It’s a common business trope to say that “our people are our greatest asset” and while it may sound trite to some, it could not be more true. Regardless of what industry you’re in, the ability to recruit and retain top talent is one of the most important components of growing a thriving business. However, in many cases, a business will focus all of their attention on the recruitment part of the process and not as much effort on the retention rate of those employees once you’ve brought them into the organization.
That’s why it’s important to understand your employee attrition rate and how it impacts your business. It might even be the most important human resources metric to keep an eye on.
Simply put, the attrition rate (also known as churn rate)definition refers to the percentage of your staff that leave your organization over a specified period of time. It’s a simple calculation where you take the number of people (team members) that have left the business and divide it by the average number of employees over that same period.
In most cases, you’re hoping that your attrition rate is as low as possible because that shows that your employees are happy and that they buy into the vision of the company. A high attrition rate on the other hand indicates issues within the work environment and company culture. When the rate of attrition starts to rise, it can be a sign of something going wrong internally. All that being said, be wary of oversimplifying things here because there are a number of things that can influence the attrition rate, so you have to do the work to identify what are the major contributing factors in order to make any sense of the figure itself.
There are a number of different things that can influence whether you have a higher attrition rate or lower. Some of the more common factors include:
So, if those are the factors – what can you do about it as an organization?
The only sustainable way to reduce your annual attrition rate is to improve the working conditions for your employees to keep them satisfied. In the short term, you might find success in throwing money at the problem, but over a long time period, employees are going to stay because they enjoy working there and because they believe in what the company is trying to achieve.
Those are just some examples of what you can do to keep employees satisfied – but all of this needs to be informed by real data that you’re collecting from those employees who are leaving. As such, it’s very important that you run a proper exit interview with each employee who is on the way out to ascertain why they are leaving and whether that points to other things within your organization that can be improved.
If you can get a handle on some of the principles above and create a working environment that employees love to be a part of, you’ll ensure a low attrition rate and give your business the best possible chance to reach the lofty heights you’re dreaming of.
It might just be the secret weapon that takes your company to the next level!
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