A company’s attrition rate is the rate at which people leave. It is calculated by dividing the number of people who have left the company, by the average number of employees over a period of time. Early attrition is the percentage of people who leave within a specific period of time.
Let’s say, 100 people joined your company in the past 90 days but 20 of them quit in the same 90-day period. Here’s how you will calculate the early attrition rate —
Early Attrition Rate = (No. of employees that left / Total of employees) x 100
Early Annual Attrition Rate = (20/100) x 100 = 20%
The different kinds of attrition are as follows:
| Type of Attrition | Explanation |
| Voluntary | When employees leave by their own choice |
| Involuntary | When employees are let go |
| Internal | When employees move to another department |
| Demographic-specific | When a specific group (age, gender, ethnicity) leaves |
The most common type is voluntary attrition, followed by involuntary and internal attrition. Demographic-specific attrition is the least common type.
Employee retention rate is a big challenge that HR departments face, in volume-hiring companies.
A high attrition rate indicates that employees are leaving the company too quickly. This rate will vary based on the size of the company and the industry. In banking, BPOs, insurance, financial institutions, retail, and so on, the early attrition is usually high. However, that doesn’t mean it is accepted as a norm.
Reduction of attrition leads to:
• timely delivery of projects, resulting in company growth
• boost in employee productivity, as less time is spent training new hires
• attraction of new and talented employees because a low attrition rate will build a positive reputation in the industry
• increase in employee satisfaction as a result of correct expectations, proper goal setting, etc.
In this post, we’ll discuss ways to reduce the attrition that doesn’t involve throwing more money at the problem.
Top 5 ways to ensure low or no attrition (without raising compensation!)
1. Relying on referrals
Here are three interesting stats about referrals that relate to retention:
• 45 per cent of referral hires stay longer than four years, compared to only 25per cent of job-board hires.
• Employees who refer others also stay 20 per cent longer than employees who don’t refer.
• 88 per cent of employers rate employee referral programmes as the best source of applicants they want to retain for the long term.
If you are hiring via only job boards, agencies, or campus drives you are losing out on the benefits of referrals. Referred candidates usually fit your culture very well as they know about the company through their friends beforehand. Hence, they are already excited to work with their friends and usually don’t want to disappoint them by leaving the company quickly.
On the other hand, people who refer others, stay for as long as they believe in the company’s mission, values and work. That is what prompts them to refer others. To stay consistent with their ideology, they tend to stay with the company longer than the people who don’t refer others.
Setting up a referral programme is not complicated if you use the right technology and create excitement amongst employees about it. RippleHire’s gamified employee-referral system can help you leverage your workforce as ambassadors to bring in quality talent.
2. Setting the right expectations
Misalignment of the candidate’s expectations with what the work actually entails and looks like leads to distrust and high attrition.
When your company is trying to hire hundreds of people per week, the process is rushed. This leaves no room for setting the right expectations. The information generally flows one way — from the candidate to the employers. Employers are so busy collecting the information that they forget to talk about the company, job type, working culture, and so on. Regional HR (RHR) systems of handling recruitment also create dissonance between expectations and the actual job.
To manage candidate expectations better, hiring managers should reserve some time in the interview to give a clear, honest picture of what the job requires. It’s beneficial to highlight the not-so-great aspects of the job that have demotivated others in the past. Write the goals associated with the role and what it would take to achieve those. Hire only the candidates who align with achieving those goals, without shying away from hard work.
If the candidates pass through the hiring manager interview stage, you can educate them once more at the offer letter stage. It would be a great opportunity to talk about the company’s culture, demographics, locations, remuneration, leave policy, and so on, so that other expectations beyond the actual work are also aligned.
3. Creating assessment kits for hiring managers
In most cases, it’s the nature of the job that compels people to churn rather than the pay scale, location or perks. Most people will not enjoy doing the work they don’t like again and again. If they do, then at some point they will feel like they should get out of it and figure out something else (which may appear more enjoyable or easier to them!).
Letting the candidate know the nature of work, style of communication, time shifts, engagement with customers, and so on, is the responsibility of the hiring managers. They are the best people to judge whether the person is suited for the role in the long term or not. Simply filling the position once, only to see it being rendered vacant in a few weeks is a waste of time and resources.
To ensure that hiring managers match the candidate with all aspects of the job, create an assessment kit for them. You can include questions such as ‘Did you ask the candidate how long they plan to stay with the company?’, ‘Is the candidate okay working night shifts?’, ‘Is it okay for the candidate to travel to at least 3-4 locations every day to collec information?’ and so on. These can be based on the industry and type of role.
4. Verifying background before interview
Doing background verification is a huge task requiring employment verification, reference check, educational check, confirmations, going through records, and so on. Additionally, it’s not very economical to hire third-party agencies for background verification when you are hiring at scale. A huge number of fake candidates in your system also creates the risk of losing out on talented candidates who get lost in the sea of resumes.
You may think it makes no sense to do background verification on hundreds and thousands of applications received every day. And that’s where most companies leave a crack in the system for people who are highly likely to leave in a few weeks.
But what if people & technology can work together to filter fraudulent candidates quickly? Using AI-based fraud-detection systems, such as the one provided by RippleHire, you can flag duplicate or suspicious applications. The system parses through millions of records to spot fabricated details and bring them in front of you to take action (reject, delete, or block). This saves time, resources, and effort for everyone in the recruiting team and also the hiring managers.
RippleHire is the ideal solution for a busy CEO, HR leader, or People Team that wants to scale their distributed workforce hiring without facing the burn of early attrition.
5. Embracing technology
To solve early attrition, it is important to have a tech ecosystem that connects all the stakeholders in the process of hiring and retaining an employee. This will give a clear picture to everyone of why employees leave, what type of employees stay the longest and at which points changes can be made to check attrition.
Usually, the talent-acquisition folks are blamed most of the time, which is wrong and unfair. They are involved in the process of hiring from start to end but don’t have control over all the steps such as expectation setting, offers, and so on. Attrition is a problem that can’t be solved by one department alone. It needs collaboration for deeper and complete understanding.
At scale, collaborations are messy, confusing, and almost impossible to execute efficiently. That’s where technology can help. Systems such as RippleHire, are designed for markets such as India where hiring, attrition, referrals, everything needs to be done at scale and efficiently. Request a demo to see how RippleHire can help you lower attrition without having to increase any compensation package or offering unnecessary perks to candidates.
Sudarsan Ravi is the Founder and CEO of RippleHire and is known as a pioneer and category creator in recruitment technology.
