The terms employee turnover and attrition are simply can be used interchangeably. Both describe the natural loss of staff over a period of time, rather than losses through redundancy and company restructuring. Retention refers to the percentage of employees a company retains for around a year or more. A turnover levels that includes employees who leave due to redundancies is sometimes referred to as crude or overall turnover.
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Attrition offers companies the opportunity to reduce staff levels without having to make people redundant, which can involve hefty payouts. Involuntary layoffs, in contrast, are not typically categorised as attrition as they are enforced. Many companies simply put a freeze on hiring new staff in periods of financial difficulty, leaving employee numbers to reduce naturally through attrition. Not only can this strategy save the company money, but it can also be beneficial to staff morale which can often become strained during times of layoffs.
Employee attrition can also have a negative impact on organisations. A high level of employee attrition means there are lower levels of experienced staff present in a company. New staff will also need to be trained, which can have a significant monetary impact on a company’s profits. The impact of attrition can therefore differ significantly depending on the sector a company is based in.
Low-skilled jobs such as retail or warehouse positions, typically have high attrition rates as these roles are often filled by students during term breaks. However, since these jobs are unskilled, lost employees are easily replaced without the need for costly outlay on training. High attrition rates in a financial or legal firm are likely to have a much more significant impact on a company’s finances, however, as these roles require more extensive training.
Firms have no direct control over attrition levels as people come and go as they please dependent on factors outside the company’s control. However, a firm may be more likely to have lower levels of attrition if they provide attractive salaries and a positive work environment, which may make employees less inclined to seek other employment.
Firms usually factor in attrition levels when assessing overall employee levels and the need to expand or contract the workforce. Retirement is an obvious source of employee attrition that can be accurately accounted for as people tend to cease working at around the same age. Other causes, however, such as emigration, serious illness or employees seeking to enter further education, are less easy to predict.
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