Attrition is a real problem. It’s something that I am passionate about fixing because high attrition means unhappy people, wasted time and money, and missed opportunities.
Attrition destroys capability. Without capability, objectives aren’t met. When objectives aren’t met either leaders are fired and/or the organization dies.
Attrition is a leadership problem, and the good news is, there are some basic steps that we leaders can take to avoid attrition becoming an organizational death sentence. In this Part 1 of 2, we will look at the what Attrition is, why it’s important, the different types of Attrition and the leadership impact on Attrition. In Part 2 we dive further into how we can become better leaders and reverse the Attrition trend, the impact of Operating Models on Attrition and the dangerous response patterns of leaders which amplify Attrition.
If you are a leader (Digital or not) and are concerned about attracting and retaining the best talent, then read on! If you aren’t a leader but know of a leader who would benefit from this perspective, share it with them and let’s stop the rot together!
Before we get into what we can do about Attrition, let’s first agree on what we mean by Attrition and why it’s an important problem to solve.
What is Attrition?
Attrition is an organization’s ability (or lack of) to retain talent. Attrition problems occur when the number of people leaving the organization becomes unmanageable, creating the following challenges:
Short to medium term loss of organization knowledge
Loss of delivery capacity while replacing the individual
Cost and time involved in searching for and hiring a replacement
On boarding and ramp-up time of the new employee
So, if we are already below ideal delivery capacity (which let’s face it, most of us are), attrition rates can kill our ability to deliver important business objectives. Under-capacity and overworked people experience stress and fatigue which causes us to react and perform poorly. This lower performance causes further stress and demotivation and further attrition and so the Attrition Vortex takes hold as the process continues, until the potential death of the organization.
The Attrition Vortex
We aren’t aiming for Zero Attrition rates
It’s a common misconception that any attrition is bad, and therefore we should be aiming for zero attrition rates. This simply isn’t true. It is healthy for an organization to have an attrition rate. An employee may find themselves in the wrong job or organization – usually due to an incorrect hire or shift in either the employee’s desires or the organization’s direction. Left un-addressed an unmotivated, misaligned employee’s behavior can become toxic, poisoning others within their sphere of influence.
In other circumstances, attrition cannot be avoided. An employee may leave the organization to care for a sick relative. It doesn’t matter how great the organization and leader are, that individual needs to exit the company, and so they should.
Attrition in small numbers is natural and healthy. It brings in fresh blood, new perspectives and helps drive change and innovation. Without attrition, people become familiar and culturally indoctrinated and the risk of disruption by competitors increases.
In Australia, the average (corporate) attrition rate is 16%. Defining what a healthy attrition rate can be challenging because it depends on your particular context and what you are currently trying to achieve. If for instance, you are currently undergoing a transformation, it’s common for attrition rates to be higher than the industry average. If however your attrition rate is above 20% and it this is NOT intentional, then you have likely entered into the Early Warning phase as shown below:
Left unchecked the early warning signs of increasingly higher attrition rates can push the impact past the point of being fixable for an organization. In the world of Digital, there is a dearth of great talent and as such, attracting talent is a challenge for all but a few organizations. Once attrition gets past a certain point, it becomes impossible for an organization to recruit new talent, as word on the street spreads about the toxic culture. Attrition at terminal status requires costly interventions to stand any chance of recovery.
Attrition begins life as the silent killer of organizations because it’s a lag indicator of a systemic problem. This means that if we only monitor attrition rates, we are dramatically reducing our ability to respond and fix the problem. As leaders, we need to monitor lead indicators that give us the opportunity to respond early, effectively and efficiently. The earliest signal of an attrition problem is gained via a leader’s connection with their people and teams. Great leaders care about their teams, and when they care, they meet and support them on a regular basis. Great leaders regularly have people based conversations and ask questions that relate to how the person is feeling and how engaged they are, rather than what they are doing and how they are progressing with delivery.
In certain (dysfunctional) Operating Models a leader may find it practically impossible to maintain a genuine leadership connection with each person. Until the Operating Model and organizational structure are changed, these leaders may have to resort to the likes of employee satisfaction surveys to understand motivation levels within their teams. The challenge is that these surveys are usually expensive and time-consuming to administer and as such have longer than desirable intervals between execution (in most organizations, they are only run on an annual basis.) At a microscopic (team level), this slow feedback cycle can prove to be lethal. It’s possible for a team to devastated by attrition in under twelve months.
The Four Attrition Types
Attrition is not always an organizational level issue. In some scenarios, it is limited to smaller areas such as teams or departments. Let’s take a look at the four key attrition types that occur:
Leaders are the problem AND the solution
In almost all scenarios, attrition rates can be improved through better leadership. People don’t leave organizations they leave leaders.
When people don’t feel connected, trusted, valued and appreciated by their leader, they will (at some point) leave that leader. So we have to ask ourselves: How is it that we leaders so often fail at doing these basics activities and creating environments for our people to flourish?
Negative culture is often blamed for high attrition rates as if it were some “thing” sitting outside of our control. As leaders, we are the ones that create culture. I define culture as:
“A set of values that drive the actions and behaviors of the people within the system”
Therefore, what we value as leaders, influences our actions. The combined actions of leaders with an organization create its culture. This seems straightforward; the problem occurs when we communicate values to our people and our actions are incongruent with those espoused values. This often materializes in cultures that explicitly talk about valuing personal growth and development while their leadership behaviors consistently prioritize delivery and outcomes above all else.
There are a few principles that we can follow to help us solve the Attrition problem and keep it at bay:
Attrition is a Leadership problem – don’t leave it until its too late.
Maintain a genuine care and connection with your people and teams. Doing so gives us access to early warning signs.
Don’t aim for zero attrition
Agree with key stakeholders what an acceptable Attrition rate is and monitor it.
Understand the types of Attrition you have (or could potentially have)
These point to the root cause of the problem and provide a more focused and effective response.
Attrition can be a complicated problem to solve. In Part 2 of this series, we will take a look at the four dangerous responses leaders give when facing attrition challenges. We will also discuss how operating models and org structures can impact attrition rates before diving into how to step into your leadership role and tackle the problem face on.
Consider These Questions
In the meantime, here are some questions for you to reflect on before progressing to Part 2:
What type of attrition challenge are you facing (Septic Tank, Manager, Ivory Tower, Island)?
What assumptions have you made about the challenge?
How might you have contributed to the attrition problem?
What will you do differently, given these new insights?