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Retention/ staff turnover is your biggest workforce challenge for 2023.
What is attrition?
Attrition is the departure of employees from an organisation for any reason (voluntary or involuntary), including resignation, termination or retirement. Voluntary attrition is the metric to closely monitor as it’s employee initiated. Attrition rate is the rate at which employees leave an organisation divided by the average number of employees at the organisation over a given period of time.
Why do you believe staff attrition is the biggest workforce challenge in 2023?
The current average attrition rate in Australia is on the rise (16%) and alarming many organisations who are scrambling to respond by offering by the best value proposition in the market to address the 'quiet quitting' trend over the last 12-18months.
Why is attrition at its highest ?
1. Supply: shortage of critical skills which are in high demand in a labour short market. The best talent is being snapped up very quickly by paying incredible salaries so secure in demand skills.
2. Costs: increasing OpEx for companies and increasing inflationary pressure is making it very difficult to respond to market conditions related to skills and talent in very high demand. Perhaps employers were happy to match competitive offers over the last few years however now is far more challenging keep up with the demand.
3. Limited opportunities for growth/progression and development: anywhere and anytime self-paced learning has exploded with many companies scaling their learning platform efforts in response to the pandemic. There is a common theme with many companies neglecting to identify and define career pathways for critical workforce segments. Additionally, specific or customised learning for technical workforces is being left in the ‘too hard basket’ by many companies at the determent to losing critical talent.
4. Hybrid way of working: Hybrid and ‘intentional flexible work’ practices are having mixed results. The reality is many 'white collar' jobs weren't designed to operate in our new world of hybrid and disparate 'work' and many employers are grappling with this dilemma to redefine; jobs, culture and the 'employee experience' in 2023. We are social creatures who need to be seen and heard to enable us to be at our best hence why many employers are mandating return office policies by backtracking on flexible work promises in our post pandemic world.
Where to from here? What can companies do either to mitigate or manage this? Solutions available.
It’s important to not just review your headline attrition rate but to unpack it further by looking at other leading and lag indicators such as absenteeism, increased safety incidents, internal mobility or movements into or out of certain teams, exit survey themes and engagement scores. We have done plenty of recent work to explore these trends from an independent, objective and expert view to determine probable root causes with a number of bespoke solutions to decrease attrition and increase engagement for both national and global clients.
Why do they need to take action now?
The average cost per hire benchmark to replace these departures is approximately AUD$23k according to a recent study which includes direct costs such as agency fees, hiring manager interview time and onboarding (excludes lost productivity and performance). This creates an exorbitant $7.3m problem if we apply these figures with a workforce size of 2,000 employees over 12months which equates to $50,700 per business day if no action is taken.
Limits your company's growth
Typically, it takes new employees approx. 6-12months to reach peak performance so if 16% of the team is constantly moving on, overall productivity, performance and profitability is impeded at an individual, team and organisational level. Similar to a car with a flat tyre, peak performance, efficiency and potential is never attained due to being held back and the other parts needing to work harder and take the slack to move forward.
We need to work smarter in this climate
Making informed decisions based on evidence and data is always recommended to understand the root causes because every client and organisation has different challenges, value propositions and conflicting priorities. Quite often companies aren’t sure where to start or what to do to address rising attrition and decreasing
