Attrition of employee - Associated cost with high attrition - How To Retain Employees?

Attrition of employee - Associated cost with high Attrition - How To Retain Employees?

The latest big problem staring at India's top internet companies is attrition, especially in their senior ranks.

Flipkart, Zomato and Ola, which have been aggressively recruiting top talent with the millions of dollars they have raised, are grappling with an exodus of management-level executives.

Consumer internet companies in India "are growing so rapidly that they haven't built the fundamental concept of retaining people, especially at the top-level," said Sunit Mehra, managing partner at Hunt Partners India, an executive recruitment company.

ET Bureau | Updated: Sep 28, 2015, 05.07 PM IST

Employee attrition is a situation faced by an organisation or employer when new employees joined leaves the organisation to join other organisation when he gets offers. Generally employee attrition will be very high when there is a pressing need of employees in a particular industry due to mass retirements or expansion of organisation. Normally company faces higher attrition rate when there are more employment opportunities in the market by employers. At one point of time software industry has faced high attrition rate by employers due to large openings globally in the software industry due to the demand for software products by all industries.

Employee attrition is one of the critical problem which is faced by an HR manager during these days. In an ideal situation an employee consider multiple comfort level while working in a office for e.g. employer's goodwill in the market, remuneration, future growth, working condition, co-workers, current role's scope in the market & most important future stability with the organization.

In a survey, approximate 70% of the working population in India is not happy at all due to one of the aspect (as mentioned aforesaid) which is not fulfilled while working in a organization which caused higher attrition rate. In broad term, attrition is a situation which employer face when employee left the organization due to job dissatisfaction, new opportunity in the market, retirement & natural cause (death/illness).

Now a days this is one of the most important question which is asked by higher authority to HR people…."Why our attrition rate is higher than other company". Earlier it wasn't important for the organization, whether their employees are committed or not, but now the time has been changed.

The company cannot afford to lose its best employee to competitors. Therefore, HR team conducts EXIT interview when an employee left the job to get the information about one's decision to leave an organization. It is a paramount consideration for a HR team to think, why people are vacating their positions. Still Human Resource team face the challenge due to wrong information provided during EXIT interview.

Example:-KINGFISHER AIRLINES non payment of wages for a long period, almost 40% of its staff quit for other jobs between march 2012 and September 2012. Strength of staff gone down to 3766 employees from 6185 employees in between aforesaid period. Non payment of salaries was only reason for quits by Kingfisher airlines staff. Finally kingfisher airlines became king of attrition.

Common reasons experienced by HR manager are discussed here:

    • Insufficient remuneration and employee benefits paid to employee by his employer.

    • Mismatch of job profile.

    • Job stress and work-life imbalances.

    • Odd working hours/Early morning-night shifts.

    • Entering of new companies and sectors in to the market.

    • Lack of authority provided to accomplish ones task.

    • Monotony of job.

    • Lack of proper facilities provided by employer

    • Lack of proper environment.

    • Poor concern about employees by their employer.

    • Poor promotion policies or lack of promotion for long time.

The list can be endless but the reason why employees leave the organization is vary according to the nature of the business. The work should give to them the level of the employees and the nature of the responsibility he/she can handle. Therefore it's very challenging task for an HR expert to cope up with this situation and retain talent with an organization.

Wipro rolls out bonus plan for juniors to curb attrition

ET Bureau updated: Dec 24, 2018

Wipro pays a onetime bonus to junior employees who have remained with the company since they have been hired from college campuses, an effort to curb attrition of engineers with less than five years of experience.

This initiative comes at a time when Wipro and its IT services rivals such as Infosys, Cognizant and HCL Technologies lose talent to one another as well as captives of multinationals who are expanding in India to build digital capabilities.

Wipro will pay a percentage of their total compensation as bonus with the January salary, primarily to employees in the B1 and B2 bands, a person familiar with the matter said. An employee needs to commit to stay at the company till 2020 to avail of this benefit. A Wipro spokesperson confirmed the move, saying that the plan is to incentivize high-performing individuals in niche domains and technologies and employees hired from campuses. “We incentivize high-performing individuals who are engaged in future focused niche technologies and domains with periodic salary interventions. The recent intervention was for junior employees hired from campuses for technical roles,” Wipro said in an email. “These employees will be eligible for annual increments as well.”

Cognizant is looking to offer quarterly promotion to people with newer skills. Infosys and Cognizant saw attrition at 20% in the six months through September. Wipro posted attrition of around 18% in the first six months on an annualised basis.

Dissatisfaction with job on rise; 80% looking for job change: Survey

By PTI | 19 Oct, 2016, 18:27 hrs IST

Dissatisfaction with job is on the rise and employees blame poor work-life balance for this state of affairs, with a whopping 80 per cent of them looking for a change, says a TimesJobs survey.

The findings of the 'Job Satisfaction 2016' survey by revealed that 60 per cent employees are not satisfied with their current job, while 80 per cent said they are looking to switch jobs.

As per the survey the level of dissatisfaction has increased year-on-year. In 2015, 78 per cent employees stated they were happy with their current job, although they were still open to other opportunities.

The report further said of the 60 per cent unsatisfied employees, 80 per cent belong to the junior level, 60 per cent are from the middle level and 40 per cent respondents are from the senior level profiles.

Among the respondents who claimed to be unsatisfied, 50 per cent count poor work-life balance, 30 per cent state meaningless work and 20 per cent say poor salary as the reason for this dissatisfaction.

Of the respondents who claimed to be satisfied, 45 per cent state their work-life balance as the major reason for their job satisfaction. 35 per cent attribute a good salary and 20 per cent say a good work profile is the reason for their contentment.

Cognizant attrition rate hits record high of 31%; company to make 100,000 lateral hires this year

While Cognizant's revenues for the June 2021 quarter came in at the top of its guidance and it also raised its revenue guidance for 2021 to 9-10%, attrition stood out as a key concern, reflecting its weak footing amidst the war for talent. Moneycontrol had reported on July 28, 2021, that attrition was likely to spike sharply this quarter. ​

Its attrition during the same period zoomed to a historic high of 31%, of which 29% was voluntary attrition. Cognizant has an overall headcount of 301,200. A back of the envelope calculation shows that over 23,300 employees left the company during the quarter, which means an average of 350-380 employees resigned every working day between April-June 2021. A majority of Cognizant's employees are based in India and Cognizant CEO Brian Humphries said the attrition was primarily in the more junior levels of the organisation or mid-levels in India.

The elevated attrition will limit Cognizant's ability to fulfil existing deals and go after new ones, especially in a market where the demand for outsourcing services is booming, as there is an accelerated shift to digital post-Covid-19.

While the company has planned targeted compensation revisions, job promotions and job rotations to retain talent, it expects elevated attrition to continue. Doubling down on laterals in this scenario brings its own risks, according to analysts at Kotak Institutional Equities.

​'The company has little choice but to go full throttle on laterals to fulfil buoyant demand. High attrition backfill using laterals entails risks to margins (higher cost of laterals, lower utilization) and execution (frequent change in project teams constrains effective project management, the possibility of compromise in quantity over quality of hires)' Kawaljeet Saluja and Sathishkumar S wrote in a report published on July 29, 2021. ​

While the high attrition in hot skills is an industry-wide phenomenon, Cognizant's issues extend beyond the buoyant job market. ​

It continues to lose leaders who have been at the company for decades. Moneycontrol reported recently that two more senior executives Arun Baid and Dan Smith have left the company, the latest in among key executives who left the company since CEO Brian Humphries took charge in 2019.

Former Cognizant leaders who played key roles in building the company have now become the preferred choice of private equity firms and global IT/BPM services companies.

In the past two years alone, eight companies – Mindtree, Firstsource, Bristlecone (part of Mahindra & Mahindra), Collabera, Hitachi Vantara, Zensar, Qualitest and Virtusa – have handpicked ex-Cognizant leaders as their CEOs. Others have joined as managing directors or CEOs of large private equity firms and startups.

Attrition in India to top world charts in 2013; one in four employees to change jobs

One in four employees in the organised sector in India is set to switch jobs, the highest attrition rate globally, In India especially in insurance sector, period between 2002 and 2008 was rapid expansion due to stepping of many member of players into this insurance sector. this has caused high inflation in employee salaries and also high attrition in insurance sector due to many number of openings offered by new entrants.

In this period due to abundant openings there was an unprecedented war of talent in the insurance sector to find the right people to join their organisation especially for the key positions. India, In the first three quarters of the financial year 2011-12, more than 3 lakh active insurance agents have quit the profession. Insurance companies such as Life Insurance Corporation of India (LIC), ICICI Prudential and HDFC Life have seen mass exodus owing to lesser incentive to agents when compare with other similar sophisticated industries.

The study seems to support this.

Nearly 55% of Indian employees expressed concerns about the fairness of their compensation and the extent to which benefits meet their needs (48%) One in every three employees expressed concern over a lack confidence in being able to achieve their career objectives with their current employers (37%); as a result, they are concerned about opportunities for learning and development (39%) and supervisory coaching for their development (36%).

An analysis of Hay Group's employee opinion database, covering 5.5 m employees worldwide, threw up the most consistent predictors of employee engagement and commitment: confidence in leadership; an opportunity for career development; autonomy; supportive work environment; and appropriate compensation.

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Associated cost with high Attrition:

Talent loss:

    • It includes the cost of lost knowledge, skills and contacts that the person who is leaving is taking with them out of your door.

Recruitment cost:

    • The cost of advertisements; agency costs; employee referral costs; internet posting costs.

    • Calculate the cost of the manager who has to understand what work remains, and how to cover that work until a replacement is found.

    • cost of the various candidate pre-employment tests to help assess candidates' skills, abilities, aptitude, attitude, values and behaviors.

Training cost:

    • It includes the cost of orientation in terms of the new person's salary and the cost of the person who conducts the orientation.

    • It also consists of the training.

    • Calculate the cost of various training materials needed including company product manuals, computer or other technology equipment used in the delivery of the training.

Motivational cost:

    • It refers to the cost arises because of motivating the other employees to retain them in the organization in terms of increasing their salary and time.

Lost Productivity Costs:

As the new employee is learning the new job, the company policies and practices, etc. they are not fully productive. Use the following guidelines to calculate the cost of this lost productivity.

How To Retain Employees?

Retaining employees has always proved to be fruitful across many industries rather than to search for new & efficient talent. So to gain the fruit of this tree, different companies devise different strategies for retaining their employees. simply hiking ones salary in an endeavor to retain your valuable employee will serve no purpose as today's workforce has a lot going during his/her decision making process and its certainly not restricted to just pay.

    • Insurance schemes for the employees and some of there family members

    • Leased accommodation

    • Transportation facilities to & from office.

    • Personal healthcare like medical attention for self & family

    • Recognition of merits & rewards

    • Participation in decision making

    • Memberships of prominent social clubs.

Highest attrition in hospitality, aviation sectors: Survey2012:

Hospitality and aviation sectors were witnessed the highest attrition rates among employees, making retention of critical manpower resources a key challenge, survey.

According to a study by, the average attrition rate in aviation and hospitality in fourth quarter of 2011-12 was 22 per cent across sector, a rate that had increased by 8 per cent from the from the year-ago period. In comparison, attrition rates in IT and ITeS sector had fallen from 24 per cent in fourth quarter 2010-11 to 18 per cent in same period in 2011-12.

Similarly, in the auto sector, attrition rates fell to 10 per cent in January-March quarter from 11 per cent in the corresponding period in 2010-11. "At the entry and mid-management level, attrition rates in aviation and hospitality industry have doubled over the last three years. This was happened due to perceptions of being poor pay masters, delay in salaries, job insecurities and little concern for employee welfare.

Attrition levels fall due to uncertain economic environment: Study

July, 2012: Indian companies had witnessed a sharp decline in the employee attrition levels during the months of April-June as employees were becoming cautious about changing there jobs due to uncertain economic environment.

Among the 11 industries surveyed, aviation and hospitality sectors had seen highest attrition rates among employees, while the rate was lowest among automobile and manufacturing areas. However, all these sectors had witnessed a decline in attrition compared to previous quarter.

The aviation and hospitality space saw the highest attrition rate of 16 per cent in the first quarter of 2012-13, a fall from 22 per cent in the the fourth quarter. The banking and financial services sector witnessed an attrition rate of 15 per cent against 20 per cent in the preceding quarter.

In addition, IT and ITes sector's attrition level stood at 13 per cent in the first quarter, followed by FMCG (11 per cent), real estate (10 per cent), telecom (eight per cent), automobiles and manufacturing (six per cent). Employees with experience of up to five years had the highest attrition rate of 32 per cent, while it was 27 per cent for those with 5-10 years of experience and 22 per cent in the 10-15 years' experience bracket. Interestingly, senior-level employees (experience more than 15 years) had an attrition rate of 19 per cent. The survey was conducted among over 8,500 employees and 325 employers between May and June this year.