As a leader, it’s your job to ensure that your teams are happy, fulfilled, productive, and that your high performers are committed to your organization’s mission for the long haul. As such, you probably often see metrics about voluntary attrition and employee turnover as indicators of an organization’s overall health.
The terms “employee attrition” and “employee turnover” are often used interchangeably in the corporate world, but they refer to different phenomena with distinct implications for businesses. Understanding these differences is crucial for business leaders striving to effectively manage their workforce.
What is employee attrition?
Employee attrition refers to the natural reduction in the workforce due to employees leaving for voluntary reasons other than being replaced or fired. Typically, attrition includes:
- Retirement. When employees reach retirement age and choose to leave the workforce.
- Resignation due to personal reasons. These employees might leave an organization for reasons other than dissatisfaction such as moving to a new city, health issues, or pursuing further education.
- Death or disability. These are unfortunate but natural reasons for attrition.
Attrition is often seen as a passive process where the company does not actively seek to replace the departing employee. It can reflect a stable workforce where employees tend to stay longer or where the organization might be downsizing without hiring replacements.
What is employee turnover?
Employee turnover, on the other hand, encompasses all leavings, including those from attrition. Turnover typically also includes:
- Voluntary resignations. Employees leaving for better job opportunities, dissatisfaction with the current job, or other career advancements.
- Involuntary terminations. This includes layoffs, downsizing, or firing due to performance issues or misconduct.
- Internal transfers. Sometimes turnover includes employees moving to different positions within the same company, although this can be treated separately.
Turnover is a broader metric that captures the total movement of employees in and out of an organization. High turnover rates can indicate issues within the company like poor management, inadequate compensation, or lack of growth opportunities.
Key differences
There are notable differences between voluntary attrition and employee turnover. These can generally be thought of in a variety of ways:
Nature of departure
- Attrition involves employee exits that are generally not influenced by dissatisfaction or external job offers.
- Turnover includes all forms of departure, highlighting both the voluntary and involuntary reasons for leaving.
Impact on hiring
- Attrition might not immediately prompt a hiring process, especially if the role isn’t critical or if there’s a strategic reduction in workforce.
- Turnover often leads to immediate recruitment efforts to fill the vacant positions to maintain operational capacity.
Company culture and strategy
- Attrition can be part of a planned workforce aging strategy or might reflect well on company culture if employees leave at retirement age.
- Turnover might suggest a need for cultural or strategic changes within the organization to retain talent or improve working conditions.
Cost implications
- Attrition might have less immediate financial impact since there’s no urgent need to replace staff.
- Turnover can be costly due to the expenses involved in recruiting, hiring, and training new employees, not to mention the loss of productivity during transition periods.
Why organizations must understand attrition versus turnover
Understanding whether your organization is dealing with attrition or turnover can significantly affect how you manage your human resources.
- Strategic Planning. Knowing if you’re losing employees to retirement or external opportunities helps in planning future staffing and leadership transitions.
- Retention Strategies. If turnover is high, strategies might include improving the workplace environment, offering better benefits, or career development opportunities.
- Financial Planning. Differentiating between these can help in budgeting for recruitment versus leveraging attrition for cost-saving in workforce reduction.
While both attrition and turnover deal with employee exits, the context and implications are quite different. Effective management of these metrics can lead to a healthier, more stable, and more productive workforce.
Aligning roles and motivations
High employee turnover is often due to misalignment between roles and intrinsic motivations. When employees are in roles that do not align with their motivations, dissatisfaction can accelerate turnover.
Leaders looking to shift their metrics on turnover can do so by attuning themselves to their team member’s motivations. If there are clear indications that employees are not satisfied in their roles and are considering a move, start here.
- Have employees take the MCode assessment to identify their core Motivations.
- Review current role requirements against individual Motivational patterns.
- Adjust responsibilities to align with primary Motivations where possible.
- Consider internal transfers to positions better aligned with each employee’s Motivational Dimensions.
Dimension-based management
For each Motivational Dimension, tailor management to ensure employees find greater satisfaction in their roles. Managers can do so through a targeted approach meeting each employee where they are best motivated.
Achievers
- Provide clear career advancement paths for future development.
- Recognize an Achiever’s unique contributions publicly.
- Create opportunities to stand out from peers.
- Set challenging individual performance goals.
Drivers
- Establish clear objectives that define success.
- Allow great autonomy in achieving goals.
- Present regular challenges, even those that may seem insurmountable.
- Reward and encourage persistence and completion.
Learners
- Offer continuous education opportunities that give Learners the ability to dive deep on topics.
- Create platforms to share knowledge with others in the organization.
- Support exploration of new skill development.
- Value and reward a Learner’s expertise development.
Visionaries
- Enable creative freedom to explore ideas, no matter how far-fetched.
- Support innovative initiatives that are bigger than standard operations and tie them to organizational success.
- Connect a Visionary’s work to future impact on the organization and its customers.
- Allow strategic input on direction and impact.
Warning signs a high performer is leaving
Knowing an employee’s Motivational Dimension can help leaders identify warning signs and take preventative action before losing a high performer. By understanding what makes each high performer engaged and fulfilled, the signs become clear. For example:
- Achievers becoming quiet about accomplishments. This is out of character for an Achiever and is a sign that they are no longer engaged.
- Relators withdrawing from team activities that previously excited them.
- Optimizers withholding improvement suggestions or allowing a status quo problem to continue.
- Visionaries no longer sharing ideas or dreaming big.
Motivation Code can help with early warning signs
The science of motivation isn’t just theoretical. It’s a powerful tool for building sustainable, engaged workplaces. By understanding and actively managing for individual Motivational Dimensions, organizations can create environments where employees don’t just stay, they thrive.
A motivation-aligned approach to retention isn’t just nice to have, it’s essential for long-term organizational success. Take the first step: assess your team’s Motivations and start building a workplace where turnover is the exception, not the rule.
