I’ve just received a campaign flyer about a public management seminar on “how to avoid attrition.” In the war for talent, a seminar like this is interesting piece, except I believe there’s something good about having attrition in any organization. Could you help me understand both sides of the coin? — Pink Torpedo.
Just like religion and atheism, we are forced to think of the advantages and disadvantages of two opposing positions. In doing so, we have to use our head and not rely on “tales” to come up with the best judgment. With this in mind, let me tell you that there are more than two sides of the people management coin. Hence the title of this article: the good, the bad, and the ugly sides of attrition:
One, the good side. As long as the turnover rate is maintained not higher than 5% per year, then your organization need not worry about attrition. If organizations can maintain that level of turnover, they can use it to welcome new blood and fresh ideas with the help of those who want to remain loyal. An organization may also choose not to replace a resigned employee at this level of turnover.
Instead, the work to be left unattended by the resigned worker could be distributed to the remaining workers. For example, if Andy who is receiving P35,000 a month has resigned, then the best approach could be to not replace him but instead distribute his tasks to his junior colleagues like Boy (receiving P20,000 salary), Cris (P18,000), and Danny (P16,000).
At this point, your company has already saved P35,000 a month, except you don’t consider it a windfall or a development that adversely affects operations. It might be better to increase the basic pay of Boy, Cris, and Danny by P2,333 each, to preserve the internal equity based on meritocracy and seniority.
So, how did I arrive at the pay increase for the three survivors?
My rule of thumb is 80-20. Twenty per cent is P7,000 out of the P35,000 salary of Andy. Divide the P7,000 into three equal portions and that should be your basis for the salary increase of the three loyalists who are required now to share in the load left by Andy. This also means an 80% or P28,000 monthly savings for the organization. That’s how you should be able to improve morale and productivity.
Two, the bad side. At 6-9% annual turnover over the last three years, prepare to review your empowerment and engagement programs. This includes a review of your salary structure if it is within industry standards. Or, if you’re not sure about the cause or causes on the steady increase in voluntary resignations, then better conduct a morale or satisfaction survey at the soonest possible time.
It could be that while you have a sophisticated engagement program and your salary package is above the industry average, the attrition rate could mean other things like the toxic management style of your frontline supervisors and other people managers. Or it could that your working facilities have degenerated into something bordering on violating labor standards.
Don’t guess why you have an increasing turnover rate. Do something right away.
Last, the ugly side. The worst thing that could happen is double-digit turnover rates. I’ve seen and heard of organizations with more than 25%, placing undue stress on its recruiters to deliver fresh candidates, failing which operations will suffer.
At times, trouble comes in with excessive, if not unnecessary praising of people. “Praise” here means many people have become comfortable with their work situation that they have degenerated into average performers who will not be kicked out of their jobs.
A case in point is the perfect attendance award. Some organizations use it to recognize workers who have logged zero absences and tardiness without looking at their actual tangible work performance. Chances are, you’ll discover that these people with perfect attendance routinely go with the flow without contributing any tangible accomplishments for the organization.
If this happens, many people who are not happy with the set-up would look for alternative employment in a more dynamic organization. It’s counter-intuitive, but just the same, I believe that organizations that don’t value meritocracy would often drive fast-trackers elsewhere.
In summary, having a low or high turnover rate is not good for any organization. Both extremes at some point could be harmful. Having an extremely low or zero attrition rate is bad, in the same manner as that of having a double-digit resignation rates. Let’s accept that. The only thing that we can do is to manage every resignation and make it a learning point for everyone.
The exit interview may not help management discover the reasons behind voluntary resignations. It’s too late for anyone in people management to do just that. The employee has resigned and it’s not a good idea to make a counter-offer, unless you want to establish a bad precedent.
Therefore, the best approach for managers is make sure they always have a finger on the pulse of their workers and respond with reasonable strategies to reconcile the interests of the workers with the vision, mission, and value statements of the organization.
ELBONOMICS: A painful resignation is often without a clear reason.