Article

    Beyond the staff turnover: tap the benefits of low attrition with dedicated teams

    Consider this: hiring a new employee costs a company 3-4 times their annual salary. The significant figure emphasizes a crucial reality: retaining talent is more financially advantageous than continual recruitment. Maintaining a low attrition rate in a swiftly evolving tech landscape is vital for sustainable progress, enabling your company to pursue its objectives without squandering resources on unexpected replacements. Reducing attrition rates ensures ongoing project momentum and stability. At the heart of this effort lies the establishment of resilient tech teams.

    IT Outsourcing Staff Augmentation Global Capability Centers

    How to do that? One proven way to mitigate attrition’s disruptive impact is securing access to specialized talent through dedicated teams and prioritizing employee satisfaction. Let’s delve into the hidden costs of high attrition rates and explore proactive solutions to tackle this challenge effectively.

    What is the attrition rate?

    The attrition rate is a barometer indicating the speed at which employees leave a company voluntarily or involuntarily. Businesses use it to measure the overall health of their organization. A low rate reflects stability and satisfaction within the workforce, while a high rate often points to underlying issues causing talent drain.

    In the tech industry, where innovation and competition are rampant, attrition rates soar, reaching as high as 12.9%. Shockingly, in 2021, tech companies reported a staggering 50% increase in voluntary employee attrition year over year. This surge can be attributed to various factors, including fierce competition for talent, the relentless pace of technological evolution, and the allure of startup culture.

    To put things into perspective, the average attrition rate for all industries hovers around 10%, while anything above is concerning. And if you think a 3% difference is negligible, see it this way — for every 100 employees in your organization, 13 are out during the year. That’s a whole team of developers or engineers (or two teams if you take an average scrum team size of 7 people!)

     

    Attrition Rate vs. Turnover Rate

    Attrition and turnover rates both track when employees leave a company, but they focus on different things. Attrition is when someone leaves and isn’t replaced, while turnover is when someone leaves and gets replaced within a specific time. So, it’s possible to have high turnover but low attrition. This scenario suggests that the company is adept at managing its workforce turnover by promptly filling vacant positions, maintaining operational continuity, and mitigating the long-term impact of employee departures.

    Pro tip

    “Attrition is when someone leaves and isn’t replaced, while turnover is when someone leaves and gets replaced within a specific time.”

    The true costs of a high attrition rate

    A high attrition rate can impose significant financial burdens on businesses, but it’s not merely the budgetary implications that keep CEOs and HR specialists awake at night. Here are the reasons why reducing attrition rates is their number one priority.

    01 Loss of institutional knowledge
    02 Decreased team morale and productivity
    03 Recruitment and retention challenges
    04 Increased recruitment costs
    05 Disruption of project continuity
    06 Impact on customer relationships

    With each experienced employee’s departure, the organization loses institutional knowledge accumulated over time. They take valuable insights, processes, and expertise with them, causing inefficiencies, mistakes, and difficulties in maintaining consistent standards and operations. Moreover, the departure of key individuals can disrupt critical knowledge transfer to new employees.

    Research from Gallup shows that companies with engaged workforces outperform their peers by 147% in earnings per share. Unfortunately, a high attrition rate can negatively impact morale as remaining employees contend with insecurity, anxiety, and increased workloads. The departure of colleagues can disrupt team dynamics, erode trust, and impede collaboration, hindering overall team effectiveness. To top it all, the uncertainty surrounding job stability and the continuous adaptation to new team members can lead to disengagement, burnout, and a decline in productivity.

    High attrition rates pose significant organizational recruitment and retention challenges, signaling difficulties in retaining existing talent and attracting new hires. The constant need to fill vacancies strains HR resources and incurs additional recruitment costs, including advertising fees, agency commissions, and candidate assessments. Not to mention that frequent turnover can damage the organization’s employer brand, making it less attractive to prospective candidates and exacerbating talent shortages.

    Recruiting new talent incurs significant advertising, interviewing, and onboarding costs. According to Glassdoor, the average U.S. employer spends about $4,000 and 24 days to hire a new employee. In the tech industry, these figures can be several times higher. High attrition rates necessitate ongoing investments in HR personnel, recruitment platforms, and candidate assessment tools to manage the recruitment process effectively.

    High attrition rates disrupt project continuity, resulting in knowledge gaps, communication breakdowns, and delays in project timelines. This lack of continuity can lead to missed deadlines, compromised project quality, and decreased stakeholder confidence. Addressing these disruptions requires proactive knowledge management strategies, effective succession planning, and clear communication to ensure seamless transitions and minimize project risks.

    Once a company’s service gets rated as very poor, only 20% of customers are willing to forgive a bad experience. High turnover rates can negatively impact customer relationships, as clients may become frustrated with frequent changes in their points of contact. This perceived instability and inconsistency in communication can damage the organization’s reputation, leading to negative word-of-mouth and potential loss of business.

    Factors influencing high attrition rate

    Pinpointing the root causes is paramount to fostering a culture of low attrition. Let’s dissect the primary culprits driving employee departures.

    • Employees leave when they see limited chances for advancement. 94% would stay longer if their company invested in their career development.

    • Dissatisfaction with job roles or environment leads to high attrition rates. 73% of employees are willing to leave to look for better offers.

    • The prevalence of overwork and inadequate work-life balance can contribute to burnout among employees. When individuals feel overwhelmed by the demands, it can result in fatigue, stress, and, ultimately, a desire to seek employment elsewhere.

    • Compensation and benefits discrepancies prompt employees to seek better opportunities. 45% of employees rank salary as the most important factor in a job.

    • Ineffective leadership erodes an organization’s trust, communication, and morale, driving employees to seek a more supportive and empowering work environment.

    • Employees depart when they don’t align with company values. When individuals feel like they do not belong or their values are not reflected in the workplace culture, it can lead to feelings of isolation and disconnection.

    Building tech teams for a low attrition rate

    Nortal boasts a low attrition rate of 4.3% among employees hired for clients. This shows that retention in IT teams can be managed and improved through the company’s needs assessment and careful candidate selection. We have cultivated a recruitment process that contributes significantly to this success. The steps we follow are designed to foster long-term employee retention.

    “Nortal boasts a low attrition rate of 4.3% among employees hired for clients.”

    1. Initial call with a client

    2. Recruitment project kickoff call

    3. Pre-recruitment work

    4. Recruitment

    5. Project supervision

    6. Long-term engagement

    Reducing attrition rate with Nortal

    Our recruitment process proves successful as many clients find ideal candidates that fuel their ranks and stay with them long-term. Showpad, a sales enablement iOS application, stands as a testament to the effectiveness of our collaboration.

    Nortal have been their secret weapon for over ten years, filling crucial roles with top talent and contributing to their low attrition rates. Our assistance has propelled Showpad’s product launches and market expansion, leveraging our expertise in finding the right tech specialists.

    Another example of our commitment to providing top-tier talent and fostering long-term relationships is our partnership with TUI Group, a global travel and tourism company. Working together for many years, we’ve assembled a dedicated team of over 150 professionals who have become integral to their operations.

    But that’s not all—we have numerous client success stories that further attest to our prowess in recruitment and retention.

    how-to-reduce-attrition-rate-2
    how-to-reduce-attrition-rate-2
    how-to-reduce-attrition-rate-2
    how-to-reduce-attrition-rate-2
    how-to-reduce-attrition-rate-2

    Find the perfect fit for your low attrition rate teams

    Concerned about your attrition rate inching closer to the 10% threshold? In the fast-paced world of tech, high attrition can spell trouble, but here’s the good news: we’re here to support you. Let’s work together to build a resilient and steadfast IT team with minimal attrition. Reach out today to ensure your company stays on track for success and thrives in the long run!
    Reach out today

    Get in touch

    Nortal is a strategic innovation and technology company with an unparalleled track-record of delivering successful transformation projects over 20 years.