Attrition vs turnover: What’s the difference?

They may sound similar, but attrition and turnover rates in the workplace have very different meanings. Whereas turnover is negatively associated with losing staff due to mismanagement, attrition can actually have a positive influence on the workplace. Here’s why.

What is ‘attrition’?

Attrition is essentially defined as people leaving a company, most often when someone chooses to retire or the position is eliminated. So it’s unsurprising that many business owners confuse ‘attrition rate’ for ‘turnover rate’ when measuring the company’s overall wellbeing. After all, low attrition must mean everything is peachy in the workplace, while high attrition must indicate a serious problem, right?

Actually, some of the most popular and people-focused companies may have high attrition rates for any number of reasons – whether people are retiring after several years at the business, or the company is consolidating and eliminating unnecessary positions. The key is knowing the difference between ‘good’ and ‘bad’ attrition, which we will touch on later.

What is ‘turnover’?

Turnover comes about from several different actions, most notably discharge, termination, resignation or abandonment. Unlike attrition, there is no such thing as ‘good’ turnover. Whether it’s a poor performer who receives a notice of termination or a high-flying staff member who quits because they feel they aren’t being adequately rewarded, turnover is an issue that needs to be rectified.

Attrition can actually be a good thing

In any organisation – no matter whether it’s a small business or multinational – people will join and leave for different reasons. In service industries, for example, where most employees are hired on casual or part-time contracts, this is common, and attrition is completely normal.

Spotting good and bad attrition is important so you don’t get bogged down in hard figures of ‘losing staff’. The loss of a poor performer – while appearing negative on paper – could actually be a positive for the business. In terms of attrition, this may be done by eliminating unnecessary positions. When the time comes to expand again, you can then hire new staff and train them up to avoid the pitfalls of previous poor performers.

On the other hand, losing a star employee – whether it’s to a competitor or due to bad management – can have a negative impact on the whole team. This is bad attrition and should be avoided at all costs. Conducting an exit interview is recommended for learning why a staff member has decided to leave.

Good attrition is when people leave the business and don’t diminish the overall output of the team. That is the key point to remember when reviewing attrition rates.

High turnover is always bad for business

High turnover can occur for various reasons, and none of them positive. Whether it’s an inefficient hiring process, poor training or general mismanagement of staff, high employee turnover can create:

• Cost problems: Hiring staff is expensive. There’s the job-search process, recruitment costs, training and more. Retention is almost always the better option.
• Reduced business performance: High turnover often impacts the staff who remain, with lower productivity and less incentive to be efficient as they are forced to absorb the duties of exiting employees.
• A revolving workforce: If high turnover is allowed to continue, then that means the problems at the core of the business have neither been addressed nor resolved. This can lead to a revolving door of short-term employees.

How to spot the signs of high turnover

If you are concerned about staff leaving, there are several tactics you can use to spot the signs of high turnover:

• Review your hiring process: In order to get the right people for the right role, it’s crucial that you create accurate job descriptions, have a structured interview and hiring process, and convey your company culture to all applicants.
• Listen to team leaders: Working with staff day in, day out, team leaders have their ear to the ground and may provide unique insights on fellow employees.
• Conduct regular surveys: Boost transparency by allowing staff to have a voice with ongoing surveys. This can help you improve the inner workings of the business.
• Interview star performers: Top employees can give you information on what they love about the business, as well as ways in which you might be able to improve retention.

How to re-engage your disengaged employees

5 steps to re-engage disengaged employees.

Disengaged employees are a critical business issue. Not only can they create a negative, even toxic, company culture, but their reduced productivity comes at a huge cost to a business’s bottom line. Research by Gallup found that as much as 17.2% of an organisation’s workforce is actively disengaged, and the cost of this disengagement can be as great as 34% of an individual worker’s salary. Fortunately, there are steps you – and a software (Redii) can take to turn things around.

Step 1: Find out why they’ve switched off

Before you can make significant changes, you need to know exactly why your employees have disengaged. Is it due to a weak company culture, poor management, poorly defined roles or KPIs, or a lack of recognition? Ask your staff to tell you their thoughts. You could run anonymous surveys so people are free to be completely honest, or hold focus groups with a cross-section of employees and encourage them to air any and all grievances in a safe space. Make sure your managers are trained to invite and address feedback properly. Incorporating feedback tools into regular staff communications is a good way to ensure it is consistent and ongoing.

Our Employee Engagement MasterClass attendees receive a free pulse survey they can implement to start with the first step towards building a culture of recognition. It is a great way to understand your employee needs.

Step 2: Create change based on these insights

Once you understand what’s really happening with dissatisfied employees, you can create a strategy that addresses the core issues. You may want to hold collaborative meetings to develop an engagement program that’s tailored to your employees’ specific needs. Involving staff in the process of developing this strategy will give them a greater sense of ownership and autonomy, which in itself can drive engagement.

Hint: Employee Recognition is proven to be the fastest way to increase employee engagement.

Step 3: Make them part of the big picture

Disengaged employees often feel that decisions are being made above their heads and beyond their control. Including them in business decision-making that affects the strategy and direction of the company can re-engage them in the corporate culture. Besides creating channels of communication for feedback, regular staff meetings can help ensure everyone has their say and is across what’s happening in the organisation at a broader level.

Step 4: Create a culture of opportunity and recognition

As well as addressing more immediate issues, consider long-term strategies for promoting greater employee engagement. These may include: providing better forums for open discussion; creating more opportunities for performance review and goal-setting; implementing better employee health and wellness programs; or creating a company initiative that promotes collaboration and team building, such as a corporate volunteer program.

Creative employee rewards are also an effective employee engagement tool. Redii’s employee recognition and reward software have more than 3,000 rewards to choose from, including e-gift cards for retailers like JB Hi-Fi and Coles to Red Balloon experiences.

Step 5: Manage and monitor engagement

Once your strategies are in place, it’s important they’re not just ‘set and forget’. You need to keep managing and monitoring them in order to measure their effectiveness. Redii provides you with regular insights on the performance of your rewards and recognition program so you can adjust it to suit your employees’ needs.

Register for FREE to our Employee Engagement MasterClass – 60 minutes that will transform your workplace culture.

Remote Employee Engagement Strategies

Engaging a remote workforce

Remote working is a well-established and growing part of our corporate culture. Data from the Australian Bureau of Statistics show that almost a third (3.5 million) of all employed Australians regularly work from home in their main job or business. With the completion of the National Broadband Network (NBN), the government intends to create more work-at-home opportunities by 2020, with a goal for 12% of all public servants to regularly telecommute.

Insights from McCrindle reveal that 80% of those surveyed were more likely to stay longer with an existing employer if they provided the flexibility of working remotely, while most employees (52% of men and 51% of women) were prepared to take a pay cut in exchange for greater flexibility in their working arrangements. What’s more, 55% of Australians reported being more productive working from home than in an office environment.

The challenge for employers, of course, is how to manage remote workers and keep them engaged in the business culture when they’re not physically in the building. Here are some best-practice strategies for managing a remote workforce.

1. Make the most of digital tools

Including remote workers in team communications and meetings is far easier these days when they can have an immediate virtual presence. All companies with remote workers should be capitalising on the wide range of digital tools that make remote communication easy, such as Slack, video conferencing, social media, intranet communications and employee engagement software such as Redii.

2. Over-communicate

The risk of remote working can be reduced communication when it’s not easy to wander over to someone’s desk or request a quick coffee catch-up. Make communication a top priority with remote workers by scheduling weekly, or even daily, meetings and embedding this communication in your workflows.

3. Make communication a two-way street

It’s equally important that remote workers feel heard. So ensure they can easily supply feedback on projects, any issues they may be having while telecommuting and company operations in general. This is a key way to make sure they don’t feel disconnected. Provide clear channels for feedback such as corporate surveys, online forums, social media and intranet communications.

4. Give them the right tools

Remote employees in particular need to be empowered with tools to make their job easier and promote autonomy. Make sure they have equal access to files, tasks, deadlines, updates and news as on-site staff. It’s also important to ensure their remote working environment is a productive one. This may mean equipping them with better laptops, computers and mobiles, ensuring that they have easy access to tech support or engaging ergonomic experts to do home visits so their workspace is set up to avoid injury.

5. Bring them across company values and culture

Making sure all remote workers really understand your corporate culture and brand values will help them feel part of the team. It’s entirely possible to create a strong corporate culture even when workers are dispersed geographically. Every person who works for your business should have a strong understanding of your company’s values and way of doing business. Aligning all workers, including freelancers, with company values drives loyalty, communication and engagement. You can achieve this by making sure remote workers are equally included in all relevant communications, meetings and business events.

6. Reward and recognise

Another great way to make remote workers feel engaged and part of the larger team is through personal reward and recognition for their contribution. Consider sending them an e-card, or even a cake, on their birthday, along with other tangible rewards for meeting their KPIs and other company contributions. With Redii’s reward and recognition program, you can include them in rewards and recognition such as appearing on the Recognition Wall or Leaderboards.

Redii help organisations increase employee engagement. RSVP to the Employee Engagement Masterclass.