Attrition: A Key Element to A Successful Staffing Program?

When I was in college, to be truly cool, you had to be a fan of Kurt Vonnegut. You had to acknowledge that he was “deep” and “ahead of his time.” You had to have memorized certain phrases and inject them in your conversation (always with that little “knowing” smile.) Otherwise, unless you owned a car other than a Pinto, you were not “hip.” In one of his books, “Slaughterhouse Five,” Vonnegut mentions in the introduction that when he informed his publisher that this book was going to be an anti-war novel, the publisher remarked, “You might as well write an anti-glacier book for all the good it will do.” Often I think back on this when we discuss turnover, or attrition. In essence, attrition is the loss of an employee though voluntary resignation, or involuntary resignation. (Sometimes due to illness or death, but even staffing has limits on what it can control.) It results in the loss of the investment made to hire this person and, based on the time they have been with the company, the loss of training and professional development invested in this person. As staffing professionals, our reaction to attrition is not unlike a fireman’s response to fire, or a doctor’s response to a fever. It is the enemy. We hate it! I always enjoy planning a hiring strategy based on anticipated growth. However, the meeting always gets a little sullen when factoring the expected impact of attrition on the plan. I think we see attrition as a measure of our failure in past hiring. After all, if we are such great staffing professionals, why can’t we prevent attrition? If your client shelled out $12K for a hire that leaves within 6-9 months, it is difficult to exert the same sense of confidence and control you did on the day the candidate accepted the offer, and you were everybody’s hero. But can we really make all that much difference where attrition is concerned? From that question comes the two points of this article;

  1. Exactly how much impact should we expect to have on attrition?
  2. Is attrition as bad as we make it out to be?

To the first point, in-house recruiters, consultants, and agency recruiters can have a limited impact on attrition through the recruiting, screening, hiring, and initial orientation process. If you did the following, then you may assume that attrition is not the result of a poorly planned and conducted hiring program:

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  • Sought to screen out those with career track records of frequent and poorly justified turnover
  • Made every effort to insure the position was accurately described to the candidate
  • Insured they were allowed to meet enough of the proposed peer group they would be joining
  • Listened carefully to the candidate to insure you were matching their career goals and intent with a company, group, and position that would truly meet those stated goals
  • Made a fair an equitable offer
  • Met the new employee on their first day with a complete and comprehensive “Welcome on Board” orientation
  • Ensured the new team was prepared to support the new hire on their arrival

You may stay in touch with new hires and offer yourself as an in-house counsel for any negative issues that may arise, but as a staffing professional, with other requisitions to close, or other fees to earn, you can only stay involved with a new employee for so long. So, what is a good percentage of attrition for a company to experience to make it feel good about itself and how well it hires and maintains its employees? Is there a standard measure? No, I think not. Should the bomb squad of a large metropolitan city have a higher or lower attrition rate than a CPA firm? How about during tax season when everybody is too busy doing their taxes to make bombs? If you have a company with a rather significant number of unskilled labor positions that require limited training and offer little in the way of career growth, is it worth your time to even worry about attrition? Let us stop being “knee-jerk” staffing professionals who hate even hearing the word attrition, and see if there is a list of situations where attrition can have a positive impact:

  • New Blood – Attrition allows the opportunity to make sure the company constantly has access to new thinking and new ideas brought in from other companies at a greater rate than expansion may allow.
  • Keeps the Pyramid in Shape – Without attrition, you would wake up one day with a company of 237 VPs and 1 administrative assistant. Who do you think would get to change the toner in the copier?
  • Professional and Technical Transition – Business and technology are dynamic, not static. When existing staff that represents what you were yesterday leaves, you can hire in the skills you need for the projected changes based on what you want to be tomorrow. Their decision to leave is cheaper than severance.
  • Prevents Disabling Corporate Culture –Many of the companies that were success stories in the 1980s and failed in the 1990s did so because they began to believe their own myths of invincibility. Losing an acceptable percentage of employees at all levels insures that the company never develops an attitude of critical complacency. There are always the new faces who do not buy into the myth.
  • Gets the Dirty Work Done for Us –Nothing makes me happier than discovering the employee we were preparing to sit down for his or her first verbal warning in an administrative discharge process is resigning to go to another job. Do I honestly feel that the percentage of attrition this person represents is truly a “bad thing?”

So where do you draw the line between normal and negative attrition? Well, not just based on looking at the average for the last five years and comparing that number to this year’s attrition.

  • Review all the positions within your company and determine those positions that are inherently not great jobs. If you cannot re-engineer these positions, then high attrition may well inevitable. Consider these as portal positions. Then try and identify those persons with great potential and elevate them as quickly as possible out of these areas. Assume this portal position will have high attrition and focus your curative powers on things that you can fix.
  • Track attrition within the first 6 months, 12 months, and 36 months. After 36 months consider the debt paid. These benchmarks will tell you if you are facing attrition issues based on your initial hiring, the ability of the company to live up to it’s projected image, or the ability to keep people engaged after the newness of the environment has worn off.
  • Attrition is not only a function of “how many” left this year, but “who” left this year. Every company has its top 20%, bottom 20% and middle 60%. If the bulk of your attrition comes from the middle and the bottom, is there really a problem? If your attrition is low, but it is almost exclusively from the top 20%, does the low attrition number matter? (By the way, if the top 20% is leaving, and you are still there…never mind.)
  • Attrition can be used to locate other and potentially bigger issues within your organization. For example, sales professionals always want to sell the “hottest” product. Disproportionate turnover amongst your top sales professionals may indicate your company is losing its edge.
  • Attrition may be the result of other companies offering better salaries and benefits, but that does not mean you have to feel the need to respond. Measure the packages offered to those leaving your organization. If they are totally out of line with the marketplace, then you can respond by overpaying your own employees and lowering or eliminating your profit margin. On the other hand, you can accept that sometimes you lose and people leave. (I recommend all HR and staffing professionals play poker, where you are constantly reminded that fairness does not always beat 4 aces.)
  • Attrition, like everything else in life, has a price. If you throw enough money at it, you can make it go away. However, when the cost of preventing attrition exceeds the cost of hiring and training new employees, then the real enemy is the assumption that all attrition can and should be prevented.
  • Attrition allows HR and Staffing to be exposed to a level of honest feedback via exit interview data that they would never get from an employee who intended to remain and hopefully build a career within the company. (Hey, when you get stuck with lemons, at least make lemon aide!) Attrition is a factor of staffing. My checkbook does not always balance; I did not buy IBM when it was $9.75 a share, not all my hires “stick.” However, maybe not all hires should “stick.” Track attrition with an eye to determining if the cost of eliminating it, or reducing it, would be more harmful than allowing it. Track who you are losing more than how many you are losing. It is estimated that making cars safe enough for passengers to survive 90% of the accidents that occur on the highways raised the cost of cars during the 1980s and 1990s by 50%. It is estimated that eliminating the last 10% of the remaining fatalities would require tripling the cost of the average car. I want to live, but not that much. Pretty much sums up my feelings about attrition. Have a great day recruiting! <*SPONSORMESSAGE*>

Ken Gaffey (kengaffey@comcast.net) is currently an employee of CPS Personal Services (www.cps.ca.gov) and has been involved in the Department of Homeland Security, Transportation Security Administration project since its inception. Prior to this National Security project Ken was an independent human resources and staffing consultant with an extensive career of diversified human resources and staffing experience in the high-tech, financial services, manufacturing, and pharmaceutical industries. His past clients include Hewlett Packard, First Data Corporation, Fidelity Investments, Fleet Bank, Rational Software, Ericsson, Astra Pharmaceutical, G&D Engineering, and other national and international industry leaders. In addition to contributing articles and book reviews to publications like ERE, Monster.com, AIRS, HR Today, and the International Recruiters Newsletter, Ken is a speaker at national and international conferences, training seminars, and other staffing industry events. Ken is a Boston native and has lived in the greater Boston area most of his life. Ken attended the University of South Carolina and was an officer in the United States Marine Corps.

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1 Comment on “Attrition: A Key Element to A Successful Staffing Program?

  1. I have read Ken’s article with interest as we consult to organisations to continually improve both hiring and retention outcomes!

    Yes, some level of attrition is healthy, we work for some organisations with very strong brands in industries that are very appealing. Their turnover or attrition rate in some areas is as low as 5% so it would be good here to gain “new blood” as Ken mentions.

    However, in some organisations the attrition rate is 50-60% in one year and in some cases higher (and hire is what they do!).

    This is expensive for the organisation in terms of training, managers time, morale and yes the recruitment fees if applicable.

    For one large global organisation who has intensive training for new starters their costs have been assessed at $60K AUD if an employee leaves in the first 12 months.

    We find in reveiwing the organisations Performance Management System results and correlating this to the recruitment process can significantly impact attrition in relation to the hiring process.

    Our aim is to establish what the competencies and skills are of the high performers. We also seek to understand the attitudes and types of staff who are content in their roles.

    Yes, you can use Call Centre and Customer Service Officer positions as “Portal” positions but what turnover rate is acceptable?

    My view is an organisation should set goals in relation to attrition based on the impact to business objectives and also cost.

    In addition it is important to analyse at what point the new staff leave. If you have a 30% attrition rate but 90% of these leave within the first month of hire something is worong with the recruitment process or recruiter.

    I am happy to share experiences in this area if any one is interested.

    Regards

    Trevor Vas
    Director
    Human Capital Management Solutions

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