Attrition has been most typically used in the world of HR to describe the unwillingness or inability to replace employees who leave the organization as a result of retirement, dismissal, or mortality. As a result of attrition, the number of people working in the organization comes down.
How Many Types of Attrition Are There?
Attrition due to external factors
1. Voluntary Attrition
When an individual departs an organization of their own volition, this is voluntary attrition. This can occur for various reasons, including finding a new job or career, returning to school, or relocating to a different city.
Voluntary attrition can assist a company by allowing it to dispose of individuals that are no longer a suitable fit. It can also help an institution to reduce costs because they will no longer be required to pay the employee's wages.
2. Involuntary Attrition
When an individual departs a company unwillingly, it is frequently due to poor performance or other disciplinary issues. This is a challenging scenario for the employer as well as the employees. Finding a new job can be stressful, and employees may feel like they have failed.
Specific actions can be taken to help prevent involuntary attrition, such as implementing a transparent performance-tracking system and offering opportunities for training and growth.
3. Natural Attrition
Natural attrition refers to the progressive decrease in the number of staff caused by employees departing a company due to retirement plans or deaths. While this is a typical and expected occurrence, it can pose problems for firms because they can often find themselves becoming understaffed.
4. Attrition Due to External Factors
A change in an organization's management or changes in policies, protocols, and managerial vision are common external causes of attrition. For instance, a basic modification in the uniform code or a revision in how the paid holiday is accumulated may lead to employees leaving and thereby result in attrition.
Changes in technology might also be considered external business issues that can lead to attrition. Often, technological changes can make many employees redundant; some may even choose to leave voluntarily as a result of such changes.
What Is the Rate of Attrition in the US?
In the United States, the rate of attrition is high. According to the Bureau of Labor Statistics, the attrition rate in 2021 was 47.2%. According to a recent study, roughly one-third of all American workers left their jobs last year.
This is a concerning trend because many employees are dissatisfied with their current workplace. There are several possible explanations for this. However, one of the most prominent is a lack of job satisfaction.
Many employees, particularly those with modest incomes, are dissatisfied with their wages. Employee pay has not kept pace with spending in recent decades. Recent high inflation has exacerbated the situation. Another critical source of attrition is dissatisfaction among millennials owing to a lack of advancement in their occupations.
What Are the Effects of Attrition?
On the plus side, attrition might lead to cost reductions for a company. When an employee departs, the company does have to pay their salary and benefits anymore. Moreover, organizations can generally lower their overhead expenditures when there are fewer employees. A corporation, for example, may need to hire fewer office premises or buy fewer office supplies.
On the downside, attrition might result in systemic knowledge and experience loss. Replacing experienced employees with a wealth of information and experience might be difficult and expensive. Furthermore, attrition might impair morale among the remaining workforce. Employees may feel overworked and unappreciated if they notice coworkers leave frequently.
In general, the effects of attrition are determined by the situation in which it happens. When utilized to incentivize personnel, attrition can be beneficial in enhancing productivity. However, if attrition is employed to cut costs, it may have undesirable implications, such as lower morale and productivity.