Best performers in an organization always have one eye at the exit door.
Best performers in an organization are also hardest the retain, most of the times. They do well, and they know it. And, that makes them more confident (sometimes, over-confident) and creates desirability for them as individuals with competitors, customers or suppliers.
Just having the right processes is not enough to retain high performers. Most often, the organizational leaders swing into action only once the retention challenge is clear or it becomes known that the ‘undesired’ exit is a possibility. Sadly, it is often too late by then and a lot of valuable productivity is lost.
An organization pays 2 kinds of costs when good performers leave:
- Hard ‘Quantifiable’ costs = costs of replacement + training costs of new employees + Productivity loss as new replacements ramp up
- Soft ‘Non-quantifiable’ costs = Loss in business due to weakened/lost relationships + Productivity loss during the transition and notice periods + Energy and investment required to get internal teams and client interfaces to become ‘as usual’
Our research at Praxis Global Alliance throws up an interesting heuristic.
‘Hard’ Cost of attrition = Employee cost base x Attrition rate / 5
So, if your cost base is US$25M (INR 150+ crore) and your attrition rate is 20%, then your ‘Cost of Attrition’ = US$25M x 20% / 5 = US$ 1M (INR 6 crores). And, this does not even take the softer ‘non quantifiable’ costs into account.
Reducing attrition is critical, especially in knowledge or services industries. Thankfully, data engineering and science now makes it possible to flag potential attrition risks. Our Attrition Defense System™ looks at >50 variables related to employees (No, we are not talking of snooping into private information) right from promotions, bonuses paid, time sheet information, leave patterns to connectedness indices to flag potential attrition risks. Layering business judgement on this and actioning with timely interventions (based on where the issues are) can help nip ‘undesired attrition’ in the bud.
Don’t ignore the obvious signs. And, in a large organization, you cannot leave this to chance and personal interpretations. Before they say ‘I will Quit’, go ahead and tell them ‘I will Fix it’. Want to know more about what we do and how organizations are cutting attrition, write to us.