We know that reducing attrition by keeping employees engaged and performing at their peak is key to minimising turnover costs and increasing financial returns. But lowering attrition rates in your organisation is easier said than done, especially if this is a systemic issue within the business. There is no overnight solution to improving staff retention, but by taking targeted action consistently, over time you can achieve real improvements.
In this guide we’ll take you through specific and actionable steps to work towards lowering your attrition rates including:
First let’s explore understanding your staff turnover costs.
Hiring and retaining the right employees doesn’t just increase ROI by improving performance, it also increases ROI by reducing turnover costs.
We often think about the visible costs of hiring a replacement staff member, like advertising the position online or recruitment agency fees, but what about all the hidden costs? Imagine a current employee is job hunting and it takes them four weeks to secure a new job. They take sick days to attend interviews and eventually give their two weeks’ notice of resignation. By the time they exit the business that is six weeks of reduced capacity your organisation will never get back.
Not only is staff turnover expensive, but the sooner employees leave, the more they cost your business. According to the Work Institute, 40% of turnover happens in the first year of employment. This is a big problem, as employees in this early stage of their tenure likely haven’t even reached full productivity yet.
Considering the known and hidden costs of attrition, let’s look at what costs your organisation may incur in obtaining a new hire.
Now multiply all these costs by how many employees leave your business each year. The numbers quickly add up. Understanding the true size of this cost is a key step in recognising how critical improving retention is to your bottom-line.
So we all understand why reducing attrition is important, not only does high attrition bring down staff morale organisation-wide, but it also has very real bottom line impacts as well.
Reasons for attrition will vary from organisation to organisation, and even from team to team. The first way we can seek to reduce attrition is understanding the unique causes of attrition in your business.
To uncover what is driving your attrition, you have to ask for feedback, and not just from the team member leaving, but their manager as well. Using intelliHR’s analytics tools, this information is easily recorded and analysed. Not only can you view attrition reasons for your organisation, but also cross-filter this data to discover trends contributing to declining performance or attrition and pinpoint areas for improvement. Let’s have a look at a practical example; intelliHR collects lots of team feedback, including team check-ins, goals, performance reviews and exit Interviews, and all of this information is useful in better understanding reasons for attrition.
In this example, it’s evident the business has a high rate of attrition in the first few months of employment. In the last 12 months, 15 employees have left before reaching one year of employment. For those who make it through 12 months, the attrition story is much healthier.
So, if the performing phase is only lasting less than one year, what is (or is not) happening in this time that contributes to attrition? Many factors could account for attrition, but capturing and reviewing feedback from team members during this stage would help provide insights into the problem. It could be onboarding related, lack of training, poor goal setting, a lack of strategy alignment or as simple as a poor manager. The important thing is being able to access good data to better understand what is happening.
In this case by drilling down in the attrition data from the first year of employment, it is clear that attrition is highest among employees in the Software business unit.
And digging further into the attrition reasons for this business unit reveals that Leadership and Company Culture were major causes of attrition for employees, while managers also cited Company Culture as a leading reason.
Once the business is aware of areas for improvement, it is time to consider how these are identified earlier and acted upon to maximise performing time as much as possible and prevent decline.
So as we can see in the example above, there can be many different causes of attrition and some will be more prevalent than others There are a plethora of factors which can contribute to lost productivity. Declining engagement, mismatch between managers and their direct reports, unclear expectations, lack of essential resources and sometimes even extreme personal factors can impact people’s performance at work.
It’s one thing to uncover attrition reasons in the offboarding process, but even better to get one step ahead and proactively diagnose symptoms of productivity decline. Of course, no one in a business has the ability to predict the future or read the minds of their people, but with intelliHR it is possible to get the next best thing, AI-powered analytics.
By gathering continuous feedback and analysing it using Sentiment Analysis and Keyword Analysis, it’s now possible to find some answers on how people in your business are really feeling about their work.
In this example, it is evident that negative sentiment is most prevalent among the cohort of 10+ years’ tenure, and those in the 7-10 years cohort have the second highest levels of negative sentiment.
Using intelliHR, it’s possible to drill down to see where these issues are occurring and uncover root causes of this sentiment. From here it is possible to take preventative action before productivity loss or attrition occurs.
Of course, in order to derive these insights, there must be a way to gather information for analysis. By handling everyday HR processes all within intelliHR, everything from form entries, goal comments, diary notes and performance management records will be automatically analysed for you.
So we’ve looked at making retention a priority, uncovering causes of attrition and spotting the warning signs – but how can we go one step further to help prevent even early issues from happening?
It all comes back to empowering your people to do their best work every day, so they can perform at their peak, and everybody wins.
And the key to empowering your people? Having the visibility to see that everyone has the tools they need to do their job and no one is getting left behind.
Continuous feedback and open communication will allow you to stay aware of areas where employees may need extra assistance or training to fill a skills gap. Sometimes something as simple as creating a better workspace can work wonders for increasing performance and keeping people happy at work. With continuous feedback we can always be aware of what our people need and how we can ensure they’re support to do their best work every day.
Now remember those attrition reasons we looked at earlier? Leadership, company culture, workplace environment, career development… With this feedback loop in place, these potential problems can be identified much earlier, before they escalate.
So those are our biggest tips to help reduce attrition in your organisation. Have questions about how intelliHR might be able to help you with retention? Get in touch with us on 1300 993 803 (Australia) or 0800 631 631 (New Zealand).