Healthy Attrition .... Regulating the Churn Rate

Talk about attrition and it is always looked upon as a taboo.

Reasons: Cost of turnover (Recruitment cost, New Hire Costs, Training and development cost, Administration cost, lost productivity costs). But not all attrition is ‘bad attrition’.

Sometimes it becomes necessary for the development and growth of the organization. And this attrition is termed as ‘good attrition’ or ‘healthy attrition’.

The first argument coming forth while talking about ‘healthy attrition’ is “Are we only talking about low performers / less productive employees in the organization?” Not really. When low performers quit, the organization definitely benefits. But good attrition is not always about getting rid of the less productive staff, and attrition cannot be always termed as ‘bad’ whenever employee departs.

When employees have been with the organization for a long time contributing in every way to its growth; the learning curve bounds to take a dip after a stage. If the company cannot envision a clear career path for the employee, it is advisable to look for fresh talent. An acquaintance Mr. Vaz whose article on ‘Moderated Attrition’ inspired me to write this has rightly pointed out; and I would like to quote him here, “Anything that needs self renewal must go through a process of re-generation. Whether that be a tree that sheds leaves and grows new ones or whether the renewal of cells in our body.” Truly complacency is very injurious to health; for the employee and for the organization both. After all ‘Nothing is Irreplaceable!’

Some employees impact the culture of the organization negatively especially in organizations with less employee base. This is either because they have been in the organization for a long period, some from the time when the company was in the caterpillar stage of its life – cycle; and still possess an old school of thought. They fail to change with the changing times, they fail to adapt to the increasing employee strength, workforce attitudes, changing technology, changing processes and systems. They might know the inside-out of the company, but may not be emerging as effective leaders. And moreover, they add to manpower costs, scaling high on the compensation ladder, as the company makes attempts to retain them. Whether deserving or not is a question that remains unattended! Such static workforce should be replaced by new employees with new abilities & attitudes, new ideas, new technology thus saving the organization from becoming stagnant. Employees having a detrimental and demoralizing influence on the work-culture and team spirit are not appreciated in the role of leaders by the young blood that flows into the organization. Traditional mindset should be replaced with out-of-box thinking. Exhausted leadership should be replaced with vibrant, dynamic leadership.

Jack Welch, former Chairman and CEO of General Electric, also advocates this through his 20-70-10 principle, where he believes that “employees must be ranked into performance categories of the top 20%, middle 70%, and the bottom 10%, and then managing them “up or out” accordingly”. This differentiation helps identify the 20% star performers and cash cows that need to be rewarded, the ‘middle 70’ that can be trained and coached to move up the career path; and helps diagnose the 10% bottom-tier performers (haunting for a sustained period of time) that need to be moved out so fresh talent can be brought in. Such turnover of employee is good attrition for a company, presuming that the parameters for deciding the 20-70-10 employees are in synch with the goals of the organization.

“Healthy attrition helps release the choked pipes of organizations hierarchy.”

- VAISHALI PARGAONKAR