Check attrition to increase profitability of your firm

AttritionAttrition refers to the gradual reduction in the work-force (and not replaced) due to reasons like resignation and retirement. Attrition results in loss of employees as well as the loss of customers; it in-turn increases the costs and decreases the profit margin of a company.

Though it’s not possible to eliminate the attrition completely, it’s possible to reduce the attrition rate significantly by focusing on some of the factors causing the attrition. Low attrition rates boost both the profitability and morale of the team.

Here are few factors that influence attrition and remedies to reduce the attrition rate.

Salary and benefits

This is one of the main causes of the employee turnover rate being so high. Employees are always in search of jobs which pay well. Employees always flock to companies who offer more benefits. So it is very important to recognize the skilled employees and offer them salary and benefits on par with the industry standards.

Working environment and work pressure

Employees prefer to work in an environment which is apposite for them. This is the most common reason why employees change companies very frequently. The companies should evaluate and amend their work procedures and policies from time to time to enable employees to use their full potential and even gain significant work experience. Employees would certainly leave the organizations if the work pressure is too much or too low. There are many cases where employees have left the company due to no projects or assignments. If they find an appropriate work environment and satisfying job in a specific company, they would not mind staying in the same organization for several years.

Leadership style

There is a popular saying in the industry, “employees do not leave the organization but leave their bosses”. In order to be a good manager, it is important to be a good human being. There are few Do’s and Don’ts for a good leader.


  1. Empower employees
  2. Let employees take ownership
  3. Rotate responsibilities
  4. Make room for fun
  5. Set a mission statement for the team
  6. Be flexible
  7. Facilitate tools and equipments required to perform their duties
  8. Be polite
  9. Be an active listener
  10. Set clear instructions
  11. Identify issues and resolve on time
  12. Appreciate the good work
  13. Provide constructive feedback
  14. Encourage two way communication
  15. Be a role model
  16. Conduct one-on-one / team meetings regularly


  1. Behave rudely
  2. Gain authority over the team/individuals
  3. Have no empathy
  4. Communicate ambiguously
  5. Have no transparency
  6. Make partiality and discrimination
  7. Make difficult to approach

Employee motivation

Motivation is something which has to come from the employees. However, boss should facilitate good working environment where employees are motivated to perform their duties. According to Abraham Maslow’s Hierarchy of Needs defines five basic need levels for motivation.

  1. Physiological – basic necessities such as food, water, sleep, etc
  2. Safety – security of body, of employment, of resources, etc.
  3. Social – friendly, energetic, and fun filled environment
  4. Esteem – self-esteem, confidence, respect by others, etc.
  5. Self-actualization – morality, creativity, problem solving, etc.

Wrong job

It is important to hire right people for the right job and not best people. If it’s a wrong hire then it leads to errors and delays in deliverables. Finally, he/she resigns as he/she lacks right skills to perform the duties.


Training is an important aspect without which the required results may not be achieved, though the employee may have the right attitude, energy, and enthusiasm. Leaders have to identify the training needs of the staff from time to time and facilitate the same. This helps employees to gain the competencies to move to various levels and creates an opportunity for career and personal development.

Advancement and promotion

Many employees leave the company due to no scope for advancements or promotions. In such cases, they prefer other companies which may provide them with higher posts and increased compensation packages. The companies need to evaluate and modify their promotion policies in a fair way which would enable promotions for candidates on the basis of employee performance. In a condition where there is no raise or promotions, employees can be given an opportunity to explore other areas within the organization by way of secondments or temporary duties. This change may be refreshing for the employee and away from the monotonous work.

Apart from the above factors, it would be ideal to do an Engagement Survey and calculate attrition rate of the company. This helps in taking corrective measures on time to reduce attrition rate. After all, employees are the most valuable resources in increasing efficiency and profitability of a company.

  • harsha

    Hey Shyamala..good job..I’m impressed!!