What is Employee Turnover Data Analysis?

Employee turnover data analysis is an HR analytics or people analytics process that involves collecting data, analyzing, and reporting HR data to help understand a company’s turnover rate. Employee turnover data analysis helps you break turnover data down and get insights into what turnover looks like in your company.

A company’s employee turnover rate is the percentage of workers leaving an organization and then being replaced by new employees within a specific period. You can calculate it on a monthly, quarterly, or yearly basis

What is Attrition Rate? How To Calculate and Analyze It

What is attrition rate?

As mentioned, attrition rate is a measure of the rate at which employees leave an organization during a specific period of time, usually expressed as a percentage.

Attrition can adversely affect the company, so it’s essential to know your company’s attrition rate.

Tracking attrition rate is helpful to monitor if the number of people leaving is growing or declining so HR teams can improve workforce planning and people management. The changes in attrition rate can signal the management to the root cause(s) of employee exodus.?

Difference between attrition and turnover

Attrition and turnover are two different concepts that describe the departure of staff from organizations, and they can have different impacts on the business.?

Attrition occurs when employees leave the workforce much quicker than the rate at which they can be replaced. Vacancies stay open for more extended periods. Or sometimes, they are eliminated because skills are currently unavailable in the job market. It is also a long-term issue. A high attrition rate can have positive and negative impacts, depending on the circumstances. Addressing it requires business and HR strategies and interventions.?

Employee turnover refers to the rate at which new hires replace employees who leave their companies. They are more short-term. High turnover rates can negatively affect businesses as hiring and training new staff can be expensive. In addition, it can lead to a loss of institutional knowledge and experience, which also impacts creativity and innovation.?

Here are some examples to illustrate the differences:?

Turnover:

• An employee who is laid off due to downsizing or restructuring
• A manager resigns due to limited career growth opportunities within the organization.
• An employee leaves their job due to poor work conditions.

Attrition:

• An employee retiring after reaching the age of retirement.
• An employee resigning because of a long-term illness?
• An employee leaves a company due to a change in personal circumstances, such as starting a family or caring for a loved one
• An employee whose contract expires or whose project comes to an end, and the company does not renew it.

Types of attrition

Voluntary vs. involuntary attrition

Voluntary attrition takes place when an employee decides to leave the organization. It’s important to assess who is leaving your company as the departure of star employees can affect your productivity in the long run. For example, if you are a tech company and face a number of resignations from your software developers, this would be a high business risk.?

Meanwhile, involuntary attrition occurs when an organization lets go of an employee. Usually, this happens because of company restructuring, economic conditions, or trends in the industry or workforce.?

Functional vs. dysfunctional attrition

Dysfunctional attrition refers to the loss of valuable employees to the company because of reasons such as toxic work culture, mismanagement, and low employee morale. This type of attrition can impact an organization’s profitability, morale, and productivity, which results in the company losing experienced staff that’s difficult to replace.

Functional attrition is a term that describes the loss of employees due to incompetence. It could be due to an employee being unable to meet the job demands as they lack the essential skills or experience. Or these employees may be unmotivated or disengaged, which could lead to them being laid off.?

Factors impacting attrition

Internal factors?

1. Compensation?

Compensation plays a factor in whether an employee remains or chooses to leave for a higher-paying job. Compensation also covers other financial incentives like bonuses, commissions, and annual increases. Most people will choose a company with higher compensation if both offer the same responsibilities and job titles.

2. Job satisfaction

Aside from compensation, job satisfaction also influences whether employees remain or choose to search for another job. People spend a significant amount of their lives at work, so it’s critical to feel fulfilled from performing their jobs. If employers fail to recognize and reward their employees for good performance or when the work environment is too restrictive (not allowing flexible work schedules when it’s feasible), employees are more likely to look for other employers.?

3. Learning and development?

It’s human nature to desire growth and improvement. We want to work with companies that give us purpose and something to look forward to. If management doesn’t provide the right L&D programs to cultivate their employees, they will seek these opportunities with other companies.?

External factors?

1. Workforce demographics

A company that has a large percentage of employees set to retire in a few years should be taking drastic steps to avoid high attrition in the coming years.? Employers can either choose to redistribute the responsibilities to other younger team members. Or if the position is no longer relevant, they could wait for the senior employee to retire and eliminate the position rather than retrain other staff or pay severance.?

2. Industry shifts

Changes within the business landscape can change staffing requirements. For example, the decline in brick-and-mortar shops means you would need fewer retail employees. And the continuous growth of e-commerce and online services means hiring more individuals to perform online and logistic support.?

3. Economic conditions?

Companies can afford to hire more people during economic growth because business is booming. Likewise, they can also offer higher salaries and more work perks to retain top employees. In contrast, during the recession, people are not spending enough,, affecting businesses. So companies are more likely to cut back on salaries and hiring people.?

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