Attrition Rate? Reason & Consequences

Any business, whether it is small or large depends on the stability of its employees. When employees leave an organization then it created a challenge for HR, management and overall process. Hence attrition rate becomes as important measure for the organization. We will try to understand attrition rate meaning and consequences here.

What is Attrition Rate?

We can also call it employee turnover rate, which means the rate which tell us that how much the percentage of employee’s leaving the organization.

I can be calculate at any specific range of time that is Monthly attrition rate, Annual attrition rate etc.

Here is the Attrition rate formula.

Attrition Rate = (Employees Left ÷ Average Employees) × 100

Average Employee means the count of employee at starting of that specific period plus the count of employee at the end of that specific period   ÷ 2

If percentage is high it means the organization has high attrition rate vice-versa.

What is the importance of Attrition Rate?

Attrition rate is not a number only it affect the growth of the company and give various impact.

HR people calculate attrition rate and on the basis of that they are able to analysis the below things.

1. What is stability of Workforce
2. How much employee is satisfied with the overall organisation
3. Is there any need of Training
4. What is the overall work culture
5. Anticipate the Future hiring Plan

What are Types of Attrition

High or low Attrition is not always good or bad for the organization it also depends on other factor as well , let us know some different types of attrition rate.

1. Employee is leaving the organisation by his choice that is voluntary.
2. When company ask to leave the organisation that is Involuntary
3. The case where employee move from one department to another department Internal attrition
4. When employee reached to his retirement date –Retirement attrition

What is the Reason of High Attrition?

Employee leave the organisation because of many reason some of that we can control. Here I have mentioned the most common reasons.

1. Getting low salary and poor benefit
2. No Growth opportunity
3. Working hours are more
4. Poor Management and Leadership
5. No Work life Balance
6. Toxic workplace

How we Can Reduce Attrition?

There are some steps by following them we can control the attrition rate.

1. Offering good completive salaries and benefits to employees
2. Provide career growth and training opportunity
3. Increase work life balance
4. Reward and recognized good performer
5. Motivation program

What are the consequences of High Attrition?

Here is some important consequences of High Attrition rate

1. Hiring Cost =>  Organization spend a good amount of money on recruitment, interview, onboarding, training and other stuffs
2. Loss of Skilled Resources => When an experience employee leave the organization the also take their skill and knowledge with them so this is type of loss.
3. Productivity Decrease =>  By loosing experience manpower overall productivity decreases
4. Down Team Morale => When employee leave the organization frequently then team loose their morale.
5. Customer Satisfaction decrease =>  If employees are frequently leaving the Job then yes it will impact the customer service and due to that we can loos our valuable client.