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Employee Attrition: Understanding Churn and Turnover

Employee retention is necessary for the culture, longevity, brand, and overall success of a company or organization. Attrition and churn rates are important KPIs that are often indications of how competent a company is when onboarding new hires, building a strong sense of company culture, cultivating leadership, and creating a healthy workplace culture. The higher your churn rates are, the more likely something isn’t working with management, onboarding, or in your corporate culture. 

Below we’ll get into why employee turnover and attrition rates are so important to manage and how you can increase employee retention going forward. 

Employee Churn Explained: Attrition vs Turnover

While similar, there are some key differences between attrition and turnover. Sometimes, attrition is inevitable, but if you can’t seem to keep certain roles filled over an extended period of time, you will need to take a closer look at why your churn rates are so high.

What is Employee Attrition?

Both attrition and turnover involve employees leaving their organizations. Attrition, however, refers to when an employee retires or leaves the company and you do not intend on refilling that position. Attrition doesn’t always necessarily mean something is amiss within the organization, however, and it can often be the result of a strategic internal decision rather than a result of some failure within the company.  

What is Employee Turnover?

Employee turnover, on the other hand, is when an employee leaves a company, voluntarily or not, and you do intend to refill the position. Turnover might be a result of a termination, retirement, resignation, abandonment, or some other reason. The point is that you will now have to find a replacement, which will take time and resources to accomplish. 

Below we’ll look at the cost of employee turnover and why managing your attrition/turnover rates are important to the longevity of your business.

The Cost of Employee Turnover Rates

There are some key differences between attrition vs churn rates that can help you improve your retention rate.

Attrition rates, unlike turnover, aren’t all that costly because leaders do not intend to refill the now-vacant position. As long as the vacant position fits in with a hiring strategy implemented by team leaders, attrition isn’t necessarily going to hurt your company. Turn over rates, on the other hand, can hold companies back if they aren’t addressed appropriately. 

According to an Employee Benefits News study, turnover rates cost 33% of an employee’s salary. That’s $15,000 on a $45,000 salary. Recruiting fees, hiring costs, advertising, and lack of productivity within the window of a vacant position are all primary costs that go into replacing a hire, which makes turnover rates inconvenient and expensive. 

Other ways that high turnover rates might negatively impact your business include:

  • Lack of productivity
  • Other employees will often have to take on more work to compensate for the vacant position
  • High turnover rates have a negative impact on company culture, making current employees worry about why employees continue to leave at such high rates
  • Increased workloads often lead to increased stressors for other employees
  • Higher turnover rates mean more time training and onboarding new hires
  • It’s difficult to create a sense of community and camaraderie if you can’t hold on to hires for significant periods of time

High attrition rates can lead to some of these concerns as well, especially if employees are worried about downsizing or positions being eliminated on a long-term basis. Both turnover and attrition rates, which equate to your employee churn rate, need to be monitored closely.

How to Reduce Your Churn Rates

There is a distinction between turnover vs churn, but ultimately, higher churn rates (attrition + turnover) should be minimized. 

A lot of what leads to churn rates takes place in the onboarding period. In fact, 20% of employee turnover takes place in the first 45 days, and nearly 70% of employees will likely stay with a company if they have a positive onboarding experience. 

In order to create a consistent workforce that can develop leadership and cultivate a strong corporate culture, employers should focus on the following:

  • Rely on powerful solutions and analytics to find great hiring matches in the recruitment process
  • Provide desirable employee benefits to increase employee satisfaction
  • Ensure you have a competent onboarding strategy that allows new hires to be properly acclimated into your business
  • Utilize pre-hire candidate assessments and reference checks that will lead you to quality hires
  • Candidate referral networks can provide you with ideal matches, allowing you to take the guesswork out of the hiring process
  • Utilize survey employees to get a better idea of what’s working, what isn’t, and what you can to increase employee satisfaction
  • Implement leadership training if there is a disconnect between managers and employees

How Crosschq Can Help Lower Employee Attrition and Churn Rates

A state-of-the-art, cloud-based hiring solution can help companies make ideal matches with quality hires for long-term success. Crosschq’s proprietary cloud technology performs data-driven reference checks and detailed 360 reporting that will enable you to make smarter hiring decisions. 

Save time, costs, and resources by ensuring you’ve landed a great hire before the onboarding process.  Click here to learn more about how Crosschq can help reduce churn rates and build high-quality talent pools.

Mark Ko

by Mark Ko

Content Writer

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