5 Steps for Managing Employee Attrition

The most important part of your company is your employees. The people that clock into work every day ready to take on new challenges, bring in new business, and keep your business running between 9-5 are an invaluable resource.

But what happens when you start experiencing employee turnover? How do you know if your team is engaged and happy with the work environment?

Every year, over 4.5 million employees quit their job. While this level of turnover isn’t always preventable, there are small changes you can make to improve the workplace experience.

That’s where employee attrition comes in.

Employee attrition helps you understand how great your business is at retaining top talent over a certain period. By tracking employee departures, both voluntary and involuntary, you can identify patterns, find new ways to reduce employee turnover, keep them engaged, and improve your company culture for everyone.

Here’s everything you need to know to control employee attrition.

What is Employee Attrition?

Attrition is the process of slowly losing employees. Unlike mass layoffs, employee attrition happens gradually and over time. Every year businesses can expect to lose around 6% of their workforce. As employees retire, this predictable decline in workforce numbers should be managed proactively to maintain institutional knowledge within the company. While this isn’t always preventable, businesses should know their employee attrition rate and look for ways to improve employee satisfaction. This will help you retain top talent and keep your team engaged and happy.

However, only some employee attrition is necessarily good. There are many instances when you may lose your staff because of business restructuring, promotions, or title changes, which is never bad! However, if you see a significant decline in employment, it could be linked to a bigger problem a company is facing. These challenges should be addressed accordingly to ensure top talent doesn’t start looking for new opportunities.

How to calculate your employee attrition rate

Your attrition rate can be calculated with a simple formula. To calculate employee attrition, you should use this formula at the end of every month, so you can always know your current attrition rate. Calculating employee attrition is crucial for understanding workforce dynamics and identifying potential issues.

Attrition Rate = ( # of employees resigned / average number of employees at the beginning of a month + # of new employees – # of employees resigned ) x 100

Let’s break it down.

Let’s say you have 50 employees working for April. 15 of these employees just joined that month, and 20 team members are leaving the company that month.

Attrition rate = ( 20 / (50+15-20) ) x 100

This would mean your attrition rate for the month is 14.6%. As a general rule of thumb, you don’t want your rate to be higher than 10%.

Employee Attrition vs. Turnover

While attrition and turnover may feel interchangeable, they aren’t exactly. Employee turnover looks at every type of turnover, including terminations and positions that need to be refilled. 

While attrition looks at all vacant roles plus termination, you could have extremely high turnover rates and still be growing your company. However, if you have high attrition rates, your company is likely shrinking month over month. 

The Different Types of Employee Attrition

Before making a game plan for combating employee attrition, you must understand the different types. Each type has a different cause. Some causes are preventable, while others aren’t. 

Here are the five different types of employee attrition to keep top of mind:

Voluntary Resignation 

Voluntary attrition is when an individual leaves a company on their own. There are many explanations someone may decide to leave a company. Some of the most common reasons include being offered a better salary somewhere else, limited growth opportunities, being undervalued, burnout, and being unfit for their current role.

This type of employee attrition is sometimes preventable. As a company, you can reduce your risk of voluntary resignation by addressing common concerns and problems in the workplace, whether with quarterly reviews, 1:1s with employees, and keeping your team’s personal goals in mind.

Involuntary Attrition

Terminations and layoffs cause involuntary attrition. Whether you’re letting someone go because they’re underperforming or it’s ethical misconduct. While involuntary attrition may affect your overall attrition rates, it can benefit your business. This helps you weed out the underperforming individuals and help you eliminate the unproductive individuals holding your company back from success. 

Retirement 

There comes the point where everyone needs to retire. Depending on where you live, individuals typically retire in their late 50s to early 70s. The departure of seasoned employees leads to a significant loss of institutional knowledge, which can jeopardize ongoing projects and team performance. While this can impact your attrition rates, there are ways to prepare. For example, you can start the replacement search in advance so your employees can train their replacements before retiring.

You must plan regular check-ins and meetings with your employees, so you can plan accordingly for individuals who plan on retiring. This will help you plan, replace, and rehire ahead of schedule so retirement doesn’t impact your workplace productivity.

Internal Attrition 

Internal attrition occurs when a specific employee jumps from one department to another. This can happen when someone is promoted, switches jobs, or moves to part-time. This type of attrition isn’t necessarily negative. In many cases, it’s positive! However, if you have a few departments with a higher attrition rate, it wouldn’t hurt to take some time to understand why this is happening.

Keeping a pulse on your internal attrition can also help you combat any challenges and make necessary changes so that every department has the support they need to succeed. 

Demographic 

If you notice that a certain demographic is leaving your company, it could signify a bigger underlying problem, whether it’s women, veterans, or minorities. If you start to see a pattern, you’ll want to investigate to find the root cause of the problem. This will help you create a thriving workplace environment.

Causes of Employee Attrition

Employee attrition can stem from a variety of factors, each contributing to why employees leave their positions. Understanding these root causes is crucial for developing effective employee retention strategies. By identifying and addressing these issues, employers can reduce employee attrition rates and foster a more stable and satisfied workforce.

Workplace Challenges and Poor Fit

Workplace challenges are a significant contributor to employee attrition. Issues such as uncollaborative leadership, lack of necessary tools for the job, and poor communication can create a frustrating work environment. When employees feel unsupported or unable to perform their duties effectively, their job satisfaction plummets, leading to higher attrition rates.

Similarly, a poor fit between an employee’s skills and job requirements can result in dissatisfaction and eventual departure. When employees feel mismatched with their roles, they are less likely to be engaged and more likely to seek opportunities elsewhere. Employers can mitigate these issues by providing regular feedback, actively listening to employee concerns, and refining job descriptions and onboarding processes to ensure a better fit from the start.

Five Steps for managing employee attrition

Now that you understand how employee attrition works and the different types, it’s time to make meaningful improvements. 

Here are five easy steps you can follow to improve the workplace experience while reducing employee attrition:

Step one: Identify a problem

You’ve been paying attention to your attrition rate for the past quarter. You notice your company is slowly shrinking month over month, and you want to find a way to make worthwhile adjustments that your business can benefit from.

The best way to get started is to identify the problem. Ask yourself:

• Why are your employees leaving for other opportunities?
• Can you identify any patterns?
• Are your employees engaged in the workplace?
• Are they burnt out with the workload?
• Are they being challenged professionally?
• Are employees leaving for personal reasons?

Every workplace dynamic is different, so you’ll want to take some time to write out a few questions that align with your company culture and some of the problems that may or may not be happening.

You won’t be able to answer all of these questions successfully. You’ll need to connect with your remaining employees. This way, you can get an honest understanding of the problems or challenges employees are running into in the workplace.

Here are some ways you can do that.

• Send out anonymous employee surveys on a quarterly or annual basis
• Conduct 1:1 meetings with employees and supervisors
• Hold an exit interview with employees that are leaving or retiring
• Host town hall-style meetings so employees can voice their concerns, questions, and opinions
• Have weekly meetings with your management team and address problems

You can use many resources to understand what is driving your employees away from your company. You’ll also want to check in on your attrition rate monthly to know your current percentage. You can use this as the baseline when you start making changes. You’ll want to check in on your rate regularly to see if you see any consistent approvements overtime.

Step Two: Prioritize Training and Professional Development

Sometimes the root cause of the problem is connected to the lack of training opportunities, a faulty onboarding process for new hires, or a lack of career growth and professional development resources. If your team members don’t feel they have the resources to develop professionally, they’ll seek new opportunities. The same rules apply to new hires. If they feel like they don’t have support or the resources, they may start to look for new opportunities or “silent quit.”

For this step, you’ll need to break your employees into two groups: New hires and current employees.

For your new hires, you should revisit your current new hire orientation. Are your new hires engaged or overwhelmed? Do they get an adequate amount of training and support during the process? Are they left with more questions than answers?

The onboarding process should be engaging and interactive. The best way to do this is with the power of gamification. Gamification utilizes game elements in non-game contexts. This is a powerful tool that can help your new hires feel engaged in the onboarding process, and it will help them stay focused.

Here’s how you can do that:

• Quizzes and trivia sessions
• Ice breakers
• Games and team bonding activities
• Interactive videos, content, and learning tools

Now, let’s think about how you can help your current employees. Once current employees familiarize themselves with their everyday tasks, things can get… boring. This can lead to a distracted workforce. To reduce attrition and create productive employees, you’ll need to challenge them and provide professional development resources they can use.

Step Three: Offer Support and Recognition 

Employees want to feel appreciated and recognized. They want to know that their managers noticed they exceeded their sales goals last month or finally closed a big deal. They may explore new opportunities with companies that value employee contributions if they feel no one notices. The best way to stay on top of recognition is to create a reward system and to gasify the workplace. Here are some game elements your company can benefit from:

• Badges
• Leader boards 
• Progress bars 
• Rewards, prizes, and incentives

With these gamification tools, you can keep your team’s progress in mind. This will keep employees excited and help them visualize their success. Once you implement leaderboards and progress bars, you can recognize top performers and reward them with incentives. This is a great way to inspire friendly competition and keep your team focused on their goals. 

If there’s a reward attached to their progress and they feel recognized for their contributions, it will inspire them to go the extra mile and improve employee loyalty. 

Step Four: Improve Employee Engagement With Communication

Employees want to feel like they’re part of a team. They want to clock in for their day, ready to tackle challenges with their team by their side. As a leader in the workplace, it’s your responsibility to build a company culture that thrives on communication, collaboration, and employee engagement. There are a few ways you can do this. Here are some of our favorites. 

• Gamify the workplace experience 
• Plan quarterly or monthly team bonding, experiencing 
• Encourage collaboration and communication
• Encourage open-ended discussions
• Be open to new ideas
• Ask for guidance and advice from your remaining employees. 

To improve employee satisfaction, you must create a workplace experience that invites open discussion, communication, and collaboration. This will help your team feel comfortable and encourage innovative discussions in the workplace experience.

You should plan quarterly or monthly team bonding events for the best results, especially if you have a remote workplace. If you aren’t actively engaging a remote or hybrid team, you risk losing your employees to other opportunities.

We recommend planning happy hours, games, and other activities regularly. This will help your team stay engaged and connected, regardless of location.

Step Five: Offer Competitive Compensation

Offering competitive compensation is essential for retaining top talent and reducing employee attrition. If employees feel they are not being compensated fairly, they are more likely to explore other opportunities. To ensure your compensation packages are competitive, conduct salary surveys and benchmark your salaries against industry standards.

In addition to competitive salaries, offering comprehensive benefits can significantly enhance employee satisfaction. Benefits such as disability and life insurance, flexible work arrangements, and employee wellness programs contribute to a positive work environment and demonstrate that you value your employees’ well-being. By prioritizing competitive compensation and benefits, you can reduce employee attrition and retain your top performers.

Step Six: Conduct Exit Surveys and Gather Feedback

Conducting exit surveys and gathering feedback from departing employees can provide invaluable insights into the reasons behind their departure. This information can help employers identify patterns and trends in employee attrition, allowing them to develop targeted retention strategies.

Exit surveys can reveal areas where the company may be falling short in terms of employee satisfaction and retention. By understanding the specific reasons why employees leave, employers can make informed changes to improve the work environment and address any underlying issues. This proactive approach not only helps in reducing employee attrition but also fosters a culture of continuous improvement and employee engagement.

By implementing these steps and continuously monitoring your employee attrition rates, you can create a more supportive and engaging workplace, ultimately reducing employee turnover and retaining your valuable team members.

Step Five: Offer Competition Compensation

At the end of the day – you need to make sure you’re paying your employee’s competition compensation. If you aren’t, you risk losing your top talent to your competitors or others leaders in the industry. To ensure compensation is always top of mind, start with hosting annual or semi-annual reviews. 

Keep in mind: There are other ways to compensate employees. Whether it’s a reward system, an incentive, or a cash bonus – these small initiatives can prevent potential employees from leaving and help you show the entire team how much you appreciate them. 

Not sure if you’re compensating your employees enough? Here are a few tips for starting the conversation. 

• Send a survey out to your team members
• Conduct research on the average salaries for positions
• Ask the individuals how much they expect to be paid
• Consider the bonuses, perks, and other types of compensation
• Assess the position, and pay employees how much they are worth to you

Look – it’s not always easy being a great boss. You will have tough conversations with a few of your employees but don’t let this discourage you from being transparent. You’ll need to be honest and upfront to build a thriving workplace environment. If you’re pairing your employees with an unlivable wage or too low below expected, your competitors can steal your top talent. 

Don’t let this affect your turnover rate. Before employees leave and go to new opportunities, make sure you’re giving them a competitive, decent, and livable salary. 

Reduce Employee Attrition With Spinify

Ready to reduce turnover and improve employee satisfaction? With Spinify, you can build a thriving workplace culture that values a work-life balance and encourages employee engagement.

With our sales gamification software, you can help your team stay motivated throughout the workweek and give them the tangible resources to grow professionally. Our sales gamification tool can be integrated into the workplace and is there to help you improve employee retention and build a thriving workplace experience. 

Whether you want to gamify the workplace with leaderboards, progress bars, or badges -we’re here to help. 
Book a free demo today to get started.