Higher Attrition Rate - Major Challenge in HRM


Ms. Sapna Rana
Department of Management Studies
B.S. Anangpuria Institute of Technology & Management

"If you think you're too small to make a difference, You've never been in Bed with a mosquito."
                                                                                                                           - Anita Roddick

Employee attrition is one of the critical problem which is faced by an HR manager during these days. In an ideal situation an employee consider multiple comfort level while working in a office for e.g. employer's goodwill in the market, remuneration, future growth, working condition, co-workers, current role's scope in the market & most important future stability with the organization. In a survey, approximate 70% of the working population in India is not happy at all due to one of the aspect (as mentioned aforesaid) which is not fulfilled while working in a organization which caused higher attrition rate.

In broad term, attrition is a situation which employer face when employee left the organization due to job dissatisfaction, new opportunity in the market, retirement & natural cause (death/illness). Now a days this is one of the most important question which is asked by higher authority to HR people…."Why our attrition rate is higher than other company". Earlier it wasn't important for the organization, whether their employees are committed or not, but now the time has been changed. The company cannot afford to lose its best employee to competitors. Therefore, HR team conducts EXIT interview when an employee left the job to get the information about one's decision to leave an organization. It is a paramount consideration for a HR team to think, why people are vacating their positions. Still Human Resource team face the challenge due to wrong information provided during EXIT interview.

Reason for Leaving:-

The reason are various behind leaving an organization & any attempt to find one comprehensive explanation for this phenomenon would be futile. Though the rising attrition within industries is a well-discussed topic but very few HR executives have been able to pinpoint the 'exact' reason for this growing trend. A recent Hewitt 'Attrition & Retention' survey shows one of the top reasons for talent attrition to be "external inequity in compensation". They also show that 27% of the employees in their EXIT interview mentioned compensation as the primary reason. It comes no surprise to many that money is an important factor but what besides this, there are several factors that influence an employee's decision to leave.

Those days are gone when salary was the sole motivator for an employee to leave an organization. According to a survey there are three main reasons that are followed by other common reason:

* In equity in compensation
* Limited career opportunities
* Role stagnation

Common reasons experienced by HR manager are discussed here:

* Mismatch of job profile.
* Job stress and work-life imbalances
* Odd working hours/Early morning-night shifts
* Job hopping
* Lack of authority provided to accomplish ones task
* Monotony of job

The list can be endless but the reason why employees leave the organization is vary according to the nature of the business. The work should give to them the level of the employees and the nature of the responsibility he/she can handle. Therefore it's very challenging task for an HR expert to cope up with this situation and retain talent with an organization.

Associated cost with high Attrition:

Talent loss:

* It includes the cost of lost knowledge, skills and contacts that the person who is leaving is taking with them out of your door.

Recruitment cost:

* The cost of advertisements; agency costs; employee referral costs; internet posting costs.
* Calculate the cost of the manager who has to understand what work remains, and how to cover that work until a replacement is found.
* cost of the various candidate pre-employment tests to help assess candidates' skills, abilities, aptitude, attitude, values and behaviors.

Training cost:

* It includes the cost of orientation in terms of the new person's salary and the cost of the person who conducts the orientation.
* It also consists of the training.
* Calculate the cost of various training materials needed including company product manuals, computer or other technology equipment used in the delivery of the training.

Motivational cost:

* It refers to the cost arises because of motivating the other employees to retain them in the organization in terms of increasing their salary and time.

Lost Productivity Costs:

* As the new employee is learning the new job, the company policies and practices, etc. they are not fully productive. Use the following guidelines to calculate the cost of this lost productivity.

How To Retain Employees:

Retaining employees has always proved to be fruitful across many industries rather than to search for new & efficient talent. So to gain the fruit of this tree, different companies devise different strategies for retaining their employees. simply hiking ones salary in an endeavor to retain your valuable employee will serve no purpose as today's workforce has a lot going during his/her decision making process and its certainly not restricted to just pay. 

* Insurance schemes for the employees and some of there family members
* Leased accommodation
* Transportation facilities to &from office.
* Personal healthcare like medical attention for self & family
* Recognition of merits & rewards
* Participation in decision making
* Memberships of prominent social clubs.


To devoid organization's growth, HR manager should give close attention to why attrition is occurring in the present. To ignore why people are leaving the organization is to ignore the organization greatest assets – its people. People in organization are needed to perform the task; but they are not just machine but more than that. They are organization dreams, hopes, ambitions, creativity and innovation. And to retain these valuable assets is one of the surest ways to build an organization rather than just to go in global markets. And this is the only way an organization can lower its attrition rate.

Ms. Sapna Rana
Department of Management Studies
B.S. Anangpuria Institute of Technology & Management

Source: E-mail June 10, 2008


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