What is attrition?

When a company’s workforce is reduced during a specific period—usually one year—it is known as attrition. Attrition includes all separations from the organization, including resignations, terminations and retirements. If a person is replaced, the separation does not count toward the attrition rate.

Why is employee attrition important?

Employee attrition is a key metric in Human Resources. A high rate of employee turnover is expensive for a business, because the costs for recruiting, hiring and training replacements are typically tied to the rate. Employers who reduce their rate can save money on labor costs and increase the profit margin.

What causes the attrition rate to increase?

A high turnover rate could be due to low engagement, poor management, or inadequate compensation and benefits. It could also indicate that competing employers are more attractive in the labor market.

Is attrition the same as turnover?

Employee attrition refers to the voluntary or involuntary departure of employees from an organization, while employee turnover is a measure of the rate at which employees are replaced by new hires.

For employers, it is important to compare the rate of employee turnover within their industry. Employers who see an increase may be able to enact programs to reduce employee turnover, which will in turn increase their profit margin.

How can a company increase employee engagement to improve retention?

To create an employee engagement program, you should follow these three steps:

1. Map the employee journey

The employee journey is everything that happens from the moment a job candidate applies for a position to the day he or she leaves. A thousand little things–from initial application to post-employment follow up–combine to create a positive or negative experience.

By mapping the employee journey, you can determine where your company falls on the spectrum of engagement. Of course, the journey isn’t the same for every employee. The employee’s manager, department, and team influence it. Improving the employee journey is the first priority when it comes to engaging employees.

2. Conduct ‘stay’ interviews

‘Stay’ interviews help you to identify weak points in the employee journey. These interviews are most effective when conducted by someone in HR, who can ask questions that will encourage employees to be candid about their relationship with their manager.

3. Automate HR to remove obstacles to engagement

Automating HR processes can improve employee engagement. Employees are constantly performing administrative transactions—punching in, turning in timecards, and receiving a paycheck. They request shift trades and vacation time and enroll in a health plan and use their benefits. An integrated HR system streamlines these processes for employees by providing transparency about HR-related information and allowing them to perform transactions themselves.

HRMS (Human Resources Management Systems) can be used to track both attrition and turnover, as well as efforts to reduce them.

See also

Additional Resources



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