Meaning of Employee Attrition
Employee attrition is a situation that occurs when an employee leaves the organization. Why does employee attrition occur? Reasons for employee attrition may be voluntary or involuntary. In the former, initiation for attrition is taken place by the employee himself or herself. The latter is the situation where the employer initiates to separate an employee. Namely, that can be positive employee attrition or negative employee attrition. Employee attrition has got both positive and negative impact on the company as well.
Positive attrition refers to staff turnover that actually benefits the organization. Whereas negative employee attrition Is when employees are laid off because they are being productive or the organization is developing a poor company culture. Positive attrition has proven useful for organizations because the company can save the extra cost by cutting out the poor performers. It is also a positive attrition when a non-performing employee separates the organization on his or her own will due retirement or getting a better opportunity
Negative attrition refers to the loss of an employee the organization would like to keep. For negative attrition, the business loses productivity and involves high cost for the company to sustain the existing employees. Negative employee attrition is one of the top Challenges for HR. HR Managers should proactively engage its Top Performers with Employee Engagement Activities to reduce Negative Employee Attrition
Irrespective of whether an attrition is positive OR negative, attrition should be done on a good note that maintains a cordial relationship between the the organization. Employee Separation should always be an amicable. A non friendly employee separation can not only create chaos, but also effect the morale of the existing employees
TYPES OF EMPLOYEE ATTRITION:
Voluntary employee attrition occurs when the employee decides to terminate his or her relationship with the organization on his or her own will. Quits and retirement are the most manifestations of voluntary employee attrition.
An employee decides to quit or resign when their level of dissatisfaction with the present job is high, or a more attractive alternative job is awaiting the individual. One of the major reasons for dissatisfaction among employees is the job itself or the extrinsic factors involved in a job, such as company policy, lack of compensation, health, spouse relocation, and the like.
During the economic boom, jobs are available in plenty. Competent people get multiple offers at any given time. Some of the employees who are incredibly loyal and committed to the organization stay with the organization. But the majority of employees on getting more attractive offers accept it and prefer to leave the company. Organizations often encourage or initiate quits through cash incentives. Also, called the voluntary retirement scheme (VRS), these employee separations are resorted to when organizations are experiencing losses, not strictly voluntary.
Retirements generally occur when employees reach the end of their careers. The age for an employee superannuation difference. In states, it is 58 years, and in the central government, it is 60. Many governments have reasonable limits to 60 and 62, respectively, as there is no shortage of skilled people to fill up the vacant jobs. Retirement differs from quits. When the employee superannuates and it’s time for them to leave the organization, several benefits are offered to the employee. But an employee who quits is denied such privileges. Second, retirement occurs at the end of an employee’s career, but the quit is not time-specific. Third, retirement is not likely to leave any corporate bad blood behind the retiree, but a quit might result in hurt feelings with the employer.
Employee Termination Reasons: Employees Resort to terminate the employment contract with employees for at least three reasons
- The organization is unable to maintain the existing labor because of going through a lean period
- Initial faulty hiring results in a mismatch between job and employs fit
- Employee exhibits deviant behavior by vitiating the environment around
Discharges, layoffs, retrenchment, or rightsizing could be the standard methods of involuntary employee attrition initiated by the employer.
Discharge occurs when the employer discovers that the employee is no more productively serving the organization. Discharge is also widely referred to as termination, should be aimed to be avoided as far as possible. Any termination is a reflection of the company’s HR system. Also, termination is an expensive affair because the firm has to seek a replacement, hire, and train the new candidate. Finally, a discharged individual is likely to fowl mouth the company. Discharge should be one’s last resort.
A layoff is a temporary separation of the employee at the instance of the employer section 2 (KKK) of the industrial disputes act 1947 denies the officer failure refusal or inability of an employee to give employment to a worker whose name is present on the roles but who has not been retrenched. A layoff may be for a definite period on the expiry of which the employer will recall the employer for duty. It may extend to any length of time; with the result, the employer is not able to estimate anymore to recall his or her employees.
A layoff may be occasioned by one of the following reasons:
- Shortage of coal power or raw material
- Accumulation of stocks
- Breakdown of machinery
- Economic recession
- For any other reason
Employee DISMISSAL/Employee DISCHARGE
Whether termination of employment is initiated by the manager, it’s called dismissal or discharge, which may be a forceful step and may be taken once careful thought is given. A dismissal has to be supported by fair and sufficient reasons.
The following reasons cause the dismissal of an employee:
- Excessive absence
- Serious misconduct
- Inaccurate statement of qualification at the time of employment
- Theft of the company’s property.
Dismissal shall be the last step and may be resorted to after all the efforts in celebrating the employees have failed.
Retrenchment, too, results in the separation of an associate worker from his or her employer. It refers to the termination of employees’ service because of the replacement of labor by machines or the closure of a department due to the continuing lack of demand for the products manufactured in the particular department of the organization. Retrenchment like layoff entitles the employee to section 25f of the industrial disputes act 1947, is equivalent to 15 days average reimbursement for every completed year of continuous service. However, retrenchment differs from sacking in this that in the latter, the employee continues to be within the employment of the organization and is sure to be recalled post the period of layoff. Entertainment employee sent home for good, and his or her connection with the company are severed immediately.
Retrenchment differs from dismissal as well. A worker is discharged as a result of his or her fault. Retrenchment, on the other hand, is forced on both the employer and its employees. Moreover, a retrenchment involves the termination of the service of many staff however, dismissal typically involves the termination of the service of 1 or 2 staff.
Employee VOLUNTARY RETIREMENT SCHEME
Voluntary retirement scheme VRS is yet one more type of separation. In the early 1980, companies both in the public and private sectors, they have been sending home surplus labor for good, not strictly by retrenchment, but by a noble scheme called the VRS. Euphemistically all the golden handshake plans—handsome compensation of pay to those workers to leave.