A Vicious Cycle – The Cost of Employee Attrition

Mar 27, 2023 | Blog

Why is employee attrition so critical to your organisation?

A negative spiral occurs when an organisation experiences a high turnover rate. This is the vicious cycle of employee attrition.

The cycle typically begins when employees start leaving the company for several reasons such as lack of job satisfaction, low pay, poor management, or limited growth opportunities.

As employees leave, the remaining employees may have to take on additional work, which can lead to burnout and reduced productivity. This, in turn, can make the work environment less attractive to employees, leading to further departures.

The vicious cycle of poor employee retention

Cycle of poor employee retention

Losing key employees also damages an organisation’s culture and further exacerbates the retention problem. In today’s environment of hybrid work, organisational culture is already difficult to cultivate and maintain.

New employees are less familiar with your organisations processes and conventions, and they are less likely to be effective brand ambassadors. Until your new joiners become as knowledgeable as the experienced ones you lost, the customer experience is impacted, potentially leading to lost sales opportunities, and impacting revenue targets.

As the cycle continues, the company may find it increasingly difficult to attract and retain top talent, which can impact the overall success of the business. High turnover rates can also be costly for companies, as they may have to spend time and resources recruiting and training new employees to replace those who have left.

Focusing on employee retention is therefore crucial for your organisation’s success.

What can an organisation do to break the cycle?

To break this vicious cycle, companies need to identify and address the underlying root causes of employee attrition. These could point to issues of workplace culture and offering opportunities for career development and growth. Providing competitive compensation and benefits are table-stakes for the contemporary workplace, but high pay is not the main factor impacting employment retention.

Recent research from McKinsey has found that uncaring leaders, unsustainable work performance expectations, the lack of career development and advancement potential and the absence of meaningful work were among the key factors in why employees were leaving their jobs without having another job in hand. These reasons were given by respondents in greater numbers than total compensation package.

Top reasons why people accepted their current job

People leaders today need to not only track historical trends, but also need to listen to what their employees are saying.

Ensuring that managers are effective and supportive, and that they provide employees with the resources and support they need to succeed is crucial. This includes allowing for regular employee feedback and promoting open communication between managers and employees. Moreover, tools to analyse feedback and identify those areas of the organisation that require the most attention are essential.

According to McKinsey’s research, workplace flexibility, adequate compensation, sustainable workplace expectations, career development and advancement potential and meaningful work were given as reasons people accepted their current roles.

Top reasons why people accepted their current job

By focusing on the issues that employees show the most concern for, and by targeting the specific segments of the organisation that are most at risk or leaving, organisations can take on the vicious cycle of attrition head-on and strengthen their organisational culture.

Find out more about how Qlearsite helps your organisation address retention issues by checking out this interactive demonstration: