Employers generally consider attrition a loss of valuable employees and talent. However, there is more to attrition than a shrinking workforce. As employees leave an organization, they take with them much-needed skills and qualifications that they developed during their tenure. On the other hand, junior professionals with promising qualifications can then succeed into higher level positions or business owners can introduce more diversity in experience or expertise. Accordingly, there are benefits and disadvantages to attrition.
Attrition and Turnover
There's one primary difference between attrition and turnover. Attrition the abandonment of a position due to retirement, resignation or other similar reasons. Therefore, attrition decreases the workforce, because there are no immediate replacements. Turnover, on the other hand, represents the number of employees who leave the organization, but with immediate replacements. Attrition is most often voluntary, while turnover can result from either voluntary resignation or an involuntary termination, discharge or layoff.
The cost of turnover can be extremely high, depending on the value of the employee's contributions as well as his salary, benefits and incentives. Cost-to-hire estimates, which include recruiting, training and ramp-up time, can become expensive. Additional cost include staff time for recruiters,employment specialists and hiring managers participating in the selection process. Turnover costs range from relatively small expenses, such as photocopies of employment applications and resumes, to large fees, such as headhunter fees and travel expenses for candidate interviews.
The cost of attrition can be relatively enormous. Attrition from retirement or resignation diminishes the workforce, demanding additional work hours and dedication from remaining employees. Whereas long-term workers have established bonds with customers and clients, attrition can reduce this rapport, running the risk of losing them to a competitor. Losing clientele affects revenue, profitability and business reputation.
Despite the negatives of attrition, healthy attrition -- or, desirable turnover -- can positively affect organizations. Losing employees with poor performance records can boost employee morale, employee engagement and productivity among the current workforce. Moreover, attrition can be encouraging to young professionals seeking promotion and upward mobility.
Employers use workforce planning to determine the timing and extent of employee attrition. Although employers avoid asking individual employees directly whether they intend to retire or resign soon, there are ways to determine which employees and how many are contemplating retirement. Conducting employee surveys is one method that can produce aggregate, though anonymous information about employee retirement. Employee inquiries about retirement savings and company contributions are other ways to detect future departures. Employers must be careful when asking employees about retirement plans, however. Inquiring about an employee's retirement plans may cause employees to allege unfair employment practices based on age.