• The success or failure of an organization is

largely dependent on the caliber of the

people working therein.
• Companies have an extra ordinary flair to
recruit and retain highly capable employees.
• These companies are described as “Talent
Magnets”.
 Attrition
• Attrition is the reduction in employees in an
organisation due to retirement, resignations
and deaths.
• Attrition rate measures the number of
employees moving out of the company
(voluntary resigning or laid off by the company).
• It is also referred as churn rate or turnover
• Attrition may be voluntary and involuntary.
 Average head count in the given month
Attrition (Per Month) % = ------------------------------------------------------- *100
Number of Separations in the given month
CLASSIFICATION OF EMPLOYEE ATTRITION
I-Voluntary versus Involuntary Attrition:

Voluntary on the part of the employee (resignation) or

Involuntary (requested resignation, permanent layoff, retirement, death).
Voluntary reasons
another job that offers more responsibility,
returning to school full time, or

improved salary and benefits are more controllable

Involuntary reasons,
employee death,
chronic illness, or

spouse transfer. Are more uncontrollable.

• Most organizations focus on the incidence of
voluntary employee attrition precisely.
• Interested in calculating the costs of
voluntary attrition, because when these costs
are known, an organization can begin to focus
attention on reducing them.
 II-Functional Attrition versus Dysfunctional
Attrition:

• Having categorized employee attrition as

voluntary, many Organizations take the next
logical step;
• to determine the extent to which the
voluntary attrition is functional
/dysfunctional for the organization.
 functional /dysfunctional
• Functional attrition
• Functional retention may represent the continuing
employment of high performing employees,
• Employee attrition is functional to the extent that the
employee‟s departure produces increased value for
the organization.
• Functional retention adds value to the organization
because employees work well together, work gets
done efficiently, and organizational interests are
furthered.
• Dysfunctional attrition
• Dysfunctional retention may represent the continuing
employment of poor performing employees
• It is dysfunctional to the extent that the employee‟s departure
produces reduced value for the organization.
• Retained employees who neglect to engage in important
workplace behaviours or who engage in deviant behaviours
correspond to dysfunctional retention.
• Dysfunctional retention may be costly to the organization not
only because effort is withheld and morale among all employees
may be negatively influenced, but also because deliberate acts
intended to harm the organization may ensue.
 Dyfunctional attrition is the exit of good performers, exit of
top performers
– employees who leave an organisation on their own
discretion are examples of voluntary attrition
– Exit due to alternative job opportunities
– High performers who are difficult to replace represent
dysfunctional attrition,
• It affects the performance, creates costs to the
organisation and is disruptive to the routine
functioning of the organisation
• High performers who are difficult to replace
represent dysfunctional attrition.
• low performers who are easy to replace
represent functional attrition
 Sectors of Attrition
• Leisure and retail sectors depict high attrition rates and low job
tenure of 1.5–2 years, as they employ large numbers of
transient employees with limited scope for development and
progression.
• Finance, information technology and professional services
industries such as consulting, insurance, etc. employ large
number of employees with specialised skills, knowledge and
expertise. These employees have job tenure of 2–2.5 years and
are much sought after, as there is shortage of skills.
• Manufacturing, engineering, transport industries and large
organisations with 5,000+ employees have longer job tenure of
3+ years
 Issues affecting turnover in the Indian
companies
• global competition,
• shifting loyalties of new generation professionals,
• shortage of skilled engineers – fitness for use
directly by the sector, etc
• opportunities with higher compensation,
• challenging roles and improved employee value
propositions
• the dissatisfaction push the employee away from
the existing organisations
 Reasons for attrition
• lack of opportunities for personal and career
development,
• issues with working relationships,
• compensation and benefits.
 Impacts of Attritions
• High Financial Cost
• Survival as an Issue
• Exit Problems and Issues
• Productivity Losses and Workflow Interruptions 88
• Service Quality
• Loss of Expertise
• Loss of Business Expertise
• Administrative Problems
• Disruption of Social and Communication Networks
• Job Satisfaction of Remaining Employees
• Lost Image of the Organization
 Organizational Attrition Management
Strategies
• Manager Retention Practices-
• represent the manager‟s actual behaviors on
the job and have little to do with the amount
of classroom training received by employees
• create a climate so that the employee is
retained and committed on a long term basis.
• Measurement and Accountability
– uncovering the potential causes of attrition
– identify top performers, reward and recognize talent
– Non performers put on performance improvement
exercises
• Organizational Retention Systems
– equity of pay scales.
– recruiting systems and processes
– committed on a long term basis
• Organizational Attrition Management
 De-merits of attrition
1. Losing staff:
some of the functions are merged to eliminate
redundancy. When there is merging of functions,
there is a need to let go off some of the employees.
2.Losing credibility:
many links with vendors and other customers
would see that vendors become more hesitant in
continuing business with them. reditors would be
even thinking twice whether to proceed
• overall bottom line.
• it would directly hit the production or services as it would
be reduced when compared to the previous. Though it
may seem that it will increase efficiency it may not be so.

• Opportunities=those who are held back in the

organisations cannot look forward to opportunities for
growth within the framework….. those who wish to see a
growth in their career as the options are limited or nil.
• Impact the decision-making process
– The view or opinions of those who departed cannot be
gathered or would be missing.
– missing those practical decision making which were
part of the company productivity and profitability.
• public perception:
– create a negative impact on their image in the eyes of
the public.
– as unprofitable or failing business thereby decreasing
clients due to misconceptions.
• a drop in revenue, repeat customers and new
customers would refrain from building
business.
• structures get changed. With such disruption,
the flow of information for executing projects
gets hampered as decision making and
exchange of ideas are not carried out
effectively.
 Merits
• financial stability could be restored as there
would be cost cuts to additional expenses
• operating at reduced costs by avoiding
unnecessary expenditures and looking into
details of any process to see that there is no
unnecessary costs.
• management needs to pay more attention to
the low performing employees so that they
could be targeted first.
• team gets smaller –allows to focus on
rebuilding the new team by focusing on
training, incentive programmes.
• Thus create loyalty, motivation and empowers
them directly impacting on productivity.
• chance for the business to re look at its
operations and strategies for growth.