Employee retention is necessary for the culture, longevity, brand, and overall success of a company or organization. Attrition and churn rates are important KPIs that are often indications of how competent a company is when onboarding new hires, building a strong sense of company culture, cultivating leadership, and creating a healthy workplace culture. The higher your churn rates are, the more likely something isn’t working with management, onboarding, or in your corporate culture.
Below we’ll get into why employee turnover and attrition rates are so important to manage and how you can increase employee retention going forward.
While similar, there are some key differences between attrition and turnover. Sometimes, attrition is inevitable, but if you can’t seem to keep certain roles filled over an extended period of time, you will need to take a closer look at why your churn rates are so high.
Both attrition and turnover involve employees leaving their organizations. Attrition, however, refers to when an employee retires or leaves the company and you do not intend on refilling that position. Attrition doesn’t always necessarily mean something is amiss within the organization, however, and it can often be the result of a strategic internal decision rather than a result of some failure within the company.
Employee turnover, on the other hand, is when an employee leaves a company, voluntarily or not, and you do intend to refill the position. Turnover might be a result of a termination, retirement, resignation, abandonment, or some other reason. The point is that you will now have to find a replacement, which will take time and resources to accomplish.
Below we’ll look at the cost of employee turnover and why managing your attrition/turnover rates are important to the longevity of your business.
There are some key differences between attrition vs churn rates that can help you improve your retention rate.
Attrition rates, unlike turnover, aren’t all that costly because leaders do not intend to refill the now-vacant position. As long as the vacant position fits in with a hiring strategy implemented by team leaders, attrition isn’t necessarily going to hurt your company. Turn over rates, on the other hand, can hold companies back if they aren’t addressed appropriately.
According to an Employee Benefits News study, turnover rates cost 33% of an employee’s salary. That’s $15,000 on a $45,000 salary. Recruiting fees, hiring costs, advertising, and lack of productivity within the window of a vacant position are all primary costs that go into replacing a hire, which makes turnover rates inconvenient and expensive.
Other ways that high turnover rates might negatively impact your business include:
High attrition rates can lead to some of these concerns as well, especially if employees are worried about downsizing or positions being eliminated on a long-term basis. Both turnover and attrition rates, which equate to your employee churn rate, need to be monitored closely.
There is a distinction between turnover vs churn, but ultimately, higher churn rates (attrition + turnover) should be minimized.
A lot of what leads to churn rates takes place in the onboarding period. In fact, 20% of employee turnover takes place in the first 45 days, and nearly 70% of employees will likely stay with a company if they have a positive onboarding experience.
In order to create a consistent workforce that can develop leadership and cultivate a strong corporate culture, employers should focus on the following:
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