrition Rate Calculation

The attrition percentage rate is determined by dividing the number of employees who left their jobs during a specific period by the average number of employees during the same period. Results can be computed for monthly, quarterly, biannual or annual periods. Consistent rates of attrition are viewed as the norm for a specific business. If high attrition rates remain outside the parameters of an accepted strategic business plan, human resources staff members may be required to evaluate the causes and find solutions. Attrition, in Human Resource terminology, refers to the phenomenon of the employees leaving the company. It 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). It is also referred as churn rate or turnover. Attrition can be calculated as:

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.