INTRODUCTION In the best of worlds, employees would love their jobs, like their co-workers, work hard for their employers, get paid well for their work, have ample chances for advancement, and flexible schedules so they could attend to personal or family needs when necessary. And never leave. But then there's the real world. And in the real world, employees, do leave, either because they want more money, hate the working conditions, hate their co-workers, want a change, or because their spouse gets a dream job in another state. So, what does that entire turnover cost? And what employees are likely to have the highest turnover? Who is likely to stay the longest? It is however not an easy task for an HR manager to bridge the ever increasing demand and supply gap of professionals. HR manager is not only required to fulfil this responsibility, but also find the right kind of people who can keep pace with the unique work patterns in industry. Adding to this is the issue of maintaining consistency in performance and keeping the motivation levels high, despite the monotonous
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INTRODUCTION
In the best of worlds, employees would love their jobs, like their co-workers,
work hard for their employers, get paid well for their work, have ample chances
for advancement, and flexible schedules so they could attend to personal or
family needs when necessary. And never leave.
But then there's the real world. And in the real world, employees, do leave,
either because they want more money, hate the working conditions, hate their
co-workers, want a change, or because their spouse gets a dream job in another
state. So, what does that entire turnover cost? And what employees are likely to
have the highest turnover? Who is likely to stay the longest?
It is however not an easy task for an HR manager to bridge the ever increasing
demand and supply gap of professionals. HR manager is not only required to
fulfil this responsibility, but also find the right kind of people who can keep
pace with the unique work patterns in industry. Adding to this is the issue of
maintaining consistency in performance and keeping the motivation levels high,
despite the monotonous work. The toughest concern for an HR manager is
however the high attrition rate.
ATTRITION
Meaning of attrition: “The wearing down of an adversary, making him weaker
by repeal attacking them or wearing down of resources i.e. the process of
reducing the number of people who are employed by an organization by
not replacing people who leave the job."
Defining attrition: "A reduction in the number of employees through
retirement, resignation or death"
“The action or process of gradually reducing the strength or effectiveness of
someone or something through sustained attack or pressure.”
“The gradual reduction of a workforce by employees' leaving and not being
replaced rather than by their being laid off”
ATTRITION RATE
Definition: The rate of shrinkage in size or number of employees is known as
Attrition rate. It is usually expressed in percentage.
An attrition rate, also known as a churn rate, can be a measure of two things. It
can be a measure of how many customers leave over a certain period of time or
how many employees leave over a certain period of time. An attrition rate can
also be a combination of these two factors.
Attrition rate in Indian IT industry has gone down and it has reached a level
which was there in this industry 3 years back. This dip in attrition rate is not
sudden. It happened to recent slowdown in world market. However experts are
saying that the main reasons of the downfall of attrition rate does lesser number
of new jobs in industry and companies prefer fresher’s over experienced
employees as fresher’s are very cheaper as compared to experienced employees.
HOW TO CALCULATE ATTRITION RATE?
“Ideally, attrition should be calculated on a monthly basis for companies that
have over 50 employees for the first five years of its business. Subsequently, a
quarterly index should be applied till a company’s 10th anniversary. After this,
annual attrition figures should be measured and accounted for. This is the
optimum within the services industry as companies tend to have different
challenges at different stages of their business lifecycle; also, maturity achieves
stability around a company’s 10th anniversary.”
WHAT IS THE HR ATTRITION RATE FORMULA?
The Most Commonly Used Formulae Are :
Total Number of Resigns per month (Whether voluntary or forced) X 100-----------------------------------------------------------------------------------------
(Total Number of employees at the beginning of the month + total number of new joiners - total number of resignations)
Number of employee separations-involuntary separations X 100-------------------------------------------------------------------------------------
*Average employee count(*Avg. employee count = January month strength + December month strength
Total Terminations in a month-------------------------------------------------------------------------------------
(Total Head Count at the beginning of the month) + (Total New Hires)
Total No.of employee left X 100-------------------------------------------Total No .Of employees present
ATTRITION CYCLE
((no. Of attritions x 100) / (Actual Employees + New Joined)) /100.
Attrition brings decreased productivity.
People leave causing others to work harder
This contributes to more attrition, which contributes to increased costs
and lower revenue
This forces additional cost reduction and austerity measures
This in turn makes working more difficult, causing the best performers
with the most external opportunities to leave
Employee attrition, a big cause for concern for firms, ranges between 15 per
cent and 20 per cent. A company is not hurt because a certain person has left.
The company is hurt because he/she takes away certain knowledge, and there is
no ready replacement in the market.
Attrition, as such, is not a bad phenomenon. It has been known to exist all
along. However, when jobs were scarce, the technology change was less rapid,
voluntary attrition was small and companies managed it. However, with
technology changing rapidly and manpower costs increasing, attrition is high
and hurts badly.
Large players often use money power to lure talent from smaller players.
Companies also use the `location' bait to attract employees. While a certain
percentage of manpower turnover is desirable to keep fresh blood coming in,
and removing dead wood, higher percentages are definitely not good indicators
of an organization's culture and people practices.
It is a challenge to find the right talent within constraints such as location,
nature of work, compensation and benefits.
Fresh graduates joining an organization make it a point to leave within the first
year. They equip themselves not for performing their current job but for
attracting a new one. Many a time, there is migration from bigger companies to
smaller companies too, mainly because of the prestige associated with a certain
project or a particular client. In some cases, smaller companies are even better
paymasters than larger brands.
The success rates of retention programs are much higher if the management
uses a direct, employee-focused, approach and is ready to invest resources for
the same.
Factors Affecting Attrition
There are various reasons why people leave their current job. These reasons
may vary from individual to individual and when data are collected from a large
number of individuals leaving or who have left an organization, some
consistencies may be observed-providing more insights as to why people leave
in large numbers. If these are controllable-one attempts to control. If these are
not within the control of the organization, the organization should prepare itself
for managing attrition.
Managing attrition does not mean reducing attrition only. It could also mean
bringing down the negative effects of attrition and increasing the positive
effects of attrition. To increase the positive effects of attrition and reduce the
negative effects, appropriate retention and capacity utilization or talent
utilization tactics should be used. In one of the organizations, attrition has been
used as brand building opportunity. Thus an organization may say that we
provide talent for other companies or they may say that if you join us your
brand value goes up and you get good jobs etc.
Today when a person leaves it causes a lot of disturbances in the organization.
If it is a small organization the disturbance is even greater. Hence it is important
to understand and manage attrition. There can be various reasons for people
leaving their current jobs.
WHAT IS ATTRITION ANALYSIS?
Attrition analysis is a study in which an analysis gives the data on what is
the current attrition trend in the company. It’s an analysis done by taking time,
manpower strength & no. of people resigned into consideration to derive the
final outcome.
i.e., Attrition % = (No. of separations/Total employees) *100
:: A MODEL OF THE TURNOVER PROCESS::
Actual turnover
Intension to quitCompare alternative
Looking for alternative
Thinking about leaving
Causes of job dissatisfaction
Job dissatisfaction
Reasons for Leaving the Organization:
1) Supervisor relations :
The quality of the supervision an employee receives is critical to
employee retention. People leave managers and supervisors more often
than they leave companies or jobs. It is not enough that the supervisor is
well-liked or a nice person, starting with clear expectations of the
employee, the supervisor has a critical role to play in retention. Anything
the supervisor does to make an employee feel unvalued will contribute to
turnover. Frequent employee complaints center on these areas.
Lack of clarity about expectations
Lack of clarity about earning potential
Lack of feedback about performance
Failure to hold scheduled meetings, and
Failure to provide a framework within which the employee perceives he
can succeed.
2) Pay & benefits:
Over half made changes based on exit interview information, and these included