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Main Dictionary A

Attrition

Attrition — is a subsequent reduction of an important resource (employees or clients). Attrition may happen to any company, and it signals the issues that need attention. These difficulties may be caused by the economic situation or the internal problems of the company, and the decision will depend on the origin of the problem.

Employee Attrition 

Employee Attrition — is a subsequent reduction of a labor force. Employee attrition leads to the lack of talents that could develop the company and undertake the necessary functions. Sooner or later it leads to the closure of the company due to the absence of the executives.  

The reasons may be internal (related to the work conditions) or external (related to the demographic situation in the country). Also, employee attrition may be voluntary and involuntary. Voluntary attrition happens when the workers decide to leave the company due to personal reasons like relocation to another city or a change of career. External attrition happens when the company cuts the position and reduces the staff. Voluntary attrition is safer for the company’s reputation. However, it says that working conditions leave something to be desired, and it requires revision. 

Let’s summarize and list the main reasons for the employee attrition: 

  • relocation;
  • retirement;
  • bad working conditions;
  • lack of the professional growth;
  • uncompetitive salary;
  • illness and death;
  • bad demographic situation in the country;
  • unhealthy psychological situation in the workplace. 

Methods to reduce the Employee Attrition

The owners of businesses should remember that today employees can change jobs when they want to, and the convictions of so-called jumpers have disappeared. That’s why they should apply several methods to retain their staff.

 How to reduce the employee attrition:

  • Access the work of the HR department. Make sure that they conduct the proper psychological testing to identify whether the candidate suits for a certain job.
  • Offer development opportunities. The candidates should see their career perspective and the possibility to grow.
  • Monitor employee satisfaction. Ask the staff, which things they would like to change in the company and implement it, if possible.  
  • Offer a competitive salary. Monitor the labor market and compare your offer with the salaries of your contestants.
  • Monitor the working conditions and working environment. Prevent mobbing and unhealthy competition. 

Difference between Attrition and layoff

Attrition is a lack of labor force caused by various reasons. In such a situation the company faces difficulties trying to hire the employees. To solve this problem, the company may implement the inner changes or contact the recruitment agency. 

A layoff is a forced termination of workplace relations caused by the impossibility to pay for the workplace. Such termination may happen due to various reasons. It can be financial problems in the company or a crisis. Also, it happens during the merger, amalgamation, or implementation of new technologies that replace human labor.

Difference between Attrition and turnover 

Attrition is a situation when the labor force gets exhausted, and the company lacks the necessary specialists. To change the situation, the company should review the hiring policy or search for candidates from other areas.

Turnover is a situation when the personnel of the company changes too quickly. The people join the work, but soon they leave the company. As a result, HR always has to look for new candidates and then train them. The turnover may be caused by the poor work conditions, uncompetitive salary, or the other inner difficulties. 

Customer Attrition 

Customer Attrition — is a subsequent reduction of a customer base. The synonym of customer attrition is a churn rate. This is a quite dangerous process that may lead to the loss of revenue and closure of the company. It shows that the company can’t adapt to the requirements of the market.

There are two types of attrition describing a customer behavior, and they require different tactics to overcome them. 

Active Customer Attrition — a situation when a customer decides to stop using the services of a certain company. This applies to the companies which require you to have an account (bank services, internet providers, streaming platforms).  

Passive Customer Attrition — a situation when a customer stops buying the products of a certain company. This applies to the companies which require the one-time purchase (airlines, clothes, automobiles).

Regardless of the type, the main reasons for the customer attrition are the following:

  • The contestants have launched a product that exceeds in quality and attracts customers. 
  • Bad customer and after-sale service.
  • Changes in the product line and loss of quality.
  • Customers age without being replaced by a new audience. 

Methods to reduce the Customer Attrition

If a company wants to stop customer attrition, it can apply the following methods. Usually, this should be done by the marketer.

  • Explore the target audience. Maybe it is time to focus on the more solvent segment of the population, or maybe your audience has already changed. To know it, conduct marketing research and define which segment of the population could be interested in your product.
  • Improve the product. Check the quality of your product in terms of correspondence to the current standards or the requirements of customers. Get feedback from your customers to know which thing hinders them to use your product or service properly.  
  • Improve the customer service. Organize the training for your staff concerning the communication with customers.
  • Create a smart marketing campaign. To do this, apply special services (free or paid) on the internet or hire a good marketer to do it for you. 

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