Employees departing and joining a company is an inevitable element of doing business. When staff turnover has a negative rather than positive impact on the organisation, it becomes a significant challenge.
When an employee is lost or replaced for the betterment of the company, this is referred to as positive attrition. The loss of outstanding achievers causes negative attrition, which has a negative impact on the organization’s bottom line.
According to a recent survey by the United States Bureau of Labor Statistics, approximately 3 million employees leave their employment each month. Significant lead times and the added expense of compensating discharged personnel result in a loss of production and income. Furthermore, the time and money spent onboarding a replacement reduces productivity and profitability. While there are preventative measures in place, such as outplacement assistance, attrition has a negative impact on a company’s reputation.
This post will explain how a Resource Management Solution can assist firms manage attrition. Let’s get the basics straight before we get into the meat of the matter.
What exactly do you mean when you say “attrition”?
Employee attrition refers to the loss in worker numbers as a result of layoffs, resignations, or retirements.
There are two types of employee attrition: voluntary and involuntary.
Employees who leave on their own accord owing to personal reasons or better opportunities are referred to as voluntary attrition.
When a business decides to part ways with an employee, it is known as involuntary attrition. The two most common types of involuntary attrition are firing and laying off.
How can resource management keep attrition under control:
A Resource Management solution can assist firms in successfully and efficiently managing their resources. It dramatically reduces expenses, improves productivity, and reduces attrition.
Let’s take a look at how it works:
1. Don’t overburden your resources with work all of the time:
Employee burnout is caused by a variety of factors, including work overload. Burnout is typically directly related to voluntary attrition. According to a Gallup study, burnout employees are 2.6 times more likely to leave their current employer.
The visibility of resources is provided by modern resource management tools. Real-time data on resource consumption and availability decreases the risk of overbooking them beyond their capacity. Furthermore, the system sends resource managers overloading alerts so that they can avoid it in the first place.
2. Considers the abilities and interests of employees:
Another primary cause of voluntary attrition is task allocations that do not consider employee talents and interests. This is when people begin looking for other ways to enhance their careers. According to Gartner, career development accounts for more than 40% of involuntary turnover. Employees may feel stuck in their careers if their skills are not utilised to their full extent. As a result, they become demotivated and begin looking for chances that appear to be promising for their professional development.
All resource-related data is extracted into a single source of truth by resource management solutions. All data is gathered in real time, including skills, certifications, and experience. Furthermore, resource scheduling and planning aids in the assignment of work based on the interests and talents of the employees. It also aids in the improvement of staff productivity and the implementation of their Individual Development Plans (IDP).
3. Eliminate erroneous resource hiring:
Managers make blind hiring decisions in the absence of a clear picture of the skill sets required to meet future project resource demands. Poor hiring decisions can lead to a loss of productivity and attrition. According to the Harvard Business Review, improper hiring decisions account for 80% of employee turnover. To a considerable extent, a resource management solution can assist firms in resolving this issue.
Future and pipeline projects, as well as their resource requirements, can be forecasted with the help of capacity planning. It aids in the development of a long-term resource plan for future or pipeline projects. Forecasting ahead of time aids in the identification and acquisition of cost-effective competent resources. Hire people with skill sets that will benefit the company and will be a good fit for future projects. As a result, resource management systems aid in making informed hiring and training decisions, resulting in a skill pool that is optimally balanced.
4. Cut hiring/firing costs that aren’t necessary:
Frequent hiring and firing can have a negative impact on a company’s reputation and employee morale. Market instability and economic uncertainty might drive companies to take drastic cost-cutting measures. Some of these include terminating and laying off employees without warning.
These reactionary tactics are a quick cure, but they have a long-term influence on the business’s viability. Firing employees raises the Cost per Hire (CPH), which is the overall cost of recruiting a successor. According to the Human Capital Benchmarking Study, the average CPH is $4,129, and the average time to fill a vacancy is 42 days.
Furthermore, most companies terminate resources simply to replace them with personnel with the same skill set but at a greater salary. One of the finest practises of resource management solutions is forecasting capacity vs demand. It allows ample time to take corrective actions and avoid last-minute hiring/firing activity. These include project burden smoothing, employee reskilling, and employing on-demand workforce, all of which help to drastically reduce hiring/firing expenses.
5. Reduce the number of mismatched skillsets on the bench:
Due to a lack of effective methods for resource allocation, tasks are frequently assigned to persons who lack the necessary skills to do them. As a result, companies may end up with a significant bench of mismatched abilities. Employees that are benched have a negative influence on the bottom line, which leads to involuntary attrition.
Real-time 360-degree visibility of resources and their competency information is provided by resource management solutions. As a result, booking resources with the appropriate skill sets reduces the risk of benched resources. It aids in the reduction of project resource costs while also increasing profitability.
6. Detects talent shortfalls in advance:
According to LinkedIn’s Workplace Learning Report, 94 percent of employees are willing to further their education if their company invests in it. Organizations, on the other hand, put off training measures until they have a clear image of which competencies can fulfil future job demands. With enough foresight into future resource demands, there is enough time to build a skilled resource pool. Scientific forecasting approaches assist businesses in identifying talent gaps and taking suitable steps to close them.
Demand capacity planning anticipates future and pipeline project needs in advance. These insights aid in the training of personnel so that they are prepared to take on future jobs. Career growth, engagement of IDP, and increased productivity are all benefits of reskilling and training.
7. Don’t assign under-skilled or over-skilled resources:
Due to a lack of visibility across the organisation, projects are frequently assigned to under or over trained resources. If the assigned resource lacks the skills required to complete the task, the project will be delayed, resulting in dissatisfaction and employee disengagement. Overqualified personnel result in a budget increase while also leaving the employee bored and starved. Attrition rates are likely to be high in both scenarios.
Workforce optimization is aided by resource scheduling and planning. It assists in the identification and deployment of resources to the appropriate work based on their abilities, experience, cost rate, and qualification. It lowers the likelihood of assigning jobs to those who are under- or over-skilled.
The Bottom Line:
Revenue decreases as a result of attrition, whether voluntary or involuntary. The hidden costs of finding and training a successor are enormous, according to quantifiable figures. In addition, the lead time and months spent onboarding have a negative impact on the bottom line. Furthermore, a loss of productivity can harm a company’s image, cause customer turnover, and reduce profitability. As a result of the aforementioned principles, resource management solutions can dramatically minimise attrition, enhance revenue, and boost productivity.