HR Terminology

Attrition

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  7. Attrition: Definition, Causes, and Impact

Attrition refers to the gradual reduction in the number of employees in an organisation due to various factors such as resignation, retirement, or termination.

It is a natural part of workforce dynamics but can pose challenges for companies, mainly if it occurs at a high rate.

Understanding the reasons for attrition, such as dissatisfaction, lack of career growth, or poor work-life balance, is crucial for HR professionals to develop effective retention strategies. These may include implementing employee development programs, improving workplace culture, offering competitive benefits, and providing opportunities for advancement. Managing attrition is essential for maintaining a stable and motivated workforce.

FAQ

Attrition can be caused by various factors, including better job opportunities elsewhere, dissatisfaction with job roles or organisational culture, lack of growth or advancement opportunities, personal reasons such as relocation or family commitments, retirement, or organisational restructuring.

Attrition can have both positive and negative impacts on organisations. While moderate attrition can lead to fresh perspectives, skill diversity, and cost savings, high attrition levels can disrupt workflow, reduce morale, increase recruitment and training costs, and affect organisational productivity and competitiveness. 

Attrition rates are typically calculated by dividing the number of employees who have left the organisation within a specified period by the average number of employees during that period, then multiplying by 100 to express it as a percentage. Additionally, organisations may track voluntary versus involuntary attrition and analyse exit interview data to identify trends and root causes.  

During times of economic uncertainty, organisations can focus on enhancing communication with employees, providing transparent updates about the organisation's financial health and future plans, offering flexible work arrangements or alternative benefits to mitigate job insecurity, and investing in upskilling and reskilling initiatives to retain valuable talent.

While high levels of attrition can pose challenges for organisations, moderate attrition can also create opportunities for workforce rejuvenation, innovation, and organisational growth. The key is for organisations to understand the reasons behind attrition, proactively address any underlying issues, and strategically manage their workforce to maintain a healthy balance between retention and turnover.

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