ATTRITION RATEATTRITION RATE

A factor, normally expressed as a percentage, reflecting the degree A factor, normally expressed as a percentage, reflecting the degree of losses of personnel or materiel due to various causes within a of losses of personnel or materiel due to various causes within a specified period of timespecified period of time The rate of shrinkage of manpower in size or number.The rate of shrinkage of manpower in size or number. Reduction of employees by retirement, resignation & layoff.Reduction of employees by retirement, resignation & layoff. A term used to describe voluntary and involuntary terminations, A term used to describe voluntary and involuntary terminations, deaths, and employee retirements that result in a reduction to the deaths, and employee retirements that result in a reduction to the

employer's physical workforceemployer's physical workforce. .

CAUSES OF ATTRITIONCAUSES OF ATTRITION

Attrition is an expected yet dreaded cost of business. Essentially, there are two causes Attrition is an expected yet dreaded cost of business. Essentially, there are two causes of attrition, which can be grouped into two broad categories—of attrition, which can be grouped into two broad categories—Functional attrition and Preventable attrition. Functional attrition and Preventable attrition.

FUNCTIONAL ATTRITION-FUNCTIONAL ATTRITION-Functional attrition is unavoidable, inevitable turnover. Examples include employees Functional attrition is unavoidable, inevitable turnover. Examples include employees who retire, employees who leave for a spouse's job transfer, and employees who leave who retire, employees who leave for a spouse's job transfer, and employees who leave because of health problems or to care for sick relatives. In other words, functional because of health problems or to care for sick relatives. In other words, functional attrition is caused by circumstances that can't be controlled. You must expect and attrition is caused by circumstances that can't be controlled. You must expect and accept this type of turnover.accept this type of turnover.

PREVENTABLE ATTRITION-PREVENTABLE ATTRITION-Preventable turnover, on the other hand, can usually be controlled and avoided but Preventable turnover, on the other hand, can usually be controlled and avoided but often isn't i.e.- Poor hiring practices, misguided policies, low salaries and inflexible often isn't i.e.- Poor hiring practices, misguided policies, low salaries and inflexible corporate attitudes are some of the preventable reasons people leave companies.corporate attitudes are some of the preventable reasons people leave companies.Preventable turnover occurs when your company can change a policy or find a solution Preventable turnover occurs when your company can change a policy or find a solution to keep employees from leaving but doesn't to keep employees from leaving but doesn't

Reasons & Measures of preventable attritionReasons & Measures of preventable attrition

a) Lack of job satisfaction –a) Lack of job satisfaction – Employees resigns because they wants to advance their career, but their Employees resigns because they wants to advance their career, but their position is a dead end. They are a great employee and likes their company, but their goals just don't position is a dead end. They are a great employee and likes their company, but their goals just don't match with their position's potential. match with their position's potential.

Suggestion-Suggestion- Company could avoid the resignation by moving them into a position with growth potential Company could avoid the resignation by moving them into a position with growth potential & suitable profile.& suitable profile.

b) Stressful work environment -b) Stressful work environment - Employee works for long hours with few rewards. S/He's expected to Employee works for long hours with few rewards. S/He's expected to work 60 hours a week to meet her/is deadlines. They feels undervalued and overworked. At the end work 60 hours a week to meet her/is deadlines. They feels undervalued and overworked. At the end S/He's started looking for another job. S/He's started looking for another job.

SuggestionSuggestion- Company could prevent this by setting deadlines that are achievable in a 40-hour workweek - Company could prevent this by setting deadlines that are achievable in a 40-hour workweek & By offering monetary, non-monetary incentives.& By offering monetary, non-monetary incentives.

c) Outside influences –c) Outside influences –Sometimes employee is approached by a competitor recruiter who promise them Sometimes employee is approached by a competitor recruiter who promise them paying twice what their company is paying them and with far better benefits & Employee just take up paying twice what their company is paying them and with far better benefits & Employee just take up their offer. their offer.

Suggestion-Suggestion-This could be prevented by paying employees what they're worth and having a comprehensive This could be prevented by paying employees what they're worth and having a comprehensive benefit plan. benefit plan.

d) Conflict with a manager –d) Conflict with a manager – In a team people don’t prefer working with less efficient or careless, lazy In a team people don’t prefer working with less efficient or careless, lazy person as it hampers their output also or inefficient person valued just because their team is efficient & person as it hampers their output also or inefficient person valued just because their team is efficient & valued. As a result conflicts, unrest is aroused that ends with resignation.valued. As a result conflicts, unrest is aroused that ends with resignation.

SuggestionSuggestion- You could prevent this by assigning Bruce to another department or working with the - You could prevent this by assigning Bruce to another department or working with the manager and Bruce on conflict resolution. manager and Bruce on conflict resolution.

The formula and correct logic behind calculation of ATTRITION RATE

[(No. Of attritions x 100) / (Actual Employees + New Joined)] /100. Examples: 1) Actual Employees No. Of people left No. Of Joined Total Employees (Opening BAL) (Attritions) (Current Headcount) 150 20 25 155 So according to the formula: ((20 x 100) / (150 + 25)) / 100 Which comes to 0.1142 i.e. 11% Now as you had 150 previously and now 25 joined so it makes 150 + 25 =175 Now if you calculate 11.42% of 175 i.e. 175 x 0.1142 = 20 Which clearly shows that 175 - 20 = 155, which is your current headcount and at the same time you can say my attrition is 11.42% that shows you lost 20 employees of 150 and 25 more joined which makes count to 175.

2) Actual Employees No. Of people left No. Of Joined Total Employees (Opening BAL) (Attritions) (Current Headcount) 100 50 0 50 This is the special case where we are considering attritions only keeping into mind that nobody has joined in particular month. So according to the formula: ((50 x 100) / (100)) / 100 Which comes to 0.5 i.e. 50% Now as you had 100 previously and now 0 joined so it makes 100 + 0 =100

Now if you calculate 50% of 100 i.e. 100 x 0.5 = 50 Which clearly shows that 100 - 50 = 50, which is your current headcount and at the same time you can say my attrition is 50% that shows you lost 50 employees of 100 and 0 joined which makes count to 50.

3) Actual Employees No. Of people left No. Of Joined Total Employees (Opening BAL) (Attritions) (Current Headcount) 500 200 100 400 So according to the formula: ((200 x 100) / (500 +100)) / 100 Which comes to 0.3333 i.e. 33.33% Now as you had 500 previously and now 100 joined so it makes 500 + 100 =600 Now if you calculate 33.33% of 600 i.e. 600 x 0.3333 = 200 Which clearly shows that 600 - 200 = 400, which is your current headcount and at the same time you can say my attrition is 33.33% that shows you lost 200 employees of 500 and 100 more joined which makes count to 400.

4) Actual Employees No. Of people left No. Of Joined Total Employees (Opening BAL) (Attritions) (Current Headcount) 8000 5000 500 3500 So according to the formula: ((5000 x 100) / (8000 +500)) / 100 Which comes to 0.5882 i.e. 58.82% Now as you had 8000 previously and now 500 joined so it makes 8000 + 500 =8500 Now if you calculate 58.82% of 8500 i.e. 8500 x 0.5882 = 5000 Which clearly shows that 8500 - 5000 = 3500, which is your current headcount and at the same time you can say my attrition is 58.82% that shows you lost 5000 employees of 8000 and 500 more joined which makes count to 3500.

Turnover Cost of Employee (Calculating Cost per Employee)  The Employee turnover cost is defined as the Percentage of Annual Salary, including the other cost benefits given to an employee. It can be calculated using the formula: Turnover Cost = Hiring Cost + Training Cost + Learning Curve Loss Cost + Termination / Separation Cost + Vacancy Cost  The following questionnaire can help in capturing the details to calculate the employee turnover cost 

 

Turnover Cost Interview Questionnaire  Exit Interviews 1. Do you conduct exit interviews? {If no, please go to question 4} 2. Who is typically involved in an exit interview? {Please include the number of individuals involved and their titles/position} 3. How long does a typical exit interview usually last?

Administrative tasks 4. What types of administrative tasks are associated with an employee leaving the organization? {Ex. processing records, security, payroll, benefits; Notice Period} 5. How many individuals are typically involved in completing the administrative tasks associated with a teacher leaving? What are their titles/positions? 6. How much time does it take for ALL administrative tasks to be completed?

Advertising 7. In what ways do you advertise openings for a new / replacement positions? {Newspaper, Internet, etc.} 8. Do you usually advertise for multiple positions at the same time? If so, in a typical year, how many positions do you advertise for at one time? 9. What types of advertising costs do you typically encounter when trying to recruit for a position? {Please provide cost estimations for each category of advertising costs} 

Recruiter 10. Do you use recruiters in trying to find qualified candidates? How many recruiters do you employ? {If none, please go to question 15} 11. What types of activities will a recruiter typically perform? 12. Is this recruiter paid on a consulting or salary basis? 13. If salaried, what is the salary range for a recruiter? If consulting, what is the typical consulting fee?{If consulting, please specify the amount of the recruiter’s time associated with the consulting fee.} 14. In a typical year, how many new teachers does the recruiter recruit? How many will actually be hired?

Travel 15. Do you pay any travel costs (either for the recruiter or the applicants) during the hiring process? 16. If so, what is the average per position?

Processing applicants 17. How do you process applications and resumes? 18. Who handles this task? {Please specify the number of individuals involved and their titles/positions} 19. How much time is associated with processing applications/ resumes? 20. What types of background checks do you perform on prospective employees? 21. Who is involved in this task? {Please specify the number of individuals involved and their titles/positions} 22. How many background checks do you typically conduct for a single position? 23. How much time is associated with conducting background checks on a single applicant? 

Interviews 24. How many interviews do you typically conduct for a vacant position? Do you ever conduct multiple interviews with the same applicant? 25. Who usually conducts these interviews? {Please specify the number of individuals involved and their titles/positions} 26. How much preparation time do interviewers usually need for these interviews? 27. How long do these interviews typically last? 28. Once interviews have been conducted, how do you choose which applicant to extend an offer to? 29. Who is involved in this selection process? {Please specify the number of individuals involved and their titles/positions} 30. How long does the selection process typically last?

 Co-ops 31. Does you district belong to an electronic co-op which does the screenings and qualifying of applicants? {If not, please go to question 35} 32. What are the costs associated with belonging to this co-op? 33. How does this co-op work? What steps does it eliminate in the hiring process? 34. How many positions in a typical year does your organization hire from the co-op pool?

 Stipends and bonuses  35. Does your organization pay stipends to employees assigned to shortage areas (niche talent / expertise employees)?  36. In the past year, what percentage of such employees who received niche expertise stipends? 39. Does your organization pay other bonuses to new employees? 40. In the past year, what percentage of new employees received other bonuses?

Post-employment tasks 41. What types of administrative tasks must be completed after a candidate is hired? {Ex. establishing payroll, security, benefits, computer passwords, email; dissemination activities} 42. Who is involved in these tasks? {Please specify the number of individuals involved and their titles/positions} 43. How long does it typically take for these administrative tasks to be completed?

 Orientation 44. What types of fresher support activities (Induction Plan) do you offer new joiners? {If none, please go to question 47.} 45. How many new joiners attend these activities in a year? 46. Who is involved in conducting these activities? {Please specify the number of individuals involved and their titles/positions} 47. What type of time commitment is usually required of the individuals involved? {Other than the fresher’s} 48. Are new joiners given any orientation materials? If so, what are the costs associated with the materials for EACH of them?

Training 49. How is your organization assisting employees with the new requirements

for professional development training associated with certification? 50. For employees in their first year in the company, how much professional

development will you organize? {In terms of cost for training, training materials} 51. How many days are the new joiners don’t attend work due to professional

development training? 

The following table can help in capturing the data to calculate the turnover cost Turnover Cost Calculations The following rules are used in all calculations of turnover cost. If any

calculation deviates from these rules, a footnote describes the rule used for the calculation. Sources of information are also noted.

 à Estimations of time for the interview: - If multiple individuals are involved in a

task, the reported time is divided evenly among all individuals involved. à Stipends, other bonuses and costs are computed for the amount invested in

the resigned / terminated employee and the amount provided to new joiners filling the vacant positions.

 Task

Time onTask

EmployeesInvolved in the process

Cost perYear

SEPARATION COSTS

Exit Interview Minutes per individual    

Grade – A      

Grade - B      

Separation Administration cost

Hours per resignation    

Grade – A      

Grade – B      

HIRING COST

Ad Cost      

Recruitment Cost      

Processing Applications      

Position – A      

Position – B      

Reference Checks      

Position – A      

Position – B      

Interviews      

Position – A      

Position – B      

Post-employment Admin Tasks      

Grade – A      

Grade - B      

Stipends      

Grade – A      

Grade - B      

Other Bonus      

Grade – A      

Grade - B      

TRAINING COSTS

Orientation      

Grade - A      

Grade – B      

Training      

Grade - A      

Grade – B      

 

The final turnover cost can be obtained, by adding up all these costs.