Attrition Impact on HR Management: Literature Study

Introduction

It is natural for an organisation to lose some of its employees, the gradual reduction of the number of personnel happens because people choose to retire or transfer to a different company, and in some cases, they are terminated. Although most companies experience some level of attrition, high rates can be harmful and lead to a lack of manpower. As a result, the necessary tasks may be left unattended because no one can perform them. Considering this, an HR manager should keep track of the current attrition rates and ensure that high turnover, the company avoids the need to address high turnover.

The term ‘attrition’ can be defined as a process of a gradual reduction in the number of people a company employs. This can be caused by non-organisational factors, such as death or retirement; however, in some cases, attrition is attributed to the inadequate organisational environment. Voluntary attrition is the focus of this paper since it can harm an organisation’s performance. From an HR perspective, attrition means additional costs and resources required to account for the staff members who resigned voluntarily. A significant problem is the cost associated with having to advertise positions, hire and train new staff members. By having a comprehension of the attrition rates, an HR manager can effectively hire people based on the organisation’s needs, especially for critical positions. According to a report by Itachi (2017), high attrition results not only in additional spending but also is associated with a loss of knowledge and skill. Therefore, high attrition has both financial and non-financial implications for a business, which can adversely affect the company’s operations.

Generally, attrition can be addressed through a motivation policy, company culture and compensation programs. The goal is to ensure that top-performing employees and those in critical positions do not leave the company. This paper will analyse three papers on employee attrition and synthesise the current knowledge on how HR managers can address attrition. In addition, it will provide an outline of research methods, their strengths and weaknesses.

Methodology

Stages of the Research Process

In total, there are ten stages in any research process. First, a researcher has to define a significant issue that requires attention (Cooper, 2018; Itani, 2017). Secondly, they should review the literature and find evidence supporting the significance of the issue and how others addressed it. The third step is the development of a hypothesis, which is a narrow research question that includes a possible resolution to a problem. The next step of the research process is determining the design and sampling methods. Next, a researcher collects data, which can be done by using both primary and secondary sources. A researcher has to analyse the data through data processing and measurement. This is followed by hypothesis testing, which is a step where a researcher tests the data concerning the hypothesis. If the hypothesis is correct, the researcher proceeds to interpret the theory and the results of the study, and this is the final stage of the research process. Finally, to share the results, a researcher prepares a report with findings, objectives and methodology.

This paper analyses research where the authors applied one of the following methods — interviews or questionnaires. A questionnaire is an easy way to collect responses from study participants because they can be distributed either face to face or by using online resources, for example, Survey Monkey. Surveys can contain either close-ended questions or open-ended questions, although most surveys use close-ended questions because it allows the researcher to quickly analyse and interpret results.

The main advantage of a survey is that it can be carried out by one researcher, who will distribute the questions and analyse the findings. However, because there is no face-to-face interaction between a respondent and an interviewer, survey questions can be interpreted incorrectly. Another disadvantage is the subjectivity of responses and the inability to ask any follow-up questions to clarify some responses.

Unlike surveys, interviews are designed to collect a lot of information from their responders since they are encouraged to respond in a manner comfortable to them with as much time dedicated to each response as necessary. There are three types of interviews — semi-structured, unstructured and structured. The difference is in the amount of guidance an interviewer provides to the participants. The main advantage of any type of interview is the amount of data that a researcher can collect, some responses may differ from what was initially anticipated. Moreover, interviews are face-to-face interactions, meaning that the interviewer can ask to follow up questions and clarify some responses if necessary. However, the disadvantages include more time to plan and conduct interviews and higher costs when compared to questionnaires. Overall, both surveys and interviews are valid methods of data collection and the main difference between the two is an effort to complete each and the amount of information the researcher can collect.

Discussion

The First Study

Haldorai et al. conducted their research in 2019 to determine what caused attrition at a five-star hotel. Notably, this study focuses on an industry where attrition is typically high because the demands of the jobs and a need to work on a 27/7 schedule are usually difficult to adjust to. The authors considered factors that were determined in prior research — work hours, work and life balance hindered by the job responsibilities, emotional exhaustion, career progression, inadequate pay and work environment (Haldorai et al., 2019). In this study, 308 full-time employees with at least one year of experience were surveyed.

The authors tested several models with different types of factors, and validity was checked through Average Variance Extracted (AVE). As the results suggest, in the short-term, turnover intention is provoked by emotional labour, work overload and interpersonal tensions (Haldorai et al., 2019). From the medium-term perspective, the issue of work and life balance added to the employee’s intention to leave. Finally, in the long-term, both factors of the short-term and long-term attrition contributed to the intention to leave an organisation.

Notably, apart from the questionnaire, the researchers used the pull-push-mooring framework. This framework is used to explain human migration, but it can be applied for HR purposes as well since the basis of it is the factors that prompt a person to leave, or push factors, and those encouraging them to stay, or pull factors. One can see different types of attrition factors in Figure 1. Additionally, mooring factors are the social, personal or cultural perceptions and attitudes that affect the way a certain job is perceived.

The strength of this study is that the authors focused on the short-term, medium and long term intentions to leave. Moreover, the researchers also included questions that should provide insight into why people do not want to join the hospitality industry, which enables HR managers to have a comprehensive assessment of the industry and organisational factors that may need to be changed to hire people more effectively. One limitation of this study is the subjectivity of responses, which is an outcome of the design that Haldorai et al. (2019) used. Another potential issue is that surveys in this study were close-ended, which did not provide the participants with an opportunity to mention their perspective on attrition.

The Second Study

The second study is by Gayathri and Thaiyalnayaki, and it was conducted in 2020.

473 women who work for information technology (IT) companies in Chennai were asked to answer survey questions. The author used journals, magazines and other printed sources to develop the questionnaire with potential factors that impact the attrition rates. The following factors were contributing to the attrition in these IT companies: compensation, organisation’s environment and culture, lack of support from superiors and no opportunities for career development (Gayathri and Thaiyalnayaki, 2020). Hence, in the IT industry, there is an issue of financial compensation and company culture that prompt employees to leave.

This study examines an industry where the nature of work differs from that in the hospitality or retail sectors, mainly because the employees do not always have to communicate with the customers face to face and work hours are not a determinant factor. Hence, issues of work hours and work-life balance were not reported by Gayathri and Thaiyalnayaki (2020), instead, the focus shifted on the companies’ environment and opportunities for career development. The strength of this study is that Gayathri and Thaiyalnayaki (2020) used two methods of data collection, including questionnaires, to collect primary data and a literature review to collect secondary data. One limitation is that the authors examined Indian companies, meaning that the responses may differ for IT employees in other regions.

The Third Study

The final study in this paper is by Bagchi (2020) who used interviews to study the attrition rates and causes specifically for the retail industry in India. The author selected face to face interviews because prior studies on the topic provided generalised findings.

The frontline employees noted that ‘competitive pay, work-life imbalance, work stress due to long working hours’ prompted them to leave their jobs in retail (Bagchi, 2019, p. 20). Moreover, the author reports that the average service time reported by the respondent is 12 months, which means that attrition rates in the retail industry are high.

One significant finding of this study is that employees report being happy with the work culture and freedom they are provided, and most report that they feel valued at their position. However, Bagchi (2020) concludes that the majority of the interviewed feel uncertain about the policies of their employers, for example regarding seeking leaves, and do not have an understanding of career development opportunities available to them. Moreover, many complain about having little time they can dedicate to being with their families.

The strength of this study is the design since interviews allowed the author to gain an in-depth understanding of the HR functions and attrition. Moreover, the author provides much evidence from the interviews that point to the issues in the way retail businesses structure the work of their frontline employees, which is very helpful. Hence, despite some limitations, such as a limited sample, this study is a valid research work that highlights the problems contributing to high attrition rates in the retail industry.

Comparison of the Sources

All three studies, despite examining different industries and using varied data collection methods, show similar results. Moreover, all authors agree that high attrition harms the organisation’s ability to function. Notably, a study by Haldorai et al. (2019) incorporates the three types of attrition factors and short, medium and long term perspectives, making it the most comprehensive review of attrition factors out of the three pieces of research. Other researchers used a simplified approach to structuring interview and survey questions, where potential contributing factors to attrition derived from the literature were included.

There is a difference in the specific attrition factors connected to the different industries that were the focus of these studies. For example, the two studies that focused on work-intensive industries that relied on their employees’ communication and cooperation with the customers show that work conditions, mainly work hours and emotional distress are the major contributors to attrition (Bagchi, 2020; Haldorai et al., 2019). In another case, organisation specific factors, such as culture, environment, communication with leadership and opportunities for career development were ranked as the most important for the employees.

However, there is a possibility that there is some bias that affected the responses of the employees. For example, Bagchi (2020) surveyed current workers of a retail chain, and their responses indicate satisfaction with the work environment and culture. However, the current employees may be reluctant to share their actual feelings about the work due to fears of their employees finding out, even though the study is anonymous. The two other studies also focused on examining the responses of the current employees, which means that these studies are potentially subjected to bias. Finally, even exit interviews do not provide full clarity regarding the employee’s leaving intentions because the latter may want to avoid providing feedback to their employer.

Data Analysis

Based on the three studies, six attrition factors displayed in Figure 2 are distinguished. The following – are most likely to contribute to an employee’s decision to leave the company. As the three research studies suggest, high attrition is the result of extrinsic, or organisation-specific factors, including salary, benefits and management behaviour. The following are the key attrition factors:

• Work and life balance
• Compensation
• Organisation’s culture
• Work Environment
• Policies
• Support from supervisors
• Career development opportunities

Conclusions

Overall, this paper examines the issue of employee attrition and how HR managers can address it. Attrition is a negative phenomenon since it leads to additional costs, time constraints and efforts from an HR manager necessary to account for the personnel who left the company. In some cases, high attrition is critical, especially when employees in key positions consider transferring to a different company or industry. This paper also reviewed the steps of the research process, which can help an HR manager to collect and analyse information about their company, for example, when attrition rates are high, and the HR wants to understand the causes. Two approaches to data collection – interviews and surveys are also examined as a way of collecting data.

Recommendations

The recommendations in this section target the following stakeholders: employees and HR managers. The first category will benefit from the advice because it targets the improvement of work conditions. As Halderai et al. (2019, p. 46) note, ‘negative impact of employee turnover involves increased costs in terms of multiple stages of HR tasks, such as recruitment and selection, training, and development’. The second category’s main responsibility is to ensure that an organisation functions efficiently, which includes ensuring that there are enough employees at key positions. Hence, this will help them manage the work of their organisations. The owners of a business or leaders of an organisation are stakeholders as well because attrition improvement will result in cost reduction associated with not needing to hire new staff and work efficiency improvement.

To implement the advice from this section, the author recommends developing and implementing an attrition management program. The main objective is to maintain a stable workforce. Hence, the first step is to examine a company’s attrition data and monitor the metric regularly to ensure that any significant changes will be uncovered in time. Another suggestion is to survey the employees to determine the factors that are important specifically for people in a particular company since the three examined studies indicate that some differences in attrition factors may be present based on industry. The following steps are a part of the proposed attrition management program:

• Establish attrition metrics and monitor attrition levels.
• Reexamining the remuneration and benefits systems or implementing them if the company does not have any.
• Reexamine employee compensation and readjust compensation according to the average in the labour market.
• Consider working schedules and work hours for employees in the hospitality and retail industries.
• Develop and communicate policies on sick leaves.
• Encourage supervisors and leaders to support subordinates and communicate with them (establish training programs to facilitate this, if necessary)
• Create career development plans for the employees and discuss career development opportunities for key employees.
• Work of developing organisational culture, starting with the companies mission and vision statements.

Reference list

Bagchi, S. (2020) ‘Employee attrition and its controlling measures: a case study of a retail store in Pune’, IJASSH, pp. 20-25.

Cooper, D. (2018) Business research: a planning guide, conducting, and reporting your study. London: Sage.

Gayathri, K. and Thaiyalnayaki, M. (2020) ‘A study on causes of attrition among the women employees working in selected information technology (IT) companies in Chennai city’, Journal of Critical Reviews, 7(8), pp. 3039-3051. Web.

Haldorai, K. et al. (2019) ‘Factors affecting hotel employees’ attrition and turnover: Application of pull-push-mooring framework’, International Journal of Hospitality Management, 83, pp. 46-55. Web.

Itani, S. (2017) The ideological evolution of human resource management. London: Emerald Publishing.