Employee Attrition

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‘An Analysis of Factors Influencing Attrition in the growing Economies’

In the recent decades the Indian industry has changed its outlook. The employment scene has changed its appearance. The factors like skill sets, job satisfaction drive the employment and not just the money. The employer hence faces the heat of continuous employee turnover. Continuous efforts are made by organisations to control the employee turnover rate as it directly affects the performance of the organisation as many key people leave the organisations for various reasons at crucial points. This turnover is normally known as ATTRITION.

Defining attrition:
A reduction in the number of employees through retirement, resignation or death.

Defining Attrition rate:
The rate of shrinkage in size or number.

In the best of worlds, employees would love their jobs, like their coworkers, work hard for their employers, get paid well for their work, have ample chances for the advancement, and the flexible schedules so they could attend to personal or family needs as and when necessary. But then there’s the real world. And in the real world, employees do leave, either because they want more money, hate their co-workers, want a change or because their spouse gets a dream job in another state. So, what does the turnover cost? And which employees are likely to have the highest turnover? Who is likely to stay the longest?

Impact of attrition

Direct impact: A high attrition indicates the failure on the company’s ability to set effective HR priorities. Clients and business get affected and the company’s internal strengths and weaknesses get highlighted. New hires need to be constantly added, further costs in training them, getting them aligned to the company culture, etc.,—all a challenge.

Indirect impact:
Problem for the company in attracting potential employees. Typically, high attrition also leads to a chronic or systemic cycle—attrition brings decreased productivity, people leave causing others to work harder and this contributes to more attrition. All this has a significant impact on the company’s strength in managing their business in a competitive environment. Productivity and profitability are both impacted, either negatively and positively, according to the type of attrition. The cost of hiring is sometimes not less than two to three times the salary of the employee. The impact on work progress is tremendous, particularly if a project is underway and one of the key people leaves. “It leads to dip in entire organizational efficiency, and a lot depends on how it is able to cover the setback,” Organizations should execute top of the line retention policies in the right earnest and consistency. They should be more employee-centered and look for further ways to “bond” employees to their companies. “Company performance is optimally aligned to the skills its employees possess. High attrition implies that certain necessary skills are vulnerable or are not present due to employees being lost. It results in lower than optimal levels of business performance. If the skills are constantly not available, the situation gets compounded into a crisis with key projects, revenues, etc., getting affected. Business is then reduced to just managing crisis.”

Reasons why organizations are not able to retain employees

1.Performance goals are unclear. In a fast growing team or business the focus is on getting the thing done today, but rarely are performance goals thought through and employees told as to which resources to approach for help. 2.Reward systems are not transparent. Most employees who get salary increases because they have a rare skill at a particular point of time think they got their raise for excellent performance. Can you share details about how they have been compensated? 3.Perceived equity of reward systems is low. Like it or not, employees discuss salary details and if there is any...
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