{"id":7245,"date":"2022-01-27T12:40:05","date_gmt":"2022-01-27T12:40:05","guid":{"rendered":"https:\/\/mailinvest.blog\/index.php\/2022\/01\/27\/how-your-companys-attrition-rate-could-be-impacting-your-business\/"},"modified":"2022-01-27T12:40:05","modified_gmt":"2022-01-27T12:40:05","slug":"how-your-companys-attrition-rate-could-be-impacting-your-business","status":"publish","type":"post","link":"https:\/\/mailinvest.blog\/index.php\/2022\/01\/27\/how-your-companys-attrition-rate-could-be-impacting-your-business\/","title":{"rendered":"How Your Company’s Attrition Rate Could Be Impacting Your Business"},"content":{"rendered":"

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Happy employees are the key to a successful business. According to the University of Oxford<\/a>, happy employees are 13% more productive. High employee satisfaction can go a long way towards your bottom line.<\/p>\n

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Of course, when your employees are not happy, that shows too. You\u2019ll likely see a slowdown in productivity, a change in the work environment, and you may start seeing an increase in employee turnover<\/a>.<\/p>\n

What have you noticed in your own organization? Are employees loyal and in it for the long haul, or are they leaving in droves? If you\u2019ve been seeing more and more employees leaving the company in a short amount of time, it might be time to calculate your attrition rate and examine what\u2019s really going on in your organization.<\/p>\n

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There are a variety of metrics that you can use to determine how your employees are doing. Many of them focus on productivity metrics such as progress to goals. However, these productivity metrics don\u2019t tell the whole story.<\/p>\n

That\u2019s why it\u2019s important to understand your attrition rate to help determine the health of your organization. Let\u2019s discuss what an attrition rate is and how to lower it.<\/p>\n

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Attrition Rate<\/h2>\n
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The attrition rate measures the rate at which employees leave an organization during a specific period of time. It\u2019s commonly referred to as a churn rate and can provide insightful information regarding employee satisfaction.<\/p>\n<\/p><\/div>\n<\/p><\/div>\n<\/p><\/div>\n

Understanding your team\u2019s attrition rate is important for the health of your organization because having a high attrition rate can have devastating impacts on your team\u2019s success. With too many experienced team members leaving at once, you run the risk of losing valuable organizational knowledge and losing revenue from repeated hiring and onboarding costs.<\/p>\n

Now that you know what an attrition rate is, let\u2019s review how to calculate it for your organization.<\/p>\n

How To Calculate Attrition Rate<\/h3>\n

To calculate the attrition rate, take the number of people who have left your company (or team) and divide it by the average number of employees over a period of time. You then multiply that figure by 100 to present it as a percentage.<\/p>\n

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Let\u2019s say at the end of the year you had 500 employees in your organization. During the first quarter of the following year, 100 employees left. This would leave you with an attrition rate of 20% for that time period.<\/p>\n

It\u2019s worth noting that a team\u2019s attrition rate can be subjective based on the size of the company. Though there is no single number that is considered a good or bad attrition rate, later on, we\u2019ll cover the important factors to keep in mind when reviewing your team\u2019s attrition data, and when to take action.<\/p>\n

Before we dive into that, we need to understand that not all employee exits are created equal. There are four different types of attrition and each one may be saying something different.<\/p>\n

Types of Attrition<\/h2>\n

People leave jobs for various reasons \u2013 some voluntary and some involuntary. Let\u2019s look at the four categories of attrition and what they mean.<\/p>\n

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  1. Voluntary attrition<\/strong> occurs when an employee chooses to leave a position on their own accord.<\/li>\n
  2. Involuntary attrition<\/strong> occurs when an employee has been released from the company.<\/li>\n
  3. Internal attrition<\/strong> occurs when employees move from one position to another within the same company.<\/li>\n
  4. Demographic-specific<\/strong> attrition occurs when there is a noticeable pattern of a specific group leaving a team or company during a given time period (this can be age, gender, ethnicity, parental status, etc.)<\/li>\n<\/ol>\n

    Internal attrition is generally not a cause for concern. If employees feel comfortable staying within the same company, it\u2019s often because overall, the culture is good and they are just looking for a promotion or new opportunity.<\/p>\n

    This can, however, be an issue if an entire department makes an exodus to other areas of the company. This suggests that you may have a management problem in that area.<\/p>\n

    Next would be involuntary attrition. These employees are being asked to leave the company. They may have been performing below expectations or weren\u2019t a good fit for the role. When this happens, it\u2019s a good idea to review hiring procedures and guidelines to ensure your team is hiring individuals who have the best chance at being successful in their role.<\/p>\n

    Voluntary attrition is much more concerning. If you have a large number of employees leaving the company at once, there may be an issue with your company culture, management, or compensation. In a bit, we\u2019ll discuss how to identify and correct these issues.<\/p>\n

    Finally, if you are seeing demographic-specific attrition, there may be a very big problem at play. When people of the same gender, age group, ethnicity, sexual orientation, parental status, or any other personal characteristic are leaving en masse, it may be because of systemic issues in how your company is structured and operated. A close examination of your culture and operations is warranted.<\/p>\n

    High Attrition Rate<\/h3>\n

    As mentioned above, attrition rates are relative depending on the size of the company. To understand if your attrition rate is higher than it should be, compare your attrition rate to your retention rate for the same time period. Your retention rate measures the number of employees who have remained in your organization.<\/p>\n

    To calculate your retention rate, divide the number of employees who have remained in your organization by the number of employees you started with (this should be the same figure you use to calculate your attrition rate) and divide this number by 100.<\/p>\n

    If you suspect a high attrition rate, it\u2019s important to compare your numbers to other companies in your industry, in your geographic location, and within the company, compare departmental attrition numbers to other areas of your business. These comparisons will alert you to any problems or may put your mind at ease.<\/p>\n

    Aside from the possibility of having an unhappy team, there are several other problems that can occur when your attrition rate is high.<\/p>\n