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At some point, employees look to change their workplace. It may happen due to professional or personal reasons, but it does happen. However, what if the number of employees leaving the organization grows past a certain threshold?
Leadership gaps in organizations, caused by the exit of senior or high-performing employees, can ring alarm bells!
While some employees may leave for better pay, others may be unhappy with a toxic work culture. But whatever its cause, a high attrition rate has massive and disastrous after-effects.
What is employee attrition?
Employee attrition is the process of employees leaving a job or the workforce without being replaced. However, it’s important to note that employee turnover and employee attrition differ.
Employee turnover is when an employee leaves and is replaced by someone else. Employee attrition happens when someone goes and the vacancy they create remains unfilled, or the position is eliminated.
“If an employee leaves for whatever reason, we can just hire another one, right? A high attrition rate doesn’t mean that the sky is falling!” — An ignorant leader
Let’s start by addressing why a high attrition rate should be worrying for employers.
Why is it important to use employee attrition models?
Employee attrition usually happens when an employee retires, resigns for personal reasons, or changes careers. No matter the reason for attrition, a high attrition rate suggests that an organization is losing workforce power. Here are some eye-opening facts about the downsides of not having an employee attrition model in place:
Cost of replacing an employee: According to Gallup, replacing an employee can cost anywhere between half to two times the employee’s annual salary.
Loss of knowledge: According to The Work Institute’s 2020 Retention Report, 40% of respondents quit their jobs in the first year of their employment.
Cost of disrupted operations: It takes an average of 42 days to fill an open position, and once an ideal candidate is hired, it takes six to eight months for them to reach full productivity.
Cost of losing a trained employee: The Industry Report by Training Magazine claims that it costs an average of $1,286 a year to train one employee.
Employee attrition analysis is especially important given the current global financial crisis. When managers know that a team member is about to retire or is planning to quit, they can be prepared to fill the vacancy.
When using an employee attrition model, there are some warning signs you can spot.
Warning signs and employee attrition models
No employee resigns without hinting at their departure. Did you know that employees tend to show signs of departure a few months before they quit and that tracking these warning signs allows organizations to identify turnover before anyone hands in their notice?
These warning signals can typically be classified under two categories: behavioral and communication-related. Let’s take a look at the warning signs to watch out for.
- Performance dips and a lackluster attitude to work
- Increased instances of absenteeism or sick leaves
- Disengagement from what is happening in the team
- Low levels of participation in team activities
- General negative attitude
Awareness of these early warning signs of attrition will enable managers to address issues with employees. In some cases, a senior manager should also be involved in discussing why employees feel the way they do, as the problem could lie with the immediate manager.
While the above-mentioned are behavioral signs, organizations can implement other early warning methods so managers of respective teams can avoid high attrition rates.
Career pathing for employee retention
Did you know career pathing, when done right, can improve an organization’s retention rate and attract new talent? Download the checklist to ensure you cover every aspect of employee career pathing for a future-proof workforce.
Survey-based employee attrition model
An employee survey about attrition can give managers a glimpse into their future workforce. Knowing how many employees are thinking about leaving — and why — allows managers to create strategic retention plans.
By intervening before employees leave, managers can increase the chances that their top performers will stick around.
Analyzing employee attrition through surveys also helps with long-term organizational planning. This means managers can ensure a smooth transition when key employees retire. An employee survey includes questions about employees’ motivation to stay at work (promotions, salary hikes, etc.), satisfaction with current roles, views on where they see themselves within the organization in a couple of years, and so on.
These survey questions are constructive for gauging employee loyalty and predicting turnover. Higher scores in the commitment and job satisfaction category mean employees are more committed to the organization and are more likely to stay in their position.
If scores are low, a follow-up discussion with an employee will help managers better understand why the employee responded the way they did.
Machine learning-powered employee attrition model
Machine learning is an essential technology for employee attrition analysis — for both prediction and evaluation. Machine learning provides forecasts based on historical information about employees, such as age, experience, education, and last promotion. Predictions give the HR department a heads up about employee attrition. The HR department can also plan ahead to recruit a replacement for an employee who is interested in leaving.
Looking to get a head start on employee attrition analysis in your organization?
Attrition is costly because when an employee leaves without a replacement, the lost productivity affects project deadlines, operations, and revenue. Schedule a call today to learn more about the causes of employee attrition and how HRForecast can help you employ long-term workforce planning strategies to manage attrition so that it doesn’t hurt your organization.
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