What is Employee Turnover?
Employee turnover is the total number or percentage of employees who for one reason or the other leave a company or organization and are then replaced by new workers. In simpler terms, employee turnover is the act of finding a replacement for a worker who has left the organization.
Employees can decide to part ways with organizations because of several reasons some of which include resignations, retirement, termination, intra-agency transfers, and many other reasons. An institution’s turnover is measured as a percentage rate which is commonly referred to as the turnover rate. The turnover rate represents the percentage of workers that have left an institution during a particular period, usually a calendar or fiscal year.
There exist four different types of turnovers which include the following:
This type of turnover occurs when a worker chooses to leave an organization out of his/her own free will. It could be as a result of conflict with another staff member, receipt of a more appealing job offer than his/her current status or even a lack of enough advancement opportunities in his/her current job.
This type of turnover occurs when an employer decides to relieve an employee his/her duties and the employee half-heartedly or unwillingly leaves the post. It could also be as a result of conflict with another staff member or as a result of poor performance from the employee or the employer taking up his/her right to exercise the at-will employment clause.
This type of turnover occurs when a poor-performing or a low-performing employee leaves an organization. This type of employee turnover reduces the load of paperwork that an organization must file for it to do away with the employee. Instead of going through the rigorous process of proving that the employee is inadequate in his/her work, the organization simply abides by his/her decision to leave.
This type of turnover occurs when a high performing employee decides to leave an organization. It can be potentially costly to a company. It can be as a result of an appealing job offer from another company or lack of enough career advancement opportunities.
Too much turnover can be costly to an organization and can bring bad reputation to an organization too. Nevertheless, there is good employee turnover, it happens when a company finds a better fitting employee in a particular position or when an employee outgrows career advancement opportunities in his/her current company and must move on elsewhere.
Employee attrition means the gradual reduction in a number of staff or employees in an organization through the normal means which include; loss of customers, retirement, and resignation, outgrowing the organization’s demographic target et cetera without replacing the lost personnel. Employee attrition is one way of reducing the labor costs of a company. It contrasts with the harsher labor reduction method of the mass layoff. Employee attrition can limit promotions within an organization if the jobs are completely done away with.
Causes of employee attrition are wide, ranging from changes in organization management to restructuring within the organization. When employees decide to leave a company voluntarily it leads to higher rate of attrition. Another probable cause of employee attrition is when an organization decides to eliminate a position completely. Also, firing and mass lay off of workers can result in attrition as long as the organization does not replace the outgoing lot with new employees. Often, when an organization terminates or ends an employee’s employment because of attrition, the worker gets a severance package or continuance of benefits for retirees.
Often, when organizations are faced with huge debts or possible closure, they do have to make tough decisions to possibly cut or trim its employee workforce in order to remain afloat. If this occurs, the organization develops some sort of lay off plan with no plan to fill the positions with new workers. Company structure changes or change in the business model of the company such as change of focus or a merger might necessitate the closure of certain departments within the organization in order to fit in the new model.
There are two types of employee attrition; voluntary and involuntary attrition. Voluntary attrition is when a worker leaves an organization out of his/her own free will. It can be as a result of leaving a current job for a new job elsewhere or retiring. On the other hand, involuntary attrition is when an employee is relieved of his/her duties and asked to leave the company.
The Differences between Employee turnover and Employee attrition
It is easy to confuse between employee turnover and employee attrition because of the simple fact that both involve employees leaving an organization for one reason or the other. However, there exist distinct differences between the two as discussed below;
Whereas turnover is the percentage rate at which an organization loses a worker due to reasons such as poor performance, laying off or career advancement opportunities elsewhere, attrition is the gradual reduction of the number of employees in an organization through other means such as retiring rather than firing.
Another major difference between the two is that whenever employee turnover occurs, the organization finds another competent worker to replace the outgoing employee almost immediately. Conversely, whenever attrition occurs, the outgoing worker leaves the position vacant and in some cases, the job role he/she held is eliminated. Companies do not seek to replace the outgoing employees when attrition occurs unlike in turnover.
Another difference is that employee attrition is a function of a decreasing or declining workforce whereas employee turnover is a function of an expanding or stable workforce. Employee turnover’s general measure is a percentage arrived at by dividing the total number of employees who have left by the total number of employees on the organization’s books.
Employee Turnover and Employee attrition both involve employees leaving an organization for one reason or the other and whereas a replacement is a sort in the case of turnover, no replacement is made in the case of attrition, this is the major difference between the two.