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The Great Indian Attrition
Recently, New Jersey-based Cognizant Technology Solutions Corp., which has more than two-thirds of its overall employees in India, was in news for a steep quarterly annualized voluntary attrition rate of 33% during the September quarter, the highest among peers in the industry. The high attrition rate is not just limited to Cognizant or the IT sector. The trend of voluntary attrition is on the rise in India as well as worldwide.
Commonly referred to as a ‘churn rate,’ a company’s attrition rate is the rate at which people leave. It is the number of people who have left the company, divided by the average number of employees over a period of time. Typically, it is expressed as a percentage (%). Ideally, your attrition rate should be below 10%.
|Type Of Attrition||What It Means|
|Voluntary Attrition||When an employee chooses to leave|
|Involuntary Attrition||When an employee is dismissed|
|Internal Attrition||When employees move internally|
|Demographic-specific Attrition||When a specific group (age, gender, ethnicity) leaves|
Why does it matter?
Exiting employees can cost your business. The first impact can be felt in hiring cost. Given that you invested resources into hiring, training, and certifying highly-trained employees in the course of their employment, replacing a highly-trained employee can vary between 120% of their annual salary to more than 200%, according to some sources. Those investments immediately vanish into thin air once an employee resigns.
Unfortunately, your company’s turnover woes don’t stop there. When good employees quit and less experienced workers are retained, overall business conditions might be put at risk due to the negative reputation owing to the high attrition rate. Your clients and employees won’t trust you as much as you would want them to and might consider looking for more reliable companies. Whenever someone leaves it definitely changes the dynamics of a team and can even hurt the company’s employer brand and even employer value proposition (EVP).
Usually it starts at the reputation and ends with poor quality and quantity of work. The truth is experienced, put simply, gives you an edge. Experienced workers bring a level of experience, critical thinking and sheer knowledge that cannot be taught.
Moreover, the new employee has to go through a period of adjustment in the workplace, which means tasks may take longer to finish as far as the new hire is concerned. Consequently, there might also be delays within teams who are relying on their newbie members to help them get things done.
Calculate Your Company’s Attrition Rate
Hence, keeping a check on the attrition rate is indispensable to ensure a great business. Once you know your turnover or churn rate, you’ll be able to find out why people are leaving and develop relevant and effective retention strategies to keep your employees happy and loyal.
A simple formula for figuring out your employee attrition rate is dividing the number of full-time employees who have left per month (called “separations”) by the average number of employees, and then multiplying that figure by 100.
Attrition rate = (No. of separations / Avg. No. of employees) x 100
You can also calculate year-to-date and annual attrition rates by adding all 12 months together.
Tips to increase employee retention
Create a happy, productive, inclusive culture. Forget micromanagement. Modern employees expect nothing less than an inclusive, tech-savvy environment, where collaboration is encouraged, autonomy is allowed, and innovation is celebrated.
To achieve this, it’s important to focus on every aspect of the employee lifecycle – from attracting the right talent, and integrating them into the fiber of your organization, to nurturing their growth and giving them opportunities to advance within your organization – and ensuring that performance is well managed throughout.
Provide opportunities to advance. Employees need to know that they will have the opportunity to advance at your company. You can make this clear, and help them reach their aims by assisting them in drawing up a career map.It need not be a five- or 10-year plan but it should give employees the chance to focus on the skills they’d like to develop.
Developing a culture of continuous learning and giving your employees the opportunity to develop their careers through training is a valuable retention strategy, which can be achieved via microlearning.
Recognize and reward employees. It plays a vital role in employee retention and job satisfaction. A simple act of appreciation shows employees that they matter, and that their thoughts, ideas, input and work are valued. And, when people feel valued, they stay longer and perform better.
While the IT Firms are squabbling to retain employees, Tata remains a leader with the lowest attrition rate in the country. However, it is still quite high as per desired below 10% rate.
Image Source: Indianexpress.com
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