Using Of An Attrition Rate Analysis Business Essay


Every year most organisations will have some number of employees, who leave the organisation either due to retirement, resignation or even death and hence there is a reduction in the number of employees. Too many employees leaving an organisation is not a very good sign though. Therefore, all organisations do keep a track of the employees who leave the organisation by noting details regarding their reason for leaving, their experience levels, and the project they worked in, their skills and also their performance. This gradual reduction in strength of the workforce that occurs without the employee being fired or due to resignation and not because he got replaced in the organisation is called attrition.

In the best of worlds, employees would love to keep their jobs, work hard for their employers, get paid well for their work, make advancements in their career, have flexible work timings so that they could attend to personal or family needs when necessary and never think of quitting. But then there's the real world. And in the real world, employees, do leave, either because they want more money, find the working conditions unhealthy, have non-co-operative co-workers, aspire a change, or because of relocation or personal issues.

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Research has revealed that employee turnover can be because of a number of reasons for instance - stressful work environment, lack of career development opportunities, monotonous work, adverse working conditions, or better and interesting job opportunities elsewhere (Varma et al., 2009). It depends from one workplace to another. Employee turnover is relatively low in organisations that have shift work while it is more in organisations where it is more (Stavrou et al., 2010).

Companies moreover try to maintain a low attrition rate. Research suggests that a high attrition rate is often coupled with replacement and recruitment costs (Deery and Iverson, 1996). Managers often fear a high employee turnover as it suggests that the employees with better skills and abilities are the ones who leave the company and the ones who stay back in the company are the ones who are unable to find other jobs (Tanova and Holtom, 2008). The negative side effect of a high turnover is that it weakens the morale of the employees who stay with the company and this may in turn affect their performance (Nadiri and Tanova, 2010).


The rate of attrition in HCL Technologies Ltd over the financial year 2008-2009 (ie. The period from April 2008 till March 2009) needs to be analysed. In order to keep a check on the attrition rate of the company, the Human Resource (HR) team gathered some kind of data before each employee left the organisation. Data was gathered in a quantitative manner by means of conducting exit interviews where employees were asked questions about their experience in the company and reasons for leaving and whether they would consider re-joining the company ever again. The data gathered was collated in a database and compiled into categories that segregated them from one another. We shall analyse this information using various techniques in order to come to a conclusion as to whether any measures could be taken to reduce the attrition rate by any means.

The analysis is performed using various business diagrams. The business diagrams are a lot more helpful than data retrieved from tables. Tables do help in depicting relevant data but it is often better to present data systematically in a diagram. Although we need a table in order to draw a diagram, it is the diagram that helps u identify important characteristics of data quickly and easily (Wisniewski and Stead, 1996). The different kind of diagrams helps provide accurate information and trends based on the data being investigated. These diagrams must be essentially used when they data is too complex to be understood when it is written as a passage. Thus these diagrams must replace and not repeat the written data. These diagrams clearly present the measure of error and distribution (Stengel et al., 2008).

The various business diagrams are potentially useful in giving a quicker and easier overview of the different patterns arising. The diagrams can be used variably to assess which of them gives a reasonably accurate understanding. Too much information should be avoided while using these diagrams as it can complicate the process (Wisniewski, 2002). It is any day better and simpler to use two diagrams rather than trying to fit in too much data into one diagram and make it complex to understand.

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The employee data has been grouped into the following categories to analyse various trends:

Attrition Trend Month Wise

Attrition Reason Wise

Attrition Skill Category Wise

Attrition Department Wise

Attrition Tenure Wise

Attrition Project Type Wise

Attrition Performance Rating Wise

These categories of data can be further analysed using graphs and chart representations in order to understand the trend in attrition.

Attrition Trend Month Wise:

The rate of attrition is calculated differently in each organisation. A time series graph shows the pattern in which the variable of interest in this case the rate of attrition has altered over a period of time. Based on the HCL Technologies Ltd database, the month wise attrition rate can be seen for the financial year 2008 â€" 2009 in the figure below.

As shown in the time series plot above, rate of attrition has been the highest in the month of October at 2.88% and the lowest in January at 1.09%. Incumbent employees would have decided to leave the company in the month of September due to lack of perceived growth opportunities or other grievances. After having completed their notice period they have been separated from the company employee database in the month of October.

The lowest attrition rate in January calls for the volatile job market coupled with the competition keeping a stringent hold on the compensation & benefits piece, the employees were probably deterred from changing their jobs and were more inclined to stay put in their secure and current company.

Attrition Reason Wise:

During the data collection at the time of exit interviews and other techniques, it was seen that the reason for employees leaving the job were quite varied like better career prospects, team issues, inadequate compensation, relocation, etc. The division can be more clearly understood with the help of the pie chart shown below.

The major reason for leaving the company seemed to be due to finding a better career opportunity. It was about 27% of the lot followed by compensation issues at 22%. Both these issues can be sorted out by arranging frequent meetings between the employees and their respective managers as to set their goals and moreover to judge if the employee is satisfied with his job and eliminate the chance of him quitting in search of a better job.

Attrition based on Skills:

Employees working in HCL Technologies have a varied amount of skills and each employee has a distinguishing skill. Below is a bar chart that helps identify employees having which of the various skills have left the company in the last financial year.

The bar chart clearly shows that a higher number of employees working on projects with the JAVA/J2EE skill have left the company. This is followed by employees having Microsoft Technology skills. These are skills which are in demand for in the job market and hence employees are left with a wide number of employers to choose from to change jobs. Hence, the higher rate of attrition in employees with these skills. At the same time, the company need not take any action to pursue the retention of employees with these skills as their replacements are readily available because of the high demand in this technology. Skills such as Mainframes are not very popular among other companies and so employees with such skills would prefer to stay with the company as it would be difficult for them to get jobs in other organisations.

Attrition Department Wise:

HCL Technologies Ltd has a number of different departments and so to minimise the complexity they have been categorised into 12 broad departments named for now as A, B, C, D up to L. This has just been done to simplify the analysis rather than involving all the departments which would add up to be over 50.

As the pie chart shows, the maximum attrition has been in department C which is 17.8% followed closely by department I at 16.8%. Departments C and D mainly comprise of the RIMS and development projects respectively and the same trend can be seen even if the project type-wise analysis is carried out.

Attrition Tenure-wise:

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Across each of the departments there were employees having various levels of experience with the company. So the employees were divided into groups of 0-2, 2-4, 4-6 and more than 6 years of tenure with the company. Below is a comparative bar chart that displays the department wise attrition in each of the tenure groups. This easily shows the comparison between the four groups.

Comparing the bar charts it is evident that the number of employees leaving their jobs in the company is highest in the 0-2 year bracket. This could be because the employee is unhappy with the company policies or other issues. The employee could be a fresher as that is the likely period when after a year’s experience an employee would want to switch to another company. This is detrimental for the company as an enormous amount of time and money is invested in the training of a new employee and replacing this employee with another would only add to company costs. One way of getting rid of this issue is by hiring employees who have the relevant training either from their previous jobs or some recognised training institute. This would eliminate the need to train new employees and thus reduce training costs. In turn the costs to the company caused due to attrition in the initial two years of employment with the company reduce.

Employees with a higher level of experience would rather try to change projects and look for career progression opportunities within the company instead of leaving the company and looking for a job in a new company.

Project Typewise Attrition:

The employees belong to different project types and accordingly the nature of work differs from project to project.

The above shown chart displays thatd the level of attrition is highest in the Production support projects and Maintenance based projects. This can be attributed to the high pressure and constant monitoring kind of work in the production support projects. The maintenance based projects involve highly repetitive work which possibly drives the employees to look for a change in job.

There are not too many company that may have projects that work on Open Plus Plus, SAS or RIMS and hence employees in these projects would rather continue to work in the company unless they want to change the kind of work they are involved in. Hence the lower levels of attrition in these project areas.

Attrition based on performance rating:

Each time when an employee completes a year in the company his performance through the year is assessed and he is given a rating by his manager. The rating given is based on certain criteria like his progress in the past year, projects handled, new value adds by the employee and his overall contribution to the organisation. The rating could be an outstanding, exceeds expectations, meet expectations, below expectations or needs rigorous training which in the below chart is mentioned as A1, A2, A3, A$ and A5 respectively.

The performance rating is linked with the salary increment and promotion opportunities. The bar chart shows that the highest attrition has been in employees who received an A3 rating. A low rating would mean that they would not be awarded a promotion nor can they expect a fair salary increment and this triggers them to look for better prospects elsewhere. The attrition rate is fairly low at the rating levels A1 and A2 compared to that seen in the lower rated employees.


Based on this analysis the HCL can take certain measures to bring down the level of attrition is certain areas where possible. Some reasons due to which employees leave the organisation cannot be handled but at least certain issues like compensation issues, personal issues can be negotiated. The retention of key resources is vital as it contributes to the overall progress of the company. Also, higher the level of attrition higher is the cost involved in replacing, recruiting and training new employees.

The diagrammatic representations of the attrition data have shown similarities in the trends of the behaviour of different kinds of employees. These trends can be used to forecast employee behaviour and thereby take corrective action so as to reduce attrition within the company. One way of doing this is by ensuring that the employee feels empowered by giving him higher responsibilities and constantly asking for employee feedback about their roles and responsibilities and trying to gauge their satisfaction levels. Also employees can be asked for their suggestions to make the work environment better and more comfortable for them to work.