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Attrition

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What is attrition in HR management?

A term used to describe voluntary and involuntary terminations, deaths, and employee retirements that result in a reduction to the employer’s physical workforce.

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CA Ravi Sisodia (CA,CS,CMA) (32226 Points)
Replied 17 July 2010

While organizations lament the challenges that they have to constantly encounter as a consequence of employee turnover, the truth is that all attrition is actually not detrimental for an organization. It is in fact a myth that every time an employee walks out

of the door, the organization suffers. Some attrition is indeed desirable and necessary for organizational growth and development.

The term "healthy attrition" is used to signify the importance of less productive employees voluntarily leaving the organization. There are some people who have a negative and demoralizing influence on the work culture and team spirit. This, in the long-term, is detrimental to organizational health. It benefits the organization when these employees leave, whose continuation of service would have negatively impacted productivity and profitability of the company.

Benefits of Healthy / Desirable Attrition

Good attrition minimizes the adverse impact on business. Desirable attrition includes termination of employees with whom the organization does not want to continue a relationship. It can be through resignation or by the employer. The benefits are: -

Removes bottle-neck in the progress of the company.

Creates space for the entry of new talents, external as well as internal.

Helps planting "ambassadors" in the eco-system who can have a positive impact on the growth of the organization.

Assists in evolving high performance teams.

Infuses new blood into the organization.

Enhances ability for execution.

New thoughts, ideas, and hence, more innovation and creativity at work.

Knowledge of best practices from across the industry is brought in.

Challenging status quo.

It is also an opportunity to induct employees at a lower cost with fresh skills and competencies aligned to the current need of business.

The cost of attrition can be computed with recruitment cost, productivity loss till replacement, training cost and cost of new hire and loss of sales.