Get a free quote now.
Two things that don’t spark joy for employers are employee attrition, and employee turnover. Both these concepts mean one thing: your company is losing an employee. It’s quite common for companies to suffer either of the two, as there will likely be hires amongst the team that don’t stay with for long. Knowing this doesn’t reduce the potential headache employers go through when dealing with employees leaving or being let go.
But, there is a silver lining. With the right strategic approach, employers can use employee attrition or turnover to their advantage. This comes by realizing the resulting cost savings, and learning and understanding the reasons why employees leave to optimize employee retention.
If you don’t know where to start, use trusted pension consulting firms. We are Canada’s first paperless benefits, retirement, and pensions firm. We are leaders in our industry serving companies in all industries, providing the expertise, attention, and products to give companies the group benefit plans their employees need to stay satisfied with work and remain healthy. In this article, we’re sharing the differences between “employee attrition” and “employee turnover”; giving you the strategy for managing attrition and turnovers in your company; and shedding light on how studying the two can actually help you retain more employees.
Read more: Why You Must Consider an Employee Benefits Consultant
Two Sides of The Same Coin
Employee attrition and turnover can be considered two sides of the same coin. Let us explain: Employee Attrition is the voluntary or involuntary departure of an employee from the company without having a replacement. They might resign, retire, or leave due to health. Whatever the case, the vacancy is not filled by new talent, and the company continues to run without someone in that position.
Calculating your employee attrition rate is easy to do. One simply needs to know the number of employees at the start of a period of time and the number of employees who left by the conclusion of said period. Divide the number of departures over the starting number of employees, and multiply the quotient by 100 to get the attrition percentage. For example, the starting number of employees in your company at the beginning of the period is 100, and you end the period with 80 employees remaining. This means the number of employee departures is 20. From there, divide the number of your employee departures (20) over your starting employee count at the beginning of the period (100), and divide the quotient (0.2) by 100 to get the employee attrition rate: 20%.
On the other side of the coin, employee turnover is when an employee leaves the company, either voluntarily or involuntarily, and is replaced with someone before the end of the period.
Calculating your employee turnover rate is similar to how you’d calculate the attrition rate, but you first need to calculate your employee count average. To get that, start by adding your total employee count on the first day of the time period to the total on the last day. Then, divide the average by 2 to get your employee count average. For example: If I start the year with 100 employees and end it with 90 (meaning I’ve had 10 departures), the sum of both is 190, which when divided by 2, lands my average employee count for the year at 95.
Once you have your employee count average, divide the number of employees who left (10), with your employee count average (95). Then, multiply your result by 100 to get the percentage. In this case, the employee turnover rate is 10.5%.
Employee turnover and attrition are hard realities for any business. Not all employees stay. But like many other difficult matters of business, you can make your turnover and attrition rates work FOR you and the company. Here are the advantages to managing employee turnover and attrition:
Managing Employee Attrition
Strategically managed employee attrition can help you drastically reduce costs, or at least manage it. Say you’d like to reduce your company expenditures without diminishing your employee count with lay-offs, a well managed strategy with employee attrition can help you determine if work can still go on without needing to replace the departed employees.
Considering that most employee attritions are cordial departures from the company, there might not be anything wrong with the diminished count of employees you now have. Operations may go just as smooth if not better, thanks to reduced cost from not having to replace an employee.
Alternatively, keeping an eye on your employee attrition also means paying attention to the future. If you see that a number of your employees are close to retirement or departure, and you know you need to maintain your employee count to keep your business running well, it’s a clear sign that you need to start hiring.
Read more: 3 Reasons Why Small Businesses Don't Have a Group Retirement Plan
Managing Employee Turnover
Employee turnover isn’t a hard pill to swallow. It happens in every business, and is really just a metric for measuring the number of employees who enter and exit your company’s service. Understanding the reason behind employee turnover rates can lead to positive insight on the reasons employees want to stay with the company; and why some would choose to leave. You can use that information to hone in on things that the company needs to improve on, like culture, compensation, or benefits.
A poor benefits plan could result in the departure of a number of your employees. Should your employee turnover be higher than you’d like, consider improving your group benefits plan options. This will give them a good reason to stay, and support the enrichment of their lives and career.
With all that being said, retaining employees and reducing costs on turnovers can be managed with the right data and strategy. Consider the factors behind your company’s employee turnover and attrition rates, and this will inform you of the areas to improve on in your company, such as the quality of benefits you administer. When you have the right pieces in place, employees will want to stay, and your company can focus on the bigger picture while striving for success.
Should your company want to improve on turnover and attrition rate, and reduce costs while increasing your employee retention, consider speaking with our expert consultants at BP Consulting for a review of your company’s benefits. We are specialists at providing tailored group benefits plans from employee benefits firms in Canada, with a focus on creating the perfect combination of benefits for our clients, without compromising expenditures. Give your company and employees the right benefits today!
Read more: The Balance Between Benefit Costs & Employee Well-Being
1235 Bay St. Suite 700, Toronto, Ontario, M5R 3K4view on map
666 Burrard St. Suite 500, Vancouver, British Columbia, V6C 3P6view on map
888 3rd St. Suite 1000 West Tower, Calgary, Alberta, T2P 5C5view on map
2001 Blvd. Robert Bourassa Suite 700, Montreal, Quebec, H3A 2A6view on map