Wednesday, April 25, 2012

Low attrition is also not good

We often hear the word- attrition is a problem, we are facing it and so on...
Let's speak about it and let's take it in different way. In my HR career I have been closely monitoring the issue and its impact and I found certain things:
1. Attrition for a larger set up is good if around 15% of your workforce leave every month.
2.  If a specific grade of employee who are handling similar kind of job role leave the organisation, it does not have impact on production quality (goods/ services) of that particular organisation.
3. For a smaller organisation, if people are not leaving for years, it is also not good. Change must be there for a good cause- for both employer and employee.
4. More than the rate of attrition, I think as an HR professional we need to keep focus on average no. of years an employee is spending with our organisation and it is matter of most worry.

Let me explain all the points 
1.  1. Attrition for a larger set up is good if around 15% of your workforce leave every month.
The reason behind this is, the larger organisation has large no. of people. Even in a particular department, there is always an additional or surplus manpower who can handle the task so by any reason, if a particular employee leave the organisation, other can handle the task very well. The average 15% attrition will not have that much serious impact on such organisation. Only the important factor is that such organisation must have a set process to handle any work/ function and record keeping. This helps a lot to retrieve the information and the set standard of process makes work easier for everybody. In my past 2 organisation, I was heavily involved and relying on designing, implementing SOPs (Standard Operating Procedures) for every single function- not only related to HR and Administration, but also for other department. Believe me, this has worked a lot.


2.  If a specific grade of employee who are handling similar kind of job role leave the organisation, it does not have impact on production quality (goods/ services) of that particular organisation.
This statement is equally true, although sometime it is not believable. This statement is true for the job role like customer care executive, telecaller, sales, technician, labour work and all such job where process is set, everybody who joins have to go under certain trainings. Attrition of such employee results into work load on other existing employee and as a human resources professional and manager, at that time we have to take challenging task to stop negativity influencing other people and to help them to cop up with their stress.  


3. For a smaller organisation, if people are not leaving for years, it is also not good. Change must be there for a good cause- for both employer and employee.
This may sound strange but in my  career, while working with SMEs, I have found this statement has relevance. As organisation grow, people also need to grow. In some cases, an organisation may grow financially but at the same time, its functions, business and verticals do not grow with the same pace. This leaves no space for employee's growth and also bear the additional burden and cost of manpower. Let me give an illustration:
An X employee has started career with a Y organisation as an executive who was handling a role of public relation. In 15 years time, the person has grown from executive to Sr. GM level as a designation. But in this 15 years that person was handling more or less same role but since he was doing his job well, the company had to give him increment. So in 15 years time, he was getting salary 8 times more than the earlier on. Whereas there is no growth in his/ her role although designation has incresed or "uplifted" and for company, the work whih was possible at 6 lakhs, the company is paying 15 Lakhs. In future when such employee want to change the company, he will find lot of difficulty in getting job as although the designation has changed there is no learning, addition of knowledge and value addition to the job.


 4. More than the rate of attrition, I think as an HR professional we need to keep focus on average no. of years an employee is spending with our organisation and it is matter of most worry.
This is most important part of attrition management in any organisation I believe. Many organisation are worried about the attrition is because the higher attrition cost them in terms of quality and in terms of training cost. I believe, if any organisation has average stay of its employees of 2 years it is good, 3 years is better and 5 years best. Beyond 5 years is bad, then worse and finally worst. Only exception is top management and few position. We, HR need to focus on making average stay of employee for 5 years.  


So to summarise the entire episode, rather than making attrition low, we, HR should focus on average stay of an employee in an organisation.

3 comments:

  1. Govind,
    As a thumb rule for any organisation the attrition @ 10% must, to add new water to the existing.
    However there exists few key drivers to the organsation. They are key due to their much existance in the market in terms of period or due to their capabilities. Their extinct from the organisation will certainly have immediate impact in the competetive market.

    Here comes the HR to play the role which in literal terms is called as COMPOSITE LEADESHIP, by recognising the Key drivers and make another. In short if there is None make one, If there is only one make another one.

    Regards,
    Raghu Chowdari

    ReplyDelete
  2. Hi Raghu,

    Nice to see you after so long time. Yes, I completely agree to you. You have well explained the needed role of HR

    Govind

    ReplyDelete
  3. Hi Raghu,

    Very well said and the HR concepts and facts are really true.

    Regards
    Dilip Joshi

    ReplyDelete

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