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Employee Attrition Vs. Employee Turnover: What to Do About Both

November 13, 2019

By: Omnia Group

Losing employees can be costly for your business and stressful for your HR department, management team, and other team members who have to take on the workload they’ve left behind. 

There are different reasons why an employee might leave your organization, but those reasons will usually fall under two main categories—employee attrition and employee turnover. But how are they different, what will they mean for your organization, and how can you prevent them? Get ready to find out!

What is Employee Attrition?

Employee attrition is defined as the loss of employees through a natural process. This could be due to retirement, resignation, elimination of a position, personal health, or other similar reasons. With employee attrition, the employer will not fill the vacant position left after losing that employee.

What is Turnover?

Employee turnover, or an organization’s employee turnover rate, is defined as measuring the number of employees who have left the organization during a specified time period, which is typically one year. So, an organization will compare their employee turnover rate year-over-year.

Employee Attrition vs. Employee Turnover: What's the Difference?

Employee attrition and employee turnover are sometimes used synonymously. While instances of both employee attrition and employee turnover will decrease the number of people you have staff, they are two very different types of employee churn

Employee attrition is typically voluntary and for natural reasons like retirement or resignation, while employee turnover could be voluntary or involuntary. An example of voluntary employee turnover would be an employee quitting because they don’t like the job, the office environment, their boss, etc. On the other hand, an example of involuntary employee turnover would be an employee who is terminated because they weren’t reaching performance goals or had a consistently bad attitude.

Additionally, with employee turnover, the company must replace the employee who has left, whereas vacant positions left open due to employee attrition typically remain unfilled.

What is an Example of Employee Attrition?

After 30 great years with XYZ Corporation, Jane has decided it’s time to retire. Her company does not plan to hire a direct replacement for her. Instead, her workload will be evenly dispersed amongst the other members of her team. So, Jane is considered part of XYZ Corporation’s employee attrition rates for the year.

What is an Example of Employee Turnover?

Steve accepts a job at XYZ Corporation, thinking he would be a great fit for both the position and the company culture. After a few months on the job, he realizes he is not enjoying his daily tasks and does not get along well with his coworkers. So, he decides to quit and search for a different role more suited to his preferences. Steve is contributing to XYZ Corporation's turnover rate, who must now replace him. 

The Hidden Costs of Employee Turnover & Employee Attrition

There are a few obvious costs of employee turnover and employee attrition that any business owner, manager, or HR professional is likely already aware of. 

For example, let’s look at Jane’s employee attrition example. When the company disperses her workload amongst the other team members, that could cause additional stress for those employees, leading them to ask for a raise. If they have to work overtime hours to complete their new larger workload, this could affect the company’s payroll costs when they now have to pay multiple people over time.

When it comes to Steve’s employee turnover example, there are also obvious costs that the company will incur after he quits. They’ll have to go back to square one and repeat the recruitment, hiring, and onboarding process with his replacement—which takes a lot of time, money, and resources that could be allocated elsewhere.

However, there are also many hidden costs of employee turnover and employee attrition that may not be clearly apparent. These could include:

  • Loss of knowledge. When a member of your team leaves, they take the knowledge they have of your products, processes, and customers with them. It will likely take their replacement a long time to develop that knowledge on their own. 
  • Training time. While HR will handle the recruiting, hiring, and onboarding of a new employee, once they’re actually in the day-to-day job role, who has to train them? Your top performers. When your seasoned employees have to take the time to train a new team member or stop what they’re doing to answer their questions or show them the ropes, it means they’re able to do less billable work for your clients. 
  • Lowered morale. When one employee leaves, it can affect the rest of your staff in a variety of ways. When someone loses a close coworker they considered to be a friend; they may become sad, distracted, or bitter as a result. Plus, when other team members have to take on their workload, they may feel stressed or overworked, lowering their morale and productivity.
  • The domino effect. If an employee quits to take another job and tells their coworkers it’s a better or higher-paying position before they go, your top performers who weren’t looking to make a career move might start looking at career sites to see what else is out there. 
  • Distracted management. When an employee leaves, management and leadership prioritize replacing them or dispersing their workload amongst their other team members. This can shift their focus, putting their responsibilities, and day-to-day job tasks on hold while worrying about recruiting or how the rest of their team will react to a bigger workload. 

Average Employee Attrition Rates and Employee Turnover Rates

In 2017, the Bureau of Labor Statistics (BLS) found that 15.1% of the total U.S. workforce voluntarily quit a position, retired, was laid off, or discharged. Other studies have found that 10% is a good baseline number to aim for when it comes to employee turnover rates. 

Keep in mind that employee attrition rates and employee turnover rates can drastically vary depending on the industry and complexity of the job role. For example, a very stressful and demanding role may have higher employee attrition rates because employees that are overworked and have been putting in incredibly long hours for most of their career will likely burn out faster or want to retire sooner. 

Top Causes of Employee Turnover 

There are many causes of employee turnover that can affect your employee turnover rates, but here are a few of the most common ones.

Financial Stresses

According to the Consumer Finance Protection Bureau, money and financial wellness is a huge stressor for modern employees. In fact, a study conducted by Financial Finesse found 66% of respondents feel stressed because of their day-to-day personal finances, and 60% expressed concern about meeting their future financial goals. A financially stressed employee will likely be on the look-out for a better-paying opportunity and willing to take any job offer with a higher salary, even if they do enjoy working for your company.

Poor Management 

There’s a saying that goes, “people don’t leave jobs, they leave managers.” The proof is in the numbers—a recent Gallup poll of over one million U.S. workers found the number one reason people quit their jobs is because of a bad boss or immediate supervisor. In fact, 75% of workers who voluntarily left their jobs did so because of their manager, not the position itself. So, having managers who are poorly trained or unable to adapt their leadership style to meet the needs of their employees can leave your top performers looking for someone better to work under.

Lack of Professional Development Opportunities and Career Growth

Top talent that constantly pushes themselves to develop new skills and grow as professionals expect to be rewarded. So, if you want to keep your top-performing employees motivated and engaged, you need to provide opportunities for them to learn, grow, and move up in their careers. In fact, a Randstad U.S. study found 58% of workers said their companies didn't currently have enough growth opportunities for them to stay long-term. Additionally, a Harris Poll study uncovered lack of career development ranked second only to compensation as the top reason employees left their organizations, and 34% of respondents who left their previous job said it was to find a new role with more career development opportunities. 

How Can You Tell if You Have an Employee Attrition or Employee Turnover Problem?

To tell if employee turnover or employee attrition is becoming a big problem for your organization, you need to have data. Keep a list or file of employees that leave, and for each one, make a note of how long they worked for you, the position they held, and the reason they left. Then, over time, you’ll be able to spot trends in their responses and your employee turnover and employee attrition rates

For example, are there certain positions that you have trouble keeping filled? Are lots of employees that work under the same manager leaving? Do employees keep leaving for similar reasons, like receiving a higher salary or getting more professional development opportunities elsewhere? The answers to these questions can help you determine if you have an employee turnover or employee attrition problem—then, once you know the root of those problems, you can start implementing ways to fix them.  

How to Reduce Employee Turnover Rates and Employee Attrition

If you identify that you have an employee attrition problem or very high employee turnover rates, what can you do? Here are five of our favorite ideas. 

1. Conduct Exit Interviews—and Actually Act on Those Insights

The first step towards reducing your employee turnover and employee attrition rates is understanding the reason behind them. Exit interviews can give you insight into why your employees are choosing to leave your company—then, you can develop a game plan for how to prevent other employees from leaving for the same reasons in the future. 

So, it’s important to ask the right questions to make an exit interview a worthy use of time that gives you the insights you need to make changes in your workforce. Some examples are:

  • How was your relationship with your manager?
  • Were the day-to-day job functions of your role in line with your pre-hire expectations and what was told to you during your hiring process?
  • Do you feel that this job helped you meet your personal and professional goals?
  • Did we provide the tools you needed for success in this role?

2. Create a Financial Wellness Program

Seeing as financial stresses are one of the main causes of employee turnover, finding a way to help alleviate those stresses for your employees can reduce your employee turnover rates. So, many employers have started to implement financial wellness programs to help their employees cope with and overcome stress caused by financial pressures. In fact, 74% of employees in a Morgan Stanley study said a financial wellness program is an important benefit to them, and 60% said they’d be more likely to stay at a company that offered one. 

Looking for ideas for your financial wellness program? You could host a monthly lunch and learn or Q&A session on different financial topics, bring a financial advisor or professional into the office for a seminar or workshop, or compile resources to distribute to your employees, such as educational pamphlets or online courses they can take in financial wellness. 

3. Offer In-Demand Employee Perks and Benefits

The labor market is competitive, and if you want to attract and retain top-talent long term, you need to align with their preferences. This means offering the perks and benefits they really care about. In fact, an AICPA survey found American workers favor better workplace benefits over pay raises 4:1. So, by identifying what those wants and needs are when it comes to benefits and perks, then delivering on them, you can remain competitive and keep your employees.

For example, just one of these in-demand perks for modern professionals is the ability to work remotely because it allows for more freedom, flexibility, and a better work/life balance. Research has found that those who work remotely at least once per month are 24% more likely to be happy and productive in their roles than those who don’t, and remote workers say they're likely to stay in their current job for the next 5 years 13% more than on-site workers. So, offering remote work policies as an employee perk can help you keep top talent satisfied, productive, and loyal to your company long-term.

4. Listen to Your Employees

It sounds obvious, and all employees probably think they’re listening to their employees—but in reality, more than one-third of the workforce currently believes their employers don’t listen to their ideas and suggestions. When employees feel like you aren’t taking their feedback seriously or aren’t willing to implement changes when they come to you with a problem, they’ll likely leave to work for a competitor who does. 

How can you show your employees you actually care about what they have to say? One idea is to send out a quarterly survey asking your employees how they feel about their manager, your company culture, their day-to-day-job tasks, and overall satisfaction in their role. It’s important to be transparent about those results and actually apply the feedback you’ve received to make positive changes in the workplace. Another is to hold regular performance reviews where managers can sit one-on-one with each of their team members to review their job performance, uncover skills they’d like to learn or new things they’d like to try, and set future goals for both personal and professional growth.

5. Leverage Insights from Hiring Assessments 

When it comes to employee retention, information is power. Hiring assessments can give you just that—information. And in a highly competitive labor market, this can be your competitive advantage. Each employee is different, so a one-size-fits-all employee retention strategy won’t help you keep your top talent. Instead, you need to understand each employee's motivators, preferences, strengths, and challenges. 

Once you have this information, you can create a customized employee development plan and future career path aligned to meet each person's goals and needs on your team. But, it can take years on the job to uncover this information yourself. Luckily, hiring assessments can give you these valuable insights in just minutes—but you can continue to use them to reduce your employee turnover rates and boost engagement throughout the entire employee lifecycle by:

  • Training your managers to coach each of their team members in the way that aligns with their learning style and communication preferences 
  • Keeping employees motivated and engaged long-term
  • Identifying areas where individuals can grow and develop new skills to overcome their challenges
  • Reducing conflict in the workplace 

At Omnia, we believe hiring assessments are a powerful, invaluable tool that can help you reduce employee turnover and employee attrition rates. We’ve got a variety of pre-employment assessments and capabilities for custom reporting than make it possible for you to get the insights you need to meet your workforce and overall business goals.  

Whether that means improving your hiring process, reducing employee turnover, or getting more out of your current employees, we’re here to help! Reach out to us today to get more information, request a demo, or start implementing hiring assessments in your organization.

Omnia Group

For over 30 years, we’ve helped organizations across the world improve and optimize their workforce operations and company cultures. While we take a unique, scientific approach to hiring, development and retention, we also believe every business is a people business. Our passionate advisors always put people first.

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