people working therein. • Companies have an extra ordinary flair to recruit and retain highly capable employees. • These companies are described as “Talent Magnets”. Attrition • Attrition is the reduction in employees in an organisation due to retirement, resignations and deaths. • Attrition rate measures the number 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 may be voluntary and involuntary. Average head count in the given month Attrition (Per Month) % = ------------------------------------------------------- *100 Number of Separations in the given month CLASSIFICATION OF EMPLOYEE ATTRITION I-Voluntary versus Involuntary Attrition:
Voluntary on the part of the employee (resignation) or
Involuntary (requested resignation, permanent layoff, retirement, death). Voluntary reasons another job that offers more responsibility, returning to school full time, or
improved salary and benefits are more controllable
Involuntary reasons, employee death, chronic illness, or
spouse transfer. Are more uncontrollable.
• Most organizations focus on the incidence of voluntary employee attrition precisely. • Interested in calculating the costs of voluntary attrition, because when these costs are known, an organization can begin to focus attention on reducing them. II-Functional Attrition versus Dysfunctional Attrition:
• Having categorized employee attrition as
voluntary, many Organizations take the next logical step; • to determine the extent to which the voluntary attrition is functional /dysfunctional for the organization. functional /dysfunctional • Functional attrition • Functional retention may represent the continuing employment of high performing employees, • Employee attrition is functional to the extent that the employee‟s departure produces increased value for the organization. • Functional retention adds value to the organization because employees work well together, work gets done efficiently, and organizational interests are furthered. • Dysfunctional attrition • Dysfunctional retention may represent the continuing employment of poor performing employees • It is dysfunctional to the extent that the employee‟s departure produces reduced value for the organization. • Retained employees who neglect to engage in important workplace behaviours or who engage in deviant behaviours correspond to dysfunctional retention. • Dysfunctional retention may be costly to the organization not only because effort is withheld and morale among all employees may be negatively influenced, but also because deliberate acts intended to harm the organization may ensue. Dyfunctional attrition is the exit of good performers, exit of top performers – employees who leave an organisation on their own discretion are examples of voluntary attrition – Exit due to alternative job opportunities – High performers who are difficult to replace represent dysfunctional attrition, • It affects the performance, creates costs to the organisation and is disruptive to the routine functioning of the organisation • High performers who are difficult to replace represent dysfunctional attrition. • low performers who are easy to replace represent functional attrition Sectors of Attrition • Leisure and retail sectors depict high attrition rates and low job tenure of 1.5–2 years, as they employ large numbers of transient employees with limited scope for development and progression. • Finance, information technology and professional services industries such as consulting, insurance, etc. employ large number of employees with specialised skills, knowledge and expertise. These employees have job tenure of 2–2.5 years and are much sought after, as there is shortage of skills. • Manufacturing, engineering, transport industries and large organisations with 5,000+ employees have longer job tenure of 3+ years Issues affecting turnover in the Indian companies • global competition, • shifting loyalties of new generation professionals, • shortage of skilled engineers – fitness for use directly by the sector, etc • opportunities with higher compensation, • challenging roles and improved employee value propositions • the dissatisfaction push the employee away from the existing organisations Reasons for attrition • lack of opportunities for personal and career development, • issues with working relationships, • compensation and benefits. Impacts of Attritions • High Financial Cost • Survival as an Issue • Exit Problems and Issues • Productivity Losses and Workflow Interruptions 88 • Service Quality • Loss of Expertise • Loss of Business Expertise • Administrative Problems • Disruption of Social and Communication Networks • Job Satisfaction of Remaining Employees • Lost Image of the Organization Organizational Attrition Management Strategies • Manager Retention Practices- • represent the manager‟s actual behaviors on the job and have little to do with the amount of classroom training received by employees • create a climate so that the employee is retained and committed on a long term basis. • Measurement and Accountability – uncovering the potential causes of attrition – identify top performers, reward and recognize talent – Non performers put on performance improvement exercises • Organizational Retention Systems – equity of pay scales. – recruiting systems and processes – committed on a long term basis • Organizational Attrition Management De-merits of attrition 1. Losing staff: some of the functions are merged to eliminate redundancy. When there is merging of functions, there is a need to let go off some of the employees. 2.Losing credibility: many links with vendors and other customers would see that vendors become more hesitant in continuing business with them. reditors would be even thinking twice whether to proceed • overall bottom line. • it would directly hit the production or services as it would be reduced when compared to the previous. Though it may seem that it will increase efficiency it may not be so.
• Opportunities=those who are held back in the
organisations cannot look forward to opportunities for growth within the framework….. those who wish to see a growth in their career as the options are limited or nil. • Impact the decision-making process – The view or opinions of those who departed cannot be gathered or would be missing. – missing those practical decision making which were part of the company productivity and profitability. • public perception: – create a negative impact on their image in the eyes of the public. – as unprofitable or failing business thereby decreasing clients due to misconceptions. • a drop in revenue, repeat customers and new customers would refrain from building business. • structures get changed. With such disruption, the flow of information for executing projects gets hampered as decision making and exchange of ideas are not carried out effectively. Merits • financial stability could be restored as there would be cost cuts to additional expenses • operating at reduced costs by avoiding unnecessary expenditures and looking into details of any process to see that there is no unnecessary costs. • management needs to pay more attention to the low performing employees so that they could be targeted first. • team gets smaller –allows to focus on rebuilding the new team by focusing on training, incentive programmes. • Thus create loyalty, motivation and empowers them directly impacting on productivity. • chance for the business to re look at its operations and strategies for growth.