What is workforce attrition? The definition, according to the article “What is workforce attrition?” by Marquis Codjia is:
“When a business experiences a gradual reduction in its workforce because personnel are leaving and department heads don’t hire substitutes. An attrition phenomenon doesn’t necessarily happen because the business is taking practical steps to terminate labor contracts; it may come from employees voluntarily leaving the company.
For example, a company has 1,000 active workers at the beginning of the year. On Dec. 31, the headcount is down to 980, leaving a deficit of 20 employees. As a result, the attrition rate for the year equals 2 percent, or 1,000 minus 980 expressed as a percentage.”
The exact definitions of positive and negative attrition factors differ from business to business, according to Philip Lop’s article titled The Differences between Positive and Negative Attrition.
Said Lop: “Indeed, some businesses will see one scenario as a very negative thing, whereas others will view that scenario as a positive move. Ensuring that understanding of the definitions is agreed locally is essential and while it can be useful to benchmark this against other businesses, as long as the definitions drive the right behaviors internally, then there is no ‘right or wrong'”.
What are some examples of positive attrition? According to Lop:
- Attrition is viewed positively where the change means that the business retains or inherits new skills. This could apply where a team member is promoted, as he/she will still be within the business and the vacancy can be plugged by a new, competent individual.
- Attrition is also viewed positively where a staff member resigns (or is dismissed) where the individual was under-performing. In this scenario, again, the business is potentially increasing its overall capability by shifting out a poor performer and bringing in somebody new.
- In essence, if the business benefits from the turnover, it should be seen as positive.
Attrition and employee turnover are issues that impact all departments within an organization, from top to bottom, says Bram Lowsky, Group Executive Vice President of Right Management, a global leader in talent and career management workforce solutions within ManpowerGroup.
Boardrooms around the world are increasingly focused on talent issues and the need to attract and retain top talent to move the business forward. As a result, employee retention and engagement no longer sit exclusively in the Human Resources department.
“All leaders across the organization need to recognize that talent shortages have put a spotlight on the need to retain, engage and develop staff,” says Lowsky.
In addition, these leaders need to take responsibility for engaging and aligning their teams to drive the organizations growth agenda. Says Lowsky: “When skilled talent is hard to find, there is just too much risk associated with having to fill employment voids when staff leave.”
The foundation of every organization’s potential for future success ultimately depends on the strength of its talent. Organizations and leaders need to focus on engaging their people to drive productivity, retain them and ultimately build strong brands that attract great talent. Through effective engagement, employees feel valued and understand their contributions to the bottom line. In this way, employees can be gifts that last and continue to give back through loyalty, performance and as brand ambassadors.
And unfortunately employees are gifts that you don’t always get to keep, says Lowsky.
“The simple truth is that attrition and turnover are a part of business, especially in today’s changing world of work,” he says. “Talent is elusive and sometimes your best and brightest leave for other opportunities especially when you don’t pay keen attention to them and they are unable to see a next step in their career path.”
At the same time, corporate reorganizations, staff reductions and restructurings due to M&A activity are the ‘new normal’ in the face of margin compression and economic uncertainty, says Lowsky.
So what do you do when an exodus of employees occurs? What happens when one top manager leaves and his supports suddenly start moving on too? What happens when a contract ends with a key client and there are layoffs within the organization? Whether it’s 10, 50 or hundreds, employers need to find positive in times of turmoil or change. Despite these ongoing challenges, however, organizations and leaders must commit to cultivating and retaining top talent if they want to thrive in the marketplace. They can do that through effective employee engagement.
“Effective engagement that drives performance and builds loyalty is essential and should be a top priority of leadership across every organization,” says Lowsky. “Clearly, engagement is the single biggest driver of accelerated performance and productivity and is a leading indicator of positive financial results.”
Simply put, companies with engaged employees thrive – even in times of change. Right Management’s experience has found the most successful companies approach engagement as a mindset that drives their culture, rather than individual programs that start and stop when times are tough or morale is low. Successful companies continually measure engagement, actively listen to employee concerns and build ongoing action planning into their culture, says Lowsky. These companies are committed to understanding the core people issues and creating meaningful actions to build ‘great people, great place’ work cultures. Successful employers take a holistic and long term approach to engagement to maximize results and optimize impact. Organizations that can evaluate what drives engagement, and the lack of it, are in a much stronger position to reduce the risks of talent attrition and departures.
“Simply understanding current employee engagement levels is not a sufficient strategy to stemming the tide of attrition,” says Lowsky “Employers need to not only be able to identify what drives engagement, but do so by actively and regularly soliciting, understanding and taking action on employee suggestions.”
It’s important to make sure that assessing engagement is part the work culture that starts at the highest levels and is shared throughout the organization. This is one of the important starting points to devising a successful retention strategy.
Patrick Foss, President of ThinkTalent Human Capital Partners, says companies shouldn’t underestimate the capabilities of the staff that remains in tact through attrition.
“I have found that after the initial shock of someone announcing their departure, it doesn’t take long to begin figuring out how it will impact the business,” says Foss. “We’ve found an eagerness and some real rock stars who step up when an opportunity to do more is presented.”