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Employee Attrition/Employee Turnover Introduction

Employee attrition rate is also known as Employee Turnover. Attrition rate is also sometimes called as churn rate. This rate shows how often the employees at a place of business change over the course of a month. For example, a fast food restaurant will have a higher employee turnover compared to a law firm. A lower employee turnover rate allows a company to keep coherence over the year. Employee turnover has been a cause of worry to the employers over the period of time. The cost on the loss of the employees varies with their contrition to the company revenue. Meaning Employee turnover has been defined as the rate of change in the working staff of a concern during a definite period. In other words, it signifies the shifting of workforce into and of an organization. It is a measure of the extent to which old employees leave and new employees enter into service in a given period. It may be defined as the rate of change in the working staff of a concern during a definite period, commonly a month.

Reason\causes of Employee Turnover


Employee turnover is caused by a variety of factor. Some of these factor lie within the employees themselves while some of the factor lie within the organization. 1) Employee-Related Factor: Employee-related factors responsible for turnover are of the following types: a) Job hoping tendency among individuals particularly at the initial stage of the career. b) Too much ambition among individuals leading to a state of never being satisfied. c) Dissatisfaction from the present job and the organization. d) Better career opportunities particularly in new economy sectors. 2) Organization-Related Factors: Besides the individual factors, there are many organizational factors, there are many organizational factors are not conductive resulting into employee turnover. These factors are as follows: a) Faulty human resource policies and practices particularly related to compensation, promotion, and training and development. b) Poor leadership and supervision. c) Poor working condition.

Calculation/measurement of employee Turnover 1) Accession method:

Total number of employees acquired Turnover rate = 100 Average number of employees during the year

2) Separation method:

Total separations during the year Turnover rate = Average number of employees 100

3) Combined Method:

(Accession + separation) 2 Turnover rate = Average number of employees 100

4) Replacement Method:

Total accessions total separations Turnover rate = Average number of employees 100

Effects/Cost of Turnover
1) Loss to employees: a) It lowers their efficiency and morale. b) They are deprived of various advantages of continued employment (such as benefits of graded pay, bonus, provident fund, level, etc.) Because of their movement from company to company. c) They are often required to pay substantial price for their reengagement in the same company or elsewhere owing to the defective system of recruitment through intermediaries. 2) Loss to management/Company: a) Hiring coast increase because of more time and expenses involved in recruitment, reselection, replacement, etc.

b) Training coast also increase because they involve more time and effort of the supervisor, the personal department and the trainee himself.

Methods to Reduce Employee Turnover or control of Employee Turnover


i. ii. Exit Interview. Retention Strategy. a. Package for long-term stay. b. Intangible Benefits. c. Matching Jobs and individuals. d. Work environment. e. Persuasion. iii. Employee relationship management.

SEPERATION Benefits of employee separation 1. Reduced Labor costs: An organization can reduce its total labor costs by reducing the of its workforce. 2. Replacement of poor performers: An integral part of management is identifying poor performers and helping them to improve their performance.

3. Increased

innovation:

Separations

creates

advancements

opportunities for high performing individuals. 4. Opportunity for greater diversity: Separations create opportunities to hire employees from diverse background and to redistribute the cultural and gender composition of the workforce.

Methods of separation Voluntary separations 1. Quits: 2. Retirement: Types of Retirements a. Premature Retirements: b. Forced Retirements c. Compulsory Retirement:

Involuntary Separations Employers resort to terminate employment contact with employees for at least three reasons: 1) Organization is passing through lean period and is unable to maintain the existing labor 2) Initial faulty hiring resulting in mismatch between job and employee fit.

3) Employee exhibits deviant behavior vitiating the environment. Around.

Involuntary separations are of following types: 1) Lay-off 2) Resignation 3) Dismissal or Discharge 4) Retrenchment 5) Voluntary Retirement scheme(VRS)

1) Lay-off: A lay-off is a temporary separation of the employee from his or her employer at the latter without any prejudice to the former. 2) Resignation: A Resignation refers to the termination of employment at the instance of the employee. 3) Dismissal or Discharge: This means termination of service or contract as a punishment for a serious misconduct or act of indiscipline. 4) Retrenchment: it is a termination of service for reasons of redundancy or surplus to requirement. The industrial disputes Act defines retrenchment as the termination by the employer of the service of a workman for any reason whatsoever, other than as a punishment, but does not include voluntary retirement, retirement and termination on the grounds of ill health.

5) Voluntary Retirement Scheme (VRS): in the present globalised scenario, rightsizing of the manpower employed in an organization has become an important management strategy in order to meet the increased completion.

Managing separation and right sizing Rightsizing/downsizing Rightsizing theoretical means reducing the size of workforce or increasing is to maintain the employee strength at the most desired level. In a reality, rightsizing means downsizing the strength through planned elimination of jobs.