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Global Work Glossary

Lost in a maze of global employment jargon? Find your way out with our handy collection of work and HR terminology

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Attrition

How can companies reduce employee attrition?

Attrition is a term that refers to the gradual reduction in workforce size over time. This could be due to a range of factors including resignations, retirements or a change in business strategy. It’s an important metric for organizations to monitor because it has significant implications for productivity, cost management, and business sustainability.

A company with a high attrition rate will often need to assess the reasons for the increased employee turnover. If they don’t, it can lead to a snowball effect where more and more people resign due to impacted work culture. What’s more, investigating the reasons behind employee attrition, such as dissatisfaction with working conditions, lack of growth opportunities, or inadequate compensation, is crucial for avoiding the costs of hiring new staff.

Attrition management strategies include competitive compensation, career development opportunities, and flexible work arrangements. Companies can also gain insight into why employees are leaving by conducting exit interviews and maintaining an open work culture.

At the same time, attrition is not always a cause of concern for organizations. It can be an intentional strategy to save costs during periods of decreased revenue. In these instances, this strategy is referred to as a hiring freeze.

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