Two critical things though. All attrition is not bad – so focus on voluntary attrition, and where possible attrition of high performers and/or key positions. PWC/Saratoga has benchmarks for that too.

Totally agree with the post on analytical skills, but I would go broader than recruiting and attrition and say that HR needs to be able to analyze workforce status and changes continously & systematically. In fact the corporate leadership council just published the results of a survey of 300 global CHROs which emphasised the need for this skill and the fact that only 1 in 8 HR organization felt they had it. (http://www.corporateleadershipcouncil.com/CLC/1,1283,,00.html)

Finally, on workforce planning, I run a fee-free workforce planning roundtable (www.wfproundtable.org) – and our recent meetings suggest a couple of additions to the scope of workforce planning. (We co-authored a white paper in the Journal on Corporate Recruiting leadership that came out in April on this topic

We would suggest that the focus of workforce planning positions, in addition to the areas Dr. Sullivan highlights, also include:
- strong connection with near-term financial planning via integrated and aligned headcount measurement
- development of human capital metrics that tie directly to business improvement
- integration of workforce movement like expected attrition and planning hiring with current financial plans
- successful management of the integration and exits associated with mergers & acquisition.

We are finding our members have less involvement with HR deliverable program/project management and HR policies than your article would suggest.

Hope that’s helpful,

Rupert

Companies with high turnover rates can?t hide for long in today?s internet-driven, word-of-mouth network. For starters, employees who leave the company talk about the reasons for departure with friends, family, neighbors, and industry peers. Add to that the connectivity of blogs and e-mail, there?s no telling where that information lands.

Next, if a company is routinely replacing high-level executives, that information is easily discovered by any candidate willing to do the research (?Why is XYZ Company publishing yet another press release for a new divisional vice president? Things that make you say, ?Hmmm…..?).

Publishing this particular metric merely acknowledges the word on the street; however, it also sends the message that the company knows about the challenges it represents, and is working to change it for the better. Across an industry, this means that the average number gives visibility to what is ?normal? ? a calibrating point for both good and bad.

To Rafael’s point, I agree that companies with high turnover should enlist the help of market research, or invest in a good business intelligence tool. But that?s not enough.

Attrition is a metric that hurts the bottom line of the business. The entire company should rally around the problem to fix it. The metric should be tracked in every department until it?s in line with industry benchmarking. As Jennifer said in her previous post, I?m not sure that such industry-based attrition metrics exist ? if so, please let me know where to find them too.

Companies that are serious about sending the right message in this area should also hire an employment brand manager, not to mention an employee retention manager so they can strategically manage their talent portfolios (great article by John Sullivan: http://erexchange.com/articles/db/46311CDB004841E5904348597CFA8EBE.asp).

All of that said, the converse of this discussion is also true: companies with lower published attrition rates may be at a significant competitive advantage for high caliber talent. Attrition, although it can be caused by many factors, still speaks volumes about the work environment ? and that is very powerful employment brand messaging.

If companies in this category were more visible, job seekers might begin to associate the number with excellence?imagine that! ?I notice your competitor publishes attrition rates, why don?t you? Is there something I should know??

I realize that publishing attrition rates is a big change – and probably not going to happen overnight. However, if companies are serious about employee retention, doesn?t it make sense to 1) make it the priority of the whole company, not just a few folks in HR; 2) find ways to develop a benchmark average that is specific to their industry (does *anybody* know if this exists? Please raise your hand if you do!); and 3) track against the benchmark religiously and hold EVERYONE?s feet to the fire for beating it.

Dr. Sullivan recently wrote that ?the human resources profession is one often perceived by those outside the function as a bureaucratic, compliance-driven, administrative function that is reactive versus proactive and that changes at the speed of a rock.?

I happen to believe that HR has the power to shift that perception a bit by taking on attrition in a more public manner. In fact, I suspect that HR might get and hold a seat at the Executive Table tomorrow if that rate was on the web site and annual report today.

Thank you for the kind words and for your valuable comments concerning metrics for recruiting.

The reason I always suggest not to publicize the attrition rates is because if you do have a high turnover, relative to your industry counterparts, you do not want to get the word out or create a bad image as a place to work for your company.

If you are a good HR Professional and keep your data on attrition for every position, department, division, etc.. you will historically know if you have problems or issues in a certain area or the company as a whole. If you suspect that it is a company problem you can then hire a research firm to do a study to really learn why people are leaving and what the company can do to correct the problem.

I hope this helps.

Rafael Zambrano

Thanks for your feedback. It was very helpful.

I have a couple of questions for you: Why the need for confidentiality in this area? How do companies know if they have an attrition problem if they can?t compare their attrition rates with other companies in the same industry? While they can look at their own attrition rates year over year, how do they know if this rate is acceptable or unacceptable? What I?m saying is this: companies don?t know whether they are retaining more employees than their competitors if that benchmark metric isn?t consistent and visible industry-wide.

If companies publicized an attrition rate (using the SHRM definition or some other accepted definition) ? or at the very least contributed to an average developed by real numbers in their industry ? they would quickly learn whether their retention efforts were working.

In fact, based on my wireless experience, a metric that?s used universally and released to the public would encourage companies to:

1) Set realistic expectations up front in their marketing and employment branding efforts.
2) Focus on employee satisfaction.
3) Compete more effectively for talent in the marketplace.

It may take a while before companies see the competitive advantage in making this information public.

As a start, though, if companies hire retention and employment brand managers to reduce attrition rates, then they should also consider making those rates a companywide (and not just HR) focus. Hiring managers should understand the costs of attrition and impact on the bottom line.

Moreover, it would be helpful if there were an industry-average attrition metric of some sort that companies could at least use as a reference point to compare against. (For example, a wireless phone industry attrition metric, a software development industry attrition metric, etc.)

I just started a metrics group for ERE. I invite those who are interested in this topic to join the discussion there as well.

Thank you for the valuable feedback concerning your metrics experience in the telecommunications business. In the HR business the metric is called the turnover ratio. While I was at Ultratech, I had to provide the turnover ratio, on a quarterly basis, for the company as a whole so that it could be reported to the company’s Board of Directors. This information is confidential and only used to determine if there is an attrition problem in the company as a whole (perhaps the company is not being competitive in the Industry in terms of benefits, compensation etc…) From time to time I also developed reports for detailed specific position turnover. I hope this helps answer the question concerning metrics in managing employee turnover.

Here is the Turnover definition and formula as provided by SHRM:
Annual Turnover Rate
Annual turnover rate is the rate at which employees enter and leave a company in a given fiscal year. Typically, the more loyal employees are to a firm, the lower the turnover rate. A 100% turnover rate from year to year means that as many employees left the company as were hired. To calculate annual turnover, first calculate turnover for each month by dividing the number of separations during the month by the average number of employees during the month and multiplying by 100: # of separations during month ? average # of employees during the month x 100. The annual turnover rate is then calculated by adding the 12 months worth of turnover percentages together.

A few thoughts:

In my previous life (as a Director of Customer Marketing for a nationwide wireless company), one of the critical elements for evaluating the success of the brand, as well as the success of retention efforts, was a metric for customer churn (turnover). This metric was standard for the entire industry.

Calculated by dividing the total number of deactivations by the average number of customers, this metric identifies how many customers leave the company (usually for another carrier).

The entire wireless industry rallied around this metric because it was (and is) vital to the financial health of the organization (acquiring a wireless customer is quite expensive). Moreover, Wall Street watches this metric very closely and uses it to evaluate the performance of wireless carriers.

Therefore, every employee was committed to 1) setting the right expectations at the point of sale; 2) building a sustainable customer brand; 3) delivering an excellent customer experience at all company touch-points; 4) providing strong customer service; and 5) offering a great value. In short, everything was done to minimize churn.

So based on my experience, I believe that an Employer Brand Manager as well as Retention Manager would be far more effective if they had a standardized, published attrition metric to benchmark their progress. (After all, if you can?t measure it, you can?t improve it).

This attrition metric would carry even more weight if it were 1) presented for all to see (including job seekers) and 2) included in a company?s financial reporting.

There are so many costs associated with losing an employee, including the cost of acquiring a new employee and the cost of vacancy; I find it curious that there seems to be no publicized attrition metric that?s used to consistently benchmark HR and recruiting efforts.

A great start would be creating a standardized attrition metric that becomes a visible part of every company?s DNA.

No big firms run without financial analysts, why should human capital efforts not have dedicated data jockeys ?