The Top 10 Reasons for Employee Attrition and How to Address Them
More than half of US workers are currently considering leaving their jobs.
The puzzle of employee attrition isn't just about the departing employee; it's about the ripples they leave behind. Understanding these reasons is half the battle. Addressing them? That's where the real challenge lies.
This article will discuss:
- Why should you worry about employee attrition?
- What are the reasons for employee attrition?
- How can you predict employee attrition?
- All the tools you need that can solve your workplace attrition challenge and create a place where your employees will love to work.
👋 What is employee attrition?
Employee attrition is when employees leave your organization for various reasons, whether voluntarily or involuntarily - including resignation, termination, death, or retirement.
It is essential to note that the timely departure of an employee who has contributed for several years is a time for celebration. However, when a productive and contributing employee leaves the organization, it fosters an atmosphere of fear and doubt for the management.
"Our assets walk out of the door each evening. We have to make sure that they come back the next morning." Narayana Murthy, Chief Mentor of Infosys.
Companies should measure and analyze the attrition rate to understand the number of people who moved out of the company within a certain period and the reason behind it.
🆚 Employee attrition vs. turnover: What's the difference?
Employee attrition and employee turnover are two words that often conflict with each other. Though the terms are often used interchangeably, there's a key difference in attrition and turnover.
Attrition includes voluntary and involuntary departures (resignation, termination, death, retirement, and automation), while turnover only has voluntary departures. Turnover is also known as employee churn.
👵 3 Types of employee attrition: Understanding the "why" behind employee departures
Voluntary attrition means employees choose to depart from their positions voluntarily. When employees voluntarily leave your company, it indicates either a problem in the company or personal reasons unrelated to the company.
Your employees may leave for a better job, relocate to a new country or city with family, or a new area that makes commuting to your office difficult, management issues, job dissatisfaction, toxic organizational culture, or lack of learning opportunities.
Involuntary attrition happens when an organization decides to part ways with the employee. The typical reasons for involuntary attrition are layoffs, policy violations, mergers, and acquisitions.
Voluntary attrition can also occur when employees retire - also referred to as natural attrition.
Retirement is typical among older adults who've dedicated years of their lives to their careers. It shouldn't be a matter of concern for the management unless a company experiences an unusually high rate of early retirements.
McKinsey's research team analyzed data from multiple countries and identified relaxers - a worker personality.
They are early retirees or simply not actively seeking employment. Relaxers want a purpose-driven job and are less motivated by money because they probably have enough to live comfortably.
Relaxers need flexibility. Working with friends or in a friendly, autonomous, peaceful, and appealing workplace is essential for them.
🕵️♀️ Top 10 reasons for voluntary employee attrition (With examples, data, and expert opinion)
High employee attrition rates are a significant concern for businesses of all sizes, resulting in increased costs, decreased productivity, and reduced morale among the remaining workforce.
Here are the top ten reasons why your employees consider changing their jobs.
No career growth opportunities
The number one reason people quit their jobs is the lack of career growth and development opportunities.
Gone are those days when a big paycheck and a flexible work schedule were enough to keep workers happy.
Today's employees seek something more profound: a chance to learn, grow, and move up in their jobs.
And if organizations don't offer these chances, they risk losing their best assets.
But you'd be mistaken to believe that a promotion policy is all it takes to make your people happy.
Riva Jeane May Caburog, Account manager at Nadrich & Cohen, shares her perspective on traditional career progression within companies:
"Many companies believe that offering promotions and climbing the corporate ladder is enough. However, they overlook that not everyone wants to move vertically. Some employees prefer a career lattice, which means growing in different directions rather than just upwards. Career lattice recognizes that career growth can happen horizontally - allowing employees to explore different roles and broaden their knowledge within the organization. Providing opportunities for lateral moves, cross-functional projects, and skill-building creates an environment that supports employees' multifaceted growth."
Spotify offers a great example of a growth organization that gives employees multiple opportunities for upskilling and shaping their career paths (some powered by AI 🤖).
🎶 Learn the ins and outs of how Spotify enables employee learning and development in our case study.
Dissatisfied by inadequate compensation
Although the focus on employee development is predominant, inadequate compensation is the second important factor for leaving a job, according to the McKinsey report on how great attrition makes hiring harder.
According to a study on predicting employee attrition using machine learning techniques, with higher salaries, there is a decrease in resignations. The highest attrition rate is up to 40% in the "$2001–$3000" range and is found in the lower salary bands.
Furthermore, the largest attrition percentage in its cluster of employees is 54.5%, within the $1000-$2000 range.
It is worth mentioning that we see employees in the age group of 18–23-year-olds depart the company more often - with an attrition rate of 44%. However, staff attrition percentages decline with age.
➡️ Learn how to run a compensation review process to maintain a competitive compensation structure to retain your top talents.
Bad workplace culture
When a work environment is toxic, it becomes difficult for employees to continue working despite attractive perks.
For Riley Beam, Managing Attorney at Douglas R. Beam, P.A., a bad workplace culture is a strong reason for employee attrition, even when pay and position are impressive.
A survey reveals bad leadership was directly responsible for developing a bad workplace culture. Even more shocking, the bad bosses were either promoted or rewarded. A company that takes no action against toxic managers most likely continues to have a negative impact on the organization and its staff.
Shockingly, many companies keep or promote terrible managers, increasing employee burnout and mental health issues.
💡 Tip: Establish clear competencies for your manager's role to help them understand where they are and where to improve.
No sense of belonging
When your employees are fully engaged in workplace activities, they experience a sense of belonging to the workplace environment - an essential contributor to their health and well-being.
For Jonas Prasanna, a Global Human Resources Business Partner at Boeing, mental and emotional well-being is the newest metric companies should use to understand their employees.
Being a strong leader doesn't mean deciding everything on your own. So, as you build out goals and strategies, give your employees a chance to share their ideas.
💡 Tip: Ask each team member to prepare relevant data and findings to present to the rest of the team and schedule time to brainstorm strategies and plans together as a group.
Recent research by the Workforce Institute revealed that 74% of employees feel more effective at their jobs when they feel heard. That's why giving your employees a chance to be part of the goal-setting is a great way to bring the team together and move forward positively.
Leaders should adopt a more humane and resilient approach that sees employees as people, not just workers who come into the office - this creates a higher sense of belonging.
Inefficient leadership and management
In a job market with many layoffs, there have been a lot of resignations as well.
But is low pay a reason why people are quitting? The answer is yes. However, it may not be the primary reason for most employees because people do not quit their jobs for a little money unless they want to go. Although employees cite a lack of compensation in exit interviews as the reason for quitting, most of them leave because they feel disrespected.
According to research by MIT Sloan management companies that claim to have healthy cultures, there may be pockets of toxicity because of their abusive managers or dysfunctional social norms like excessive competition, lack of trust, or a culture of blame and fear within specific teams.
The best way to keep your employees happy is to have an open, honest conversation with them. Leaders should conduct stay interviews instead of exit interviews since one-size-fits-all programs fail. It would help if you had an engaging way to learn what's essential to employees to take particular measures to boost their engagement and retention.
Low motivation and job satisfaction
Motivation plays a vital role in increasing an employee's performance in an organization. Chances are that employees who lack job satisfaction and motivation won't make your top performance list. They might also make the list of "work attitude at work."
There can be several factors for low motivation, such as:
- unfair treatment of employees;
- gender discrimination in the workplace;
- finding the job less challenging or interesting.
A study about perceived work favoritism at Ohio State's Fisher School of Business found that nearly half of employees believed their supervisors had favorites, causing them to perceive their workplace as unfair and feel less loyal, less satisfied, less motivated, and more likely to seek work elsewhere.
While forming stronger connections with specific team members is normal, managers must avoid displaying behaviors that seem exclusive or preferential. Such perceptions of favoritism may result in team members developing negative feelings towards the manager or the favored employee, which could lead to low motivation at the workplace.
Poor work-life balance
One thing is evident amid the vast uncertainty of the pandemic era: people seek a healthy work-life balance more than anything else.
A survey by FlexJobs of 4,000 respondents in the US said they'd choose work-life balance over better pay.
The definition of work-life balance has changed dramatically with the demise of strict 9-to-5 hours and increased remote work. Of course, a flexible schedule is a significant part of how workers define work-life balance; however, that's only the start.
What workers see as the work-life balance has broadened.
More and more employees encompass a holistically healthy work environment that allows for an open dialogue between employees and employers - enabling them to address their personal lives in the context of their careers and create the life they want.
The COVID-19 pandemic has shown that flexibility works for both employers and employees. The traditional office culture has changed. While not all companies
embraced flexibility; however, organizations that did stand out to job seekers.
Employees are happy when they can choose where to work from and when to work - because they get time for intermittent exercise throughout the day, increased control over food choices and mealtimes, and improved work–life balance.
Post-pandemic, the demand for remote work remains strong, with no signs of waning. EY found more than half of employees globally would quit their jobs if they did not provide post-pandemic flexibility.
"You can't stop the tide with a broom. Businesses that force their employees back to the office, unnecessarily risk losing talent. ...[...] If you're stedfast against it, didn't get it right the first time, or just want to pretend things will magically go back to what they once were by forcing people to not have an option, then don't expect your best workers to stick around." Adam W, a remote work and implementation specialist.
Changed attitudes toward career longevity
Gone are the days when people entered the workforce as young adults, worked until their mid-50s or so, and then gracefully transitioned into retirement, passing the baton to the next generation.
The concept of loyalty to a single company or sticking to a job for 15-20 years, once seen as a hallmark of a stable career, is increasingly viewed as limiting by younger generations.
Here's why this shift is occurring:
- Younger employees often prioritize a range of experiences over long-term tenure at a single company. According to Gartner, in 2023, 56% of candidates apply for jobs outside their current area of expertise. By switching roles or even industries, they believe they can acquire a more diverse skill set and a holistic understanding of the business world.
- The appeal of freelance or contract work is on the rise. Platforms like Upwork and Freelancer make freelancing easier than ever. 73% of US workers plan to freelance this year. The flexibility of choosing projects and clients, setting one's own hours, and the possibility of a better work-life balance can be very enticing.
- There's an increasing emphasis on personal growth and continuous learning. Younger employees might leave a position if they feel they've plateaued or if there are better opportunities elsewhere to expand their knowledge.
85% of professionals want to hear "thank you" in their daily interactions - so managers should regularly congratulate their staff and explain how their efforts benefit the company.
For instance, Dominos Pizza publicly thanks delivery specialist Luis Godinez, the National Delivery Expert of the Year: "I am so grateful to have a team member like Luis making deliveries to our customers. The customers love him and I know he takes pride in what he does. He is so deserving of this award, and it only shows that his hard work and dedication are recognized." Dan Hosseini, Canoga Park Domino owner.
For Neil Platt, director at Emerald Home Improvements, "the lack of recognition directly influences employee attrition. And the worst part is that leaders often fail to identify this sign."
Will Yang, Head of Growth & Customer Success at Instrumental, believes employee attrition isn't always negative and doesn't always signify an issue. It can also represent change and evolution for the employees moving on and the company. Organizations should take every opportunity to analyze their attrition patterns, gather data and insights, and adjust their strategies accordingly.
🎓 Check out our in-depth analysis of how to reduce employee attrition. We seek to help you implement effective strategies and best practices to improve retention and workforce stability.
🔮 3 Ways to predict employee attrition with people analytics
While predicting employee attrition with absolute certainty is challenging, organizations can utilize insights from people analytics to identify potential attrition risks.
➡️ Learn more about people analytics to make informed decisions about an organization's workforce.
"When you know your workforce, predicting employee attrition is easy. The most prominent sign is when your employees are disengaged and are just not involved with workplace activities as before." Tony Angeleri, VP of Business Development at Lone Wolf Paintball.
Here are three ways to predict talent attrition in your organization.
Look at your engagement survey results
Employee engagement surveys are a highly effective tool to gain insights and prioritize actions addressing employee feedback. You should analyze the data thoughtfully and compare it with companies in your industry.
Conducting engagement surveys is the first step. Following up is even more critical. Analyze it and share the results with your employees. Define the key priorities for the next period and create an action plan. Doing so will show your people you take their feedback and issues seriously.
Calculate and deep dive into eNPS
The Employee Net Promoter Score (eNPS) is a survey metric designed to measure employee satisfaction, engagement, and loyalty through simple questions, such as "On a scale of 0 to 10, how likely are you to recommend this company as a place to work?"
Typically, eNPS scores for most companies fall from zero to 30, with scores above 40 considered excellent.
Numerous studies have revealed a direct correlation between highly engaged employees and improved business outcomes, making employee engagement a crucial metric for high-performing businesses.
Doing these surveys helps you to identify employees who are more prone to leaving the organization (low eNPS scores).
"A short survey that asks basic employee net promoter score questions allows me to see trends as they develop. Doing these surveys makes it WAY easier to make micro-adjustments in culture as opposed to major changes as you scale your company." Adam Lawrence, co-founder and CEO of Boom & Bucket.
Conduct stay interviews
Stay interviews are an underutilized tool to retain employees. However, it is one of the simple strategies you can implement, which includes talking to your employees about what matters most and then working together to make that happen.
Stay interviews allow employees to give feedback on their job satisfaction, work environment, and other factors influencing their decision to stay or leave.
"The stay interview is an attempt to avoid the exit interview." Emily Beck, human resources expert.
➡️ Unsure what to ask about during stay interviews? Learn what to ask and avoid in a stay interview.
💸 Employee attrition: The real cost of losing an employee
Employee attrition is a serious issue and is the most costly challenge many employers face.
Here are three reasons why attrition should matter to you:
Impact due to lost knowledge
Your company loses institutional knowledge when a skilled or longtime employee leaves.
Losing an employee is not just losing a team member but also the on-the-job training knowledge they take with them. Such tacit knowledge can often be the source of competitive advantage for your business.
According to a survey conducted by HR Daily Advisor, 60% of respondents struggle to get essential job-related information from former coworkers. Many employees spend 5 hours each week trying to reach their ex-colleagues with the specialized knowledge required for their tasks.
Such work delays result in employee frustrations and decrease productivity.
Results in decreased morale
When companies go through mass layoffs, they don't affect only those who lost their jobs but also the remaining employees who "survive" the layoffs.
You can expect decreased trust, commitment, and engagement.
Some of your people might fear they are next in line. As a result, will decide to search for new jobs before that happens.
So when an employee leaves your organization, the remaining employees become less trusting, less committed, and less satisfied with their work.
Increases role replacement costs
Constantly hiring and onboarding new staff to fill the vacant position brings about additional training expenses and the challenges of aligning them with the company culture, just to name a few.
According to Gallup, the cost of replacing an individual employee can range from half to twice the employee's annual salary.
Ariav Cohen, VP of Marketing and Sales of Proprep, highlights that a high attrition rate increases a company's recruiting, onboarding, and training costs. When employees keep leaving in high numbers, the only option a company has is to hire new employees. This results in high recruiting expenses. After recruiting a new batch of workers, their onboarding and training costs are considerably high. So, high employee attrition drains a company's resources, especially considering that new hires will not reach 100% productivity right off the bat. Depending on the complexity of the role, it can take up to a full year for your new hires to be fully productive.
💡 Discover 6 strategies to lower the new hire time to productivity in your organization.
🚀 Create a workplace where your people love to work. With Zavvy
At Zavvy, we understand employees are your biggest asset. A lot goes into creating a workplace where your employees will love working, have trust, and be engaged at all levels. Our comprehensive People Enablement Platform is your key to reducing turnover and retaining top talent:
- ✈️ Onboarding, reimagined: Losing new hires shortly after they join? Zavvy's onboarding solution ensures a captivating and efficient welcome experience. Leave no room for doubt – show your commitment to their success from day one.
- 📋 Career frameworks for growth: Employees often leave when they don't see a future at their current company. With Zavvy's career frameworks, you can define clear paths for growth, demonstrating your commitment to their long-term success.
- 🤖 AI-powered employee development: Zavvy's AI-driven tools identify skill gaps and suggest personalized development plans. Keep your employees engaged and committed by investing in their continuous improvement.
- 🧠 Continuous learning: Attrition can increase when employees feel stagnant. Zavvy's continuous learning options keep your workforce ahead in their skills and knowledge. Encourage their growth, and they'll be less likely to seek new challenges outside your organization.
- 📈 Drive engagement and well-being: Unhappy employees are more likely to leave. Use Zavvy's engagement survey software to measure sentiment, uncover pain points, and create a workplace where well-being is prioritized. Happy employees are loyal employees.
📅 Don't let attrition drain your organization's talent pool. Choose Zavvy to empower your people and build a loyal, engaged workforce. Discover how Zavvy can contribute to this goal through a free demo.
How does employee disengagement impact attrition?
Steve Jobs said, "The only way to do great work is to love what you do." This quote highlights the importance of employee engagement in the workplace.
According to a study conducted by Gallup, highly engaged teams experience 59% less turnover than their disengaged colleagues. Undoubtedly, employee engagement is the secret sauce that keeps attrition at bay.
What is the difference between employee churn vs attrition?
Employee churn and attrition are two terms that are often used interchangeably, but they have distinct meanings. Employee attrition refers to the number of employees who leave an organization during a specified period, generally a year. It includes all reasons for separation, like resignation, termination, or retirement.
On the other hand, employee churn refers to the combined numbers of an organization's employee attrition and turnover rate. Employee churn is an umbrella term that includes a company's attrition rate and turnover. Employee attrition is a subset of employee churn.Imagine a ship. Steady, strong, sailing smoothly. Then, slowly, one by one, the crew starts jumping ship. Panic! Why? Why are they leaving?