You found our guide to employee attrition.
Employee attrition is the practice of leaving roles unfilled following workers’ departures. Employers will often eliminate positions, restructure departments, or implement a hiring freeze instead of bringing on new staff. There are many reasons for employee attrition, including cost-saving and organizational change.
This article covers:
- causes of employee attrition
- ways to handle employee attrition
- staff attrition factors
- staff attrition vs staff turnover
Here is everything you need to know.
Causes of employee attrition
Here are the main causes of attrition in the workplace.
Retirement is one of the main causes of employee attrition. When senior staff leave the workforce, employers sometimes choose to redistribute responsibilities to other team members instead of appointing a direct replacement.
The knowledge and experience earned throughout the course of the retiree’s career is hard to pass on in a limited timeframe. Dividing duties and teaching multiple staff members one part of the job has a higher success rate than teaching one team member several new skills and processes at once.
Also, sometimes the employer wants to overhaul or eliminate the position, and would rather wait for the team member to retire than invest in retraining or severance.
How to manage: Start succession planning early. Determine which team members will assume which duties, and leave plenty of time to train. Budget in a buffer in case unforeseen circumstances make the retiree leave earlier than expected or the transition hits hurdles. The remaining employees should feel comfortable and confident assuming the retiree’s workload.
You can give your departing colleague a proper sendoff by hosting a virtual retirement party.
Many times, employers decide not to hire new staff for financial reasons. Often, attrition is due to layoffs or budget cuts. The average cost-per-hire for new employees is $4129 according to the Society for Human Resource Management. Companies can cut costs by holding off on hiring, or eliminating the position altogether. If the organization is facing financial difficulties, then investing in new staff may not make sense, especially if previous staff were let go for budgetary reasons.
Or, perhaps the company cannot keep pace with the competitive pay for certain positions, and want time to rethink strategy and reallocate resources.
How to manage: Firstly, take an active role in reassigning responsibilities. Expecting staff to take on extra work without any acknowledgement or direction can cause tension between management and staff.
Cutting staff also means redispursing the workload. Attrition may cause employees to assume more responsibilities and work longer hours, however management should also streamline processes to accommodate the staffing changes.
For example, upon halving the staff, a restaurant might eliminate less popular dishes from the menu and keep meals with similar ingredients to cut down on prep time.
Prolonged overwork can lead to employee turnover, costing companies more money in the long term.
3. Life Events
Life events are often the catalyst for career changes. Professionals resign from roles for reasons like starting families, taking care of sick relatives, or tending to medical issues. The employer may want to hold the position in case the employee decides to return, especially if the situation is temporary.
Sometimes it makes more sense to keep a role open for a seasoned worker rather than taking a chance on a new team member. Getting a new hire up to speed may take the duration of the leave with training costs to boot. Companies may choose to wait it out to see if a team member will return after temporary time off. Not to mention, keeping the job open may prevent the team member from joining a competitor.
How to manage: Firstly, be sure the departing colleague passes on their knowledge before leaving. These preparations will help staff operate in the interim, and will safeguard the company in case the sabbatical turns permanent.
Consider hiring temporary employees to help with the workload. This approach eases the burden on remaining staff, creates an opportunity for an eventual employee return, and nurtures a strong candidate in case of a future hiring need.
Also, be sure to check in with the employee on leave from time to time to gain a clearer picture of whether or not a return is likely.
4. Career progression
Occasionally when a team member receives a promotion, management decides not to immediately fill the previous position. Perhaps the role is brand new, and the team member will continue to perform certain duties of the preceding position. Maybe there is no longer a need for the job the team member was previously performing. Or, perhaps the duties can be redistributed to the rest of the department or other teams.
Or, depending on the complexity of the role, replacements may take time to train, and management may want to gradually level up the successor before officially bestowing the title.
How to manage: Employers should be active partners in team members’ career planning. While managers may not know precisely when a role may open or a team member may apply, it should not come as a surprise that team members want to try for a promotion. Managers who are unprepared for this possibility may pressure a team member to remain in a role longer than desired, which can cause tension or even lead to resignation from the organization. Discussing career timelines during one to one meetings is one way to avoid surprise staff shuffles.
5. Evolution of the organization
In an ideal world, a company would decide on a mission, hire staff, and slowly scale while gradually accomplishing goals. In reality, the business landscape shifts constantly, forcing employers to react. To survive, organizations must be flexible, nimble, and willing to change. In the current climate, companies frequently pivot and choose entirely new business models and objectives. As a result, roles evolve or disappear.
This occurrence is especially common in startups, however is not unheard of in more established institutions.
When an employee decides to pursue different opportunities, an organization may choose to reprioritize and refocus, and decide not to refill the position. Or, the company may require employees to transition into entirely new roles based on the changing needs of the business.
How to manage: Psychological safety is an important ingredient of productivity. Employees do not want to wonder whether or not they will have a job in a year’s time. Rather than laying off staff due to changing needs, repurpose your staff and move employees into new roles. Cross-train employees to make these transitions more seamless.
Also, think ahead and project your future staffing needs so that you can plan accordingly. Reading books on business strategy can help you anticipate and adapt to these changes.
6. Industry shift
Changes within the business or industry landscape can mean that replacing an employee no longer makes sense. For example, current trends show that brick and mortar retail is in decline. If team members in charge of store expansion retire or resign, then it might make more sense to reallocate resources to direct-to-consumer departments instead of replacing existing roles.
If projections show that one area of the business is expected to slow in coming years, then it may make sense to slow hiring until operations ramp up.
How to manage: Pay attention to industry trends and forecasts. Determine how long you will realistically need particular positions. You can incentivize employees to resign earlier or later to optimally time their departure. In case schedules cannot align, consider appointing an interim replacement to wind down the role’s duties once the original employee moves on.
Reading change management books can help you navigate these shifts.
7. Skill gaps
When higher level positions are left vacant, it may take a significant amount of time to find a candidate with the required skill sets. Employers may choose to leave the position open indefinitely rather than compromise on quality. Or, managers may want time to level up and groom an internal candidate for the role.
If an organization has trouble keeping the position filled consistently, then the organization may choose to nix the role altogether and come up with a new gameplan.
How to manage: Institute a long notice period for executives and highly skilled staff so that you can properly prepare for their departures. This will allow a headstart to start searching for candidates. Keep the pipeline filled with qualified candidates. Also, have a contingency plan for operations in case your core team members need to leave unexpectedly.
Ways to handle employee attrition
Here is more general advice on how to navigate attrition due to any cause.
1. Succession planning
Succession planning is the process of identifying future leaders and preparing them gradually for future positions. To practice succession planning, you must know or be able to estimate when existing employees plan on retiring, resigning, or moving on. Develop a game plan of who will assume responsibilities, and start training early. The process often requires re-imagining roles, as it is unrealistic to expect a successor to perform the position in exactly the same manner as their predecessor. Vacancies are not always predictable, however making a habit of this practice positions the company for smoother transitions.
2. Organizational restructuring
It is often easier to expand or reconfigure existing employee roles than to hire externally. Current employees already have company and industry knowledge and are acclimated to the company culture. Although there may be a settling-in period where teammates adjust to new responsibilities, this transition usually happens more quickly than the assimilation of a new employee.
Not to mention, this occurrence offers the opportunity to cut excess and operate more leanly and efficiently.
Before restructuring, carefully assess current workloads and career plans. Then, arrange tasks and roles in an order that makes the most sense to organizational goals, while still considering teammates’ individual needs.
Here is a helpful guide to restructuring and reorganizing from The Harvard Business Review.
The departure of a highly influential or skillful employee can change a company’s destiny. The same claim can be said for high churn in one particular area of the company. When an organization loses a key member or a large volume of staff in a short period of time, it might make sense to reassess and decide whether current goals are reasonable and sustainable at this time.
A company may decide to refocus and outline new goals and objectives rather than try to replace what has been lost. Choosing a new mission and vision can take time. Putting a pause on hiring can help leaders draw up a game plan and gauge actual needs.
4. Temporary workers
When organizations do not want to refill roles permanently, hiring temporary or contract workers is one solution. Companies can lessen costs by bringing on talent only when necessary. This approach can relieve the burdens on existing employees and prevent overwork and increased turnover.
This approach is not a one-size-fits-all solution. There is a tradeoff to hiring temporary help. Company culture is often less cohesive, and knowledge and training gaps can sometimes cost money in the long run. However, if a company has temporary or seasonal staffing needs, then hiring for a limited time is an option.
To make the process run more smoothly, pare down the position to the essential functions and streamline the training process.
Also, consider hiring departing employees on a part-time or consulting basis.
Attrition should not come down to a matter of, “employees are leaving and the company can save money, so we will not rehire.” First, decide whether or not the position is essential and requires an immediate replacement. Then, calculate the long term costs of leaving the position open vs filling it. Be sure to factor in elements like overtime, quality control, and potential turnover due to overwork. Use this analysis to decide which roles should be filled, which should be eliminated, and which should be reduced or reimagined.
Here is a helpful guide from Indeed on calculating attrition rates.
Factors affecting staff attrition
Here are some of the main factors that affect employee attrition.
1. Age of workforce
Since retirement is one of the main causes of employee attrition, age is a major factor. An industry full of retirement-age workers may need to ramp up recruiting efforts to keep up with the exodus of an aging workforce. However, technological advancements or process innovations may mean that companies can operate with fewer staff. Organizations may use retirement as a way to scale down the workforce without resorting to layoffs.
The economic climate can dictate whether or not an organization rehires. If looking to trim costs, companies may choose not to replace resigning teammates. Similarly, the economy affects whether or not folks can afford to retire. Older employees working longer than expected can skew attrition projections and prompt organizations to take more direct action.
Even if companies do not eliminate jobs, leadership may wait for signs of economic recovery before resuming a normal pace of recruitment.
3. Perks and benefits
Perks and benefits can have a significant impact on attrition. Without a 401-k or IRA, staff may continue to work long past retirement age. On the flip side, employees may be more hesitant to retire or resign if they rely on an employer-provided benefits package.
Also, perks and benefits can shorten or eliminate the need for employees to take leave. For instance, child care assistance and parental leave enables parents to stay active in the workforce, and adequate health insurance can prevent conditions that would otherwise force employees to leave jobs.
Benefits can affect whether or not professionals continue to work, so it makes sense that these factors would also influence attrition. For more information, check out our guide to staff perks and benefits.
New industry developments and changes in the field may mean that there is no longer a need for certain roles to be filled. This phenomenon occurs most often in declining industries, for instance, print media, or in fields where new technological developments mean automation can replace manpower. Organizations often choose to scale down the workforce by closing out the employee lifecycle when it reaches its natural end instead of starting anew.
Staff attrition vs staff turnover
The terms staff attrition and staff turnover are often used interchangeably. However, while there is some overlap, there are subtle differences between the two concepts. Worker attrition usually refers to when employees leave the company for natural reasons such as retirement or career progression. Worker turnover tends to refer more to employees leaving for voluntary reasons like pursuing new opportunities or fleeing undesirable work environments.
Often though not always, attrition tends to be more on the employer’s terms, while turnover is typically caused by employees’ decisions to leave.
In the case of attrition, employers generally do not rehire. Organizations either leave positions vacant for some time, or eliminate roles altogether. With turnover, employers rehire to replace resigning colleagues.
Noting the subtle differences between employee attrition and employee turnover can help leaders strategize more effectively. While turnover requires an investment into recruitment and training, attrition offers an opportunity to trim costs and reimagine organizational operations. Leaders can take the company in a new direction without resorting to layoffs or causing staff discontent.
However, attrition should always be a guided process. It is the job of management to guide the change. Leaders can collect employee input on the process. However, managers should never leave it solely to employees to pick up the slack without any instruction and figure out how to operate with a smaller staff. Attrition should be strategic, and should involve communication.
Next, check out this guide to employee engagement best practices.Employee attrition
FAQ: Employee attrition
Here are answers to common questions about employee attrition.
What is employee attrition?
Employee attrition is a practice where employers do not replace employees who retire or resign. Organizations offer balance out employee attrition by scaling operations, reconfiguring roles, and assigning responsibilities.
What causes staff attrition?
Attrition typically occurs at the end of the natural employee lifecycle for reasons such as retirement, organizational restructuring, or financial factors.
What is the difference between employee attrition and employee turnover?
The two terms are often used interchangeably. However, the main difference between employee attrition and employee turnover is that organizations usually choose not to rehire with attrition, whereas employee turnover inspires cycles of recruiting, interviewing, and hiring.
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