Low Attrition: Positive or Negative For An Organization?
Last week, I had the privilege of traveling to Singapore to visit schools and learn about the country's education system. I took away some interesting insights from local education leaders around K-12 talent management and human capital. For example, I had a brief conversation with a Singaporean principal about employee attrition. A common belief is that the fewer employees that leave an organization the better. However, while the principal did not wish to lose people, he recognized that there are different types of attrition or turnover. He also noted that at times, turnover can be good for an organization as new individuals are brought in with differing talents and new ideas.
I couldn't agree more. Here's why:
Attrition happens when an employee leaves an organization through termination, death, retirement, or on their own free will, causing a reduction in the physical workforce. There is voluntary and involuntary attrition as well as favorable and unfavorable attrition. For instance, a great teacher may voluntarily retire from a school district which the district sees as unfavorable. Likewise, a company may see the departure of an unproductive employee as a good thing. Organizations can also be forced to let great employees go involuntarily due to financial constraints or other factors. So, not all attrition is "bad" and not all of it is "good" hence why the measure and data needs a closer look.
Many human resources groups monitor attrition rates as a measure of an organization's health and culture, and then use this data to drive decision making. I think more specific information is needed around attrition before it is weighed in organizational decisions. Specifically, a company or school district may look at the percentage of highly effective employees retained or the voluntary attrition rate of highly effective employees. It is also important to create an operational definition of what constitutes a "highly effective" employee. For example, an organization may classify a highly effective employee as one that receives 4 out of 5 or higher on their yearly performance evaluation.
Ultimately, it comes down to having the right measure, understanding the measure, and making a strategic and conscience decision around what changes in staff population are acceptable and which ones are concerning for your organization. As the Singaporean principal explained, losing a small percentage of effective and ineffective staff every year may turn out to be good for the organization. But, if a school district is only losing highly effective employees that should be cause for concern. High attrition rates should be investigated further by staff to identify the root cause of the turnover and then address it, as needed. This response to data can truly help to change the culture of an organization when the root causes are found, investigated, analyzed, improved, and controlled.
As always, please share your thoughts in the comments section!