Employee attrition is a critical issue that many companies face today.
High attrition rates can lead to increased recruitment costs, loss of valuable talent, and decreased morale among remaining employees.
Understanding the real reasons behind employee attrition and implementing effective strategies to address it is essential for maintaining a stable and productive workforce.
In this article we’ll explore those reasons, as well as suggesting ways you can change the culture within your company to stop it happening so frequently.
What is Employee Attrition?
Employee attrition refers to the gradual reduction of staff in an organisation due to various reasons such as resignations, retirements, or redundancies.
It’s often mistaken for ‘employee turnover’, but there’s a difference. Unlike staff turnover, employee attrition refers to staff that leave without their position being replaced, meaning fewer employees overall.
It can be categorised into voluntary attrition, where employees choose to leave, and involuntary attrition, where employees are terminated or laid off.
Measuring attrition rates helps you identify trends and develop strategies within your company to improve employee retention.
What are the Causes & Solutions of Employee Attrition?
1) Lack of Career Advancement Opportunities
Did you know that 70% of employees would be ‘somewhat likely to leave’ their job to work for a company known for investing in employee development and learning?
That’s right – employees often leave a business when they feel there are limited opportunities for growth and development.
Without clear career paths, it’s then natural that employees may seek advancement elsewhere.
The Solution
Create clear career pathways and provide training and development programmes to help employees grow within the business.
Set targets for your team and paint a picture of what their position in the business can look like if they achieve them.
Mentorship programmes and regular performance reviews can also support career advancement, and let’s employees take ownership of their own development.
To put it simply; invest in your team, and you’ll see the return.
2) Inadequate Compensation
When compensation does not match industry standards or employee expectations, attrition rates can increase.
It’s not hard in the modern day for your employer to Google ‘Average salary for X’, or search what else is out there, so offering a salary well below average is only going to lead to an increase in churn.
That’s why, if you want to save money on recruitment and training costs, and hold on to your best team members, then competitive salaries and benefits are crucial for retaining employees.
The Solution
Ensure that salaries and benefits are competitive and fair.
Conduct regular market research to stay updated on industry standards and adjust compensation packages accordingly.
3) Poor Work-Life Balance
Employees value a healthy work-life balance.
Excessive workloads and lack of flexibility can lead to burnout and prompt employees to leave.
The Solution
Implement flexible work arrangements such as remote work options, flexible hours, and wellness programmes.
Encourage employees to take breaks and holidays to maintain a healthy work-life balance.
4) Unsatisfactory Working Conditions
Poor physical and cultural work environments can drive employees away.
Factors such as outdated facilities, lack of resources, and negative workplace culture contribute to dissatisfaction.
The Solution
Invest in improving the physical work environment and taking actionable steps towards a positive workplace culture.
Where possible, give your team the tools they need to succeed and create a supportive and inclusive atmosphere.
5) Lack of Recognition and Reward
Regular recognition and rewards are essential for keeping employees motivated.
When employees feel their efforts are not acknowledged, they may become disengaged and consider leaving.
The Solution
Recognising hard work can range from a simple ‘well done’ to putting a system in place that acknowledges employee achievements.
At Instep, we regularly give ‘kudos’ publicly across our HR platform, as well as awards ceremonies and shoutouts in group calls.
Regularly celebrating milestones and providing incentives for great work is a simple thing to do which can create a huge boost in morale across your team.
6) Ineffective Management
Poor leadership and management practices can significantly impact employee morale and retention.
Ineffective communication, lack of support, and micromanagement are common issues that lead to high attrition rates.
The Solution
Offer training and development programmes for managers to improve their leadership skills.
Encourage open communication, provide support, and avoid micromanagement. Read on to find more tips for managers looking to reduce employee attrition.
Statistics on Employee Attrition
- The average employee attrition rate for UK workers is 34%. This includes 27.4% who move to a new employer and 6.6% who are not working one year later due to various reasons such as study, retirement, or long-term sickness.
- Turnover rates vary significantly by industry, with the hospitality sector experiencing the highest turnover at 52%, while the public administration and defence sector has a turnover rate of 25%.
- Companies with high employee engagement have 21% higher profitability and 17% higher productivity.
- Approximately 2.5% of turnover is attributed to employees quitting, while around 1% is due to layoffs and discharges.
- 45% of employees reported feeling burned out by business changes.
Tips for Managers to Reduce Employee Attrition
If you’re a manager, the task of reducing employee attrition is often your burden to bear.
As we’ve already mentioned, ineffective management is a contributing factor into employee dissatisfaction, so let’s take a deeper look into what good management looks like.
Here’s seven things you can do to be a better manager:
Communicate Effectively
Maintain open lines of communication with your team. Regularly check in with employees to understand their concerns and feedback.
Provide Regular Feedback
Offer constructive feedback and recognise achievements. This helps employees feel valued and understood.
Create a Positive Work Environment
A sense of belonging is something all humans innately crave, so it’s your job to create a supportive and inclusive workplace culture where employees feel safe and respected.
Encourage Professional Development
We’ve said it once and we’ll say it again – upskill your team at every opportunity. Support employees in their career growth by providing training opportunities, and you will have a happier, more productive workforce at your disposal.
Be Transparent
Share company goals and updates with employees to keep them informed and engaged. Make them feel part of the process and give them the responsibility to play their part in the wider success of the business.
Show Appreciation
Regularly acknowledge and reward employees for their hard work and contributions.
Lead by Example
Demonstrate the behaviours and attitudes you expect from your team. Be a role model for professionalism and integrity.
Lead The Way
Employee attrition is a complex issue that requires a multifaceted approach to address.
There’s no one-size-fits-all solution, but by understanding the real reasons behind attrition and implementing effective strategies, your business can improve employee retention, reduce costs, and maintain a stable and productive workforce.
Improving the leadership within your company is the best place to start.
That’s because managers play a crucial role in this process by creating a positive work environment, providing support, and recognising employee contributions.
At Instep, we provide leadership programmes tailored to tie-in with your business goals.
Schedule a free educational consultation with an expert member of our team to find out more.
