Recognizing Employee Attrition as the biggest threat to the bottom-line
Oceanic Pharmachem Private Limited (OPPL) understands that while the financial cost of replacing employees can be large, the residual effect of high attrition on remaining staff could add up to even more significant losses for the company..
Employee Attrition, also called as turnover or churn, is costing companies more than estimated, and employee retention and talent replacement is the number one challenge facing most businesses today. Across industries, healthcare, hospitality and manufacturing continue to experience the highest attrition.
Effects of Attrition
High attrition rates can have a huge impact on a company’s bottom line. Lowering the rate by even half can result in significant savings. But, employee turnover has far-reaching effects across all areas of the business, most notably in recruiting and job training costs. Replacing a single employee costs approximately 20 percent of that employee’s salary, in addition to the lost expertise that can take years to replace.
Attrition also affects other critical areas of a business: productivity and employee morale. When companies are short-staffed, products or services can suffer drastically, straining relationships with customers and vendors. The remaining employees, forced to take on additional responsibilities and work overtime, can become disengaged and stressed. Workplace stress again becomes almost 50 percent of the cause factors in voluntary turnover.
Retaining Young Talent
Voluntary turnover is the highest among the younger employees (20-35 age group), who have surpassed the middle-age (35-45) and senior (45-60) staff in the work force. A good majority of them, do not wait for the long term and stay in a job for less than three years.
The major reasons why the younger generation is likely leave their current positions, are: (1) a desire to explore options; (2) a desire not to get stressed in the same job; and (3) a desire to seek opportunities for faster career advancement.
On the flip side, many business leaders feel that the same generation is also one of the smartest, most talented and most creative. To retain them as employees, this generation needs to feel challenged and valued. Offering career advancement opportunities, whether it is in upskilling or changing positions within the company, and most importantly, providing flexible work hours as they absolutely need a good work-social life balance, are some of the best practices.
Keys to Combating Attrition
To help recruit and retain the best talent, following are keys to combat high attrition:
- Careful analysis and fit of all candidates: While some may possess all the required skills and even the nice-to-have additional skills, they may not be the best fit for the company culture. Hence, a thorough reference check is important.
- Comparing compensation and benefits to the market trend: If the offered pay packages are not in line with those offered at other companies, necessary adjustments have to be made to ensure competitiveness in the marketplace.
- Mapping out career advancement plans: Ensuring that each employee understands the intended career path and adjustments made at right times is imperative.
- Provide on-going training and upskilling opportunities: With emerging technologies bringing revolutionary changes, new skills will need to be imparted.
- Creating a culture for the desired work-life balance: Offering flexible hours and the opportunity to telecommute, where possible.
- Keeping a watch on employee morale: The best indicator of trouble within a company, making efforts to boost the morale is more cost-effective than incurring the high costs associated with employee churn.
- Reviewing trends within the industry: This helps gain a better understanding of an increased turnover and take corrective measures to combat it.
Employee attrition can be costly and hence, remaining aware of employee needs and having employee-focused programs and policies in place will help keep the best talent on board and protect the bottom line.