Factors affecting attrition of employees
Employees retire, resign or reach the completion of their contracts and no longer form part of the workforce. Understanding the pace at which people move out of a company is crucial as high staff turnover can have a negative impact on organizational performance.
In addition to loss of resources expended in training employees, a high turnover rate over-burdens team members, impacts employee morale, and affects the employer's value proposition.
Here are some reasons why workforce attrition may occur:
- Career changes
- New job opportunities
- Overwhelm due to understaffing
- Poor employee-to-job fit
- Personal motivation
- Strategic organizational changes
- Attractive employment opportunities
- Slowing economy
What is employee attrition rate?
Employee attrition rate measures the speed with which employees depart from an organization without replacement. Employee turnover rates above 20% may need evaluation by your HR team.
How to calculate workforce attrition rate:
- Conduct a headcount at the beginning of the year to know how many employees the company begins with in a given period.
- Track the total number of employees who leave throughout the year.
- Record the number of new hires across the year and sum up the total.
- Find the monthly average of active employees by dividing the total number of staff present each month by 12.
- Compute the number of attritions as a percentage of the average number of existing employees.
Here's the formula:
Employee churn rate = Number of employees who leave/Average number of employees x 100
4 ways to reduce workforce attrition in an organization
Workforce attrition changes the dynamics of a team and can be an indicator for improvement within an organization. High churn rates mean that employees are leaving the company frequently while low attrition rates suggest that employees are happy with their present work environment. Employee attrition rate will also vary depending on the size of an organization.
If your company is experiencing a high attrition rate, consider some of these strategies for employee retention:
- Improve working conditions by providing amenities and commendations to employees.
- Offer flexibility with hybrid work — if possible.
- Accelerate career growth with learning opportunities.
- Encourage employee feedback and address concerns.
- Offer a competitive annual salary and other benefits your organization can afford.
- Assess new hires for a company culture fit
Improve employee retention with Pathlight
Maintaining a low attrition rate helps organizations build skilled, knowledgeable, and high-performing teams. By partnering with Pathlight, Stitch Fix was able to cut attrition by 33% and improve customer satisfaction (CSAT) and employee engagement
Learn more about our performance intelligence solution and how you can improve employee experiences with the right workload, training, and feedback.