Understanding Attrition in the Workplace

The COVID-19 pandemic has certainly forced us to reassess how we live and work. While we have seen and experienced multiple lockdowns imposed across the country, this unexpected ‘disruption’ has had some positive consequences for employers and employees.

 These include (but are not limited to);

• Increased flexibility through remote/hybrid working models
• Increased trust between managers and employees, allowing greater autonomy within roles
• The chance to re-focus and review company values and benefits
• An acceleration in the use of technology resulting in the simplification or automation of processes
• Refreshed focus on the company’s overall agility and opportunities for innovation, particularly when faced with external threats

But also, the negatives:

• High productivity causing employee burnout
• Disconnection and misalignment between goals, colleagues, leadership, etc.
• Isolation and uncertainty impacting on physiological wellbeing
• Decrease in collaboration with colleagues; and fewer opportunities for creative problem solving
• Industry challenges exacerbated by growing skills shortages

With many of us having undoubtedly experienced various changes within our day-to-day lives, it may not be surprising if the thought of re-assessing your current work situation has also been considered as one of such changes.

‘The Great Resignation’ is a term that has been used frequently in recent news articles and blogs; it refers to an anticipated boom in the number of resignations from millions of workers globally.

Such has already been seen in the US, with more than 19 million workers have quit their jobs since February 2021. This has been identified through recent research conducted by Microsoft; which also stated that over that, over 40 percent of the global workforce were considering leaving their employer this year.

More recently, PwC published its study which found that of 1,800 Australian workers, 38% are looking at leaving their current employer in the next 12 months.

Thankfully, many companies have made it through ‘the other side of the pandemic.’ However, the last two years have been financially damaging to some degree. This coupled with the prediction of mass resignations, begs the question of the new fire phrase ‘The Great Attrition’? Not quite as impactful I know.

What is Attrition?

Often used as if they have the same meaning, Attrition is different from turnover.

Figure 3.1 Phillips J.J. & Connell A. O. (2011). Managing employee retention: A strategic accountability approach. Taylor & Francis Group.

What Does it Mean for Your Business?

If a company is contemplating the strategic decision not to backfill a vacancy, it will need to weigh up the advantages and disadvantages that will likely follow such a decision.

Advantages:

• Decrease in labour costs
• Prevention of potential redundancies that may have been considered
• Presents an opportunity to explore the possibility of automating the role
• Duties absorbed by other roles, which can in turn potentially provide those employees with:
• Further development opportunities
• Increased engagement and job satisfaction

Disadvantages:

• Reduction in size or strength of the workforce
• Increase in workload for employees that absorbed responsibilities, which can in turn:
• Increase turnover, which will subsequently increase recruitment/training time and costs
• Decrease productivity, job satisfaction, and engagement
• Make for an inconsistent company culture

Preventing Attrition

Although attrition is generally caused by unavoidable, anticipated, or sometimes positive reasons, there are things that you can do that might make an employee hold out just that little bit longer, such as:

• Review Employee Value Proposition (EVP)
• Measuring employee engagement
• Acting on feedback
• Focusing on meaningful physical and mental wellbeing initiatives
• Recognising and rewarding employees who are performing
• Clearly defining roles, career paths, and development opportunities
• Ensuring Managers are trained and empowered to engage and ensure the success of their direct reports
• Offering incentives that are based on performance and or tenure
• Promoting flexibility
• Setting clear and transparent company, team, and individual goals
• Identifying and meeting individual needs

How is Attrition Calculated as a Metric?

To calculate Attrition as a metric for reporting purposes, you take the Number of unavoidable or Managed departures ÷ Average no. of employees during the month (or number as at a certain date) x 100.

Takeaways for Employers

Measure Attrition and Other People Metrics

As a starting point, it is important to measure by measuring the level of attrition and turnover within the company. Ideally, this should then be reported on regularly in Leadership meetings, as well as assisting with the identification of any noticeable trends, goal setting, and when making informed strategic decisions.

There are also many other metrics that may be useful to start tracking and reporting on within your business. For more information, visit our recent webinar on Key HR Metrics.

Proactively review and revamp EVP and the overall Employee Experience

The PwC study previously mentioned, also highlighted that although the figures indicate that the mass resignations seen in the US is likely to be mirrored here in Australia; 48% of employers have no intention of updating their EVP.

Don’t want to be part of that statistic, but not sure where to start?

Where better than the company’s most valuable asset, who are statistically currently also a flight risk? The employees themselves. This will demonstrate that you genuinely:

• Value employee’s opinion
• Seek to improve rather than remain stagnant
• Are being proactive and transparent
• Providing the opportunity for all stakeholders to be a part of the change

This method is far more likely to produce meaningful outcomes and greater buy-in from key stakeholders.

A common area being discussed at the moment by employers with their employees; is what can be introduced to add a benefit or incentive to a role that doesn’t have the benefits associated with remote working flexibilities? This may be prevalent if the company requires all or part of their workforce to perform their duties in the office, or at a particular location for all or part of their ordinary hours. As a result, many have introduced subsidised food, travel allowances, on-site childcare, and company gyms. However, it is also important that there is a balance in the level of benefits accessible to those working remotely and on location. 

About Employment Innovations

Employment Innovations is one of Australia’s leading providers of employment services designed to increase productivity and ensure compliance. Its services and solutions include all the tools that every Australian small to medium sized employer needs – including workplace advice, legal services, payroll solutions, migration, human resource management and HR software.

Disclaimer

The information provided in these blog articles is general in nature and is not intended to substitute for professional advice. If you are unsure about how this information applies to your specific situation we recommend you contact Employment Innovations for advice.