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What is Attrition?

A voluntary and gradual reduction of employees (through resignation and retirement) who are not then replaced, decreasing the size of the workforce.

Attrition is different from employee turnover. Whereas a high turnover rate can cause company setbacks and a need for new hires, the attrition process occurs inevitably with a steady number of employees going into retirement or resigning. More robust companies are capable of withstanding minor employee reduction and typically won't seek immediate staff replacement.

Attrition can give HR leaders the opportunity to reevaluate and realign their recruiting and hiring tactics with company goals and values. Attrition can also open opportunities to attract top talent or individuals who perhaps better fit for specific purposes.

Attrition Rate Formula

The rate of attrition refers to the percentage change of employees leaving an organization. This figure can be found with the following formula:

Attrition Rate (%) = No. of separations/ No. of employees) * 100

This presents a representation of how many employees are leaving a company at certain period of time. This is a significant factor for companies to consider when determining whether they ought to begin recruiting for more critical positions that must not be left unfilled.

It is up to the human resources department to measure the rate of employees leaving a company. With this information, they can establish the necessary strategy for maintaining buoyancy in the transition from old employees to new recruits. It may be beneficial and cost-effective to allow for a gradual reduction in the number of employees.

Increasing automation of work

Downsizing does not have to lead to lay-offs and firing staff, it can be part of the process of transitioning from bigger teams to a smaller more dynamic workforce. Attrition is also facilitated with the rise in automation. As tasks become evermore efficient and streamlined, there is less demand for the previous rates of employees to get work done. The automation of many processes has contributed to a reduction in the number of workers required in an organization. As elder staff continue into retirement or resignation, there are systems in place that can absorb the redistribution of work.

Types of Attrition

Generally, there are three types of attrition that occur in any organization.

  1. Voluntary - An employee leaves the company for a more desirable job. This might mean an opportunity to improve their career prospects or better pay. As such the person leaves on their own.
  2. Involuntary - When an employee is terminated from a job due to some ethical issue or lack of performance. Alternatively, a failing business may have to release staff or employees may have no choice but to leave.
  3. Retirement - Should an employee finish their tenure at a company in order to retire. Considered a natural attrition, this occurs, typically with plenty of time for a company to prepare a succession plan.
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