Plugging the leak !!!

What happens when you invest in a huge tank, storing a great reservoir of talents working as an unparalleled source of your competitive advantage, only to find it empty at the time of its most need.

 What happened??? Well, you forgot to plug the leak!!!

Well, this is what happens when you fail to retain and celebrate the talent a firm has.

 The Problem In simpler term, the firm has high attrition or also know as labor attrition

In the plethora of problem which the HR department tackles, Employee attrition acts as a major challenge to be tackled especially in today’s stimulus rich external environment, where talent poaching and job dissatisfaction is as prevalent as ever

 So, what is attrition?

Attrition is defined as a systematic reduction in the number of employees through resignation, death and retirement.

Types of Attrition Employee attrition is classified into five types, namely:

1. Internal versus External Attrition

Internal attrition involves employees leaving their current position in the organization, taking a new position inside the organization
External attrition refers to employees leaving the organization for better terms of employment status or preferring higher salary

  2. Skilled versus Unskilled Employee Attrition

Unskilled Attrition involves employee leaving which are easily replaceable as their skill set is neither unique not mission-critical, hence the organization would be incurring less loss of performance However, high attrition rates of skilled professionals may pose a risk to the business or organization, due to the human capital lost – skills, training, and knowledge lost

3.Functional and Dysfunctional Attrition

Functional Attrition is defined as a situation in which the employee leaves the firm, and there is a net gain for the firm. E.g. when a low performing employee resigns whereas Dysfunctional attrition refers to the loss of a well-trained and well-adapted employee. The costs exceed any potential benefits

4. Voluntary versus Involuntary Attrition

Voluntary attrition means employees leave the organization out of their own will. On the other hand, compulsory attrition is where the employees leave the organization due to the implementation of government rules and regulations and the impact of those rules on the organization

5. Pull and Push form of Attrition.

When an employee leaves his job/employment in an organization for his own reasons it is labeled as the Drag or Pull form of Attrition When the employer takes the initiative to ask the employee to quit it is called Push attrition Attrition Model

Why is high attrition bad?

There are various reasons why high attrition is bad, some of them are as follows

1. When a competent and acclimatize employee leaves the firm for any of the reasons, it leads to avoiding, not only in terms of talent and job responsibility but also often time in the middle to upper management creates a power struggle among the current employee. This not only might hamper a streamlined process but also lead to a toxic working environment.
2. A simple concept of sunk cost and opportunity cost comes into play as well. Simply said there is a monetary and time cost involved with recruitment and training of a new employee
3. It affects the morale of the employee who is left behind. If unchecked it could lead to attrition being a part of the company culture, having a seriously detrimental effect over the performance and psyche of the employee
4. The decline of product/ service quality, there is a certain gap in the timeline form when talent is lost and new talent is competently recruited, trained and sent into the field.During this time lack of skilled employee can lead to a decline in product/service quality

What causes High attrition?

To understand why attrition rates are high we must understand the employee situation, demands and expectations he/she has to form their firms. Some of the reason why the attrition rate might be very high is

1. Compensation and Benefit : It is the first thought that anyone associates with attrition, which may not necessarily true for most cases .in this scenario the firm fails to provide a competitive paygrade, or the perks provided to the employee are not up to the mark as per industry standards
2. Alignment problem : This poses a hidden threat, as they are not the most evident but have a very important factor associated with the professional expectation of job satisfaction. This often happens when there is a gap between the employees’ expectation of the job and the actual Job profile
3. Involvement : This deals with the emotional satisfaction aspect of job satisfaction. It entails a sense of belonging and association with the firm, its management, and the company’s culture.
4. Work-life balance : As a major thought of work is shifting from job towards a career. The youth wants to live their lives to the fullest, hence they want a balance of work and personal life. Failing to provide often leads to a very quick churn rate of the employee

 Strategies to tackle high attrition /Best retention strategies?

Some active plans used to improve the retention rate of the firm can be

1. Onboarding, Orientation & Mentorship programs : The new recruit must be involved since the inception of their joining, this helps to cultivate a sense of belongingness and in turn, motivates and help set a reasonable job expectation for the employee. Experienced employees can help motivate new recruits to perform better.
2. Compensation, recognition and rewards system : A proper system with active feedback must be created to constantly monitor the quality of the compensation according to skills level and the industry standards. A recognitions system help employee realize their contribution to the firm’s success and positively motivates over an extended period of their tenure. It not only creates a positive impact on the moral but also generates healthy competition which would be a boon to the firms’ performance
3. Training and development : Opportunities must be provided by the company for its employees to learn, acquire and utilize new skills as per the industry requirement. This also help the firm develop its employs career and over the long run generates loyalty

So are you guys now ready to plug the leak?

Written By
Ayush Sharma
Under the tutelage of The HR Club
IMI-New Delhi