Employee retention

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    Dear Forum,
    Does anyone have any background resource information on projects regarding employee retention. I came at this from an odd angle in that I was trying to justify a manufacturing project on workflow. I’m not allowed to count a reduction in work time unless it adds up to another head. However the wasted effort frustrates the employees so much that it is often reported as being a main contributory factor to why they leave – they just don’t enjoy working in that particular place.
    I can relatively easily calculate a cost of hiring and training each new employee. I guess I can start from a pareto of data from employees as to what makes them leave but how do I get buy in that fixing the main problem will actually have the desired outcome of making people stay? Can I genuinely say that if I remove the 20% of main causes I will reduce turnover by 80%? Should I just say it will and go with the projec because it also makes sense?
    If anyone has any supporting background data or ideas I’d love to hear them?


    Malcolm T. Upton

    This is fuzzy but it might help.
    If you can find another area where the work is comparable but the “frustration factor” is about what it will be after you fix the process, you can compare retention in the broken area with the “control” area. Try to sell the idea that after the fix, retention in the (previously) broken area will look like retention in the control area. Dollarizing the difference in retention rate is the “savings”



    It can be very difficult to predict and calculate the real cost of lost employees until they are long gone and the effects are more visible, and even then an accurate accounting of the true costs can be murky and debatable. My 1st rule of thumb is remembering the prime directive is prevention not accounting and taking credit. If you know a “thing” is bad for the organization, not knowing its absolute value should not stop you from preventing it anyway.  My 2nd rule of thumb is if you cannot account exactly on an issue, then account “conservatively with consensus” so most will accept the figure as reasonable. Again, this amount may be irrelevant anyway due to rule #1. Often you can get those valuation inputs from those you are trying to pursuade by asking them “What do you think employee turnover costs our company in general, and in this instance specifically?” This input can reveal if others even think the problem is even a problem at all. The point is, having consensus that something is bad, and transforming the weakness into a strength, can be more important than seeking something’s absolute value.



    A little off the subject but still relevant is that not all Turnover, or retention, is bad.  Our company has a certain percent of turnover that each group should be at (Sales, Manufacturing, etc…) and that is NOT 0.  You may want to reference some H.R. material that discussing the issue of good verses bad Turnover.
    Hope this helps.



    Don’t get too distracted by the turnover numbers. Focus on the resources that are currently being wasted but that can be freed up. If you free up resources, it’s management’s job to decide how to put them to good use. Long-term success requires some sort of growth or evolution. You don’t get there if management’s vision is limited to cutting costs.
    Talk with management. What would they do to grow sales, improve customer satisfaction, improve morale, or increase profitability if they had $x of capital to do anything they want, or x hours of free labor? Chances are they’ve got ideas, but they’re thinking they’d have to spend a lot of money to implement any of them.
    Good luck!



    Thanks everyone for your replies,
    I would agree some degree of employee turnover is both desirable and innevitable. I favor the idea of re-deploying personnel once projects have been done to free up that particular resource. Too often we focus these projects on ultimately removing headcount and thereby cost cutting. I feel that when an  improvement leads to a freeing up of a resource then the first port of call should be what additional value can I gain fron utilizing that resource in a different way. After all it’s a resource for free.
    Dean I like your ideas about approaching senior management with the right questions about cost and value.
    Whilst I realize the importance of operating at low cost I personally feel that we attribute a disproportionately high importance to that in comparison to value. Value is more ellusive but in my mind the lower part of the iceberg. Employees provide a large part of the value of the organization and I feelit’s important to find creative and constructive ways of retaining and devloping them in the face of a drive to reduce costs.
    Thanks again



    You may get some good info from or Harvard Business Review June 2003 (“leadership and the psychology of turnarounds”).



    2 important factors:
    1.What is the benchmarked attrition rate?
    2.What is the Recruited Numbers/period – attrition numbers /period over benchmarked limit
    divide the factor(2)/Recruited Numbers/period .This will give you the effective recruitment done/period.
    Say for instance, you recruited 300 prople in the past 6 months.your benchmarked attritrion numbers is 15 for 6 months period(5%).But, the attrition numbers actual is 75(25%).Then effective recruitment = (300-75-15)/300 * 100 = 80%. Or you could have saved 20% of your workforce recruitment had you kept you attrition in control or you could have saved 20% of your recruitment cost had you taken control of your attrition.
    20% of recruitment cost is the COPQ
    Just an idea…



    Good post.
    In case anyone went through the math and is confused, the equation should be:
    Effective recruitment = (300-(75-15))/300 * 100 = 80%
    Without the extra parentheses the calculation would result in 70%.



    jes as an input to the above mentioned threads, usually the attrition rate is annualised, which means it calculated overa period of 12 months, so the multiplication factor would contain 12 near to it.
    also can anyone explain to me what is the difference between turnover rate and attrition rate.
    also what is the formula for the turn over rate.
    on the web I could see that many people follow different sets of formula in calculating the attrition rate.
    can anyone temme, maybe a HR as to how you guys would calculate attrition rate in your organisation.



    Just to bring us back a little to the real world and not just the numbers.
     It’s not just about how many you lose it’s at least as much about who you lose. Sooner or later down the line the ‘numbers game’ will lead to each employee being given points for certain skills and attributes and you would have to work that into the equation. How would you score such an attribute as ‘fits in with everyone else’? Should you score such things anyway? Who are you reaaly scoring the employee or the manager?
    Overall I think we are getting away from the fact that a large amount of management is about people management and leadership. Is employee turnover really more of a reflection of management ‘ability’?
    My experience is that low turnover (not necessarily zero) produces benefits in safety, quality,  productivity and the longer term health of the business. In which case measure those outputs and treat turnover as an input. How do you control that input….good management anyone?



    hi all,
    went through the entire post, somewhere trying to gain clarity, what are we trying to address/discuss
    anyways shall start with what i have understood
    – somebody wanted to know how to calculate attrition , well i work for a telecom service provider , the largest in India with a background of HR though now working as black belt
    see attrition is calculated on a larger period of time say quarterly/half yearly /yearly , the best way to get it measured yearly as we have slack months june-december when people generally don’t leave and you have jan – may when they leave may be when they are communicated that they belong to the lowest 10% of the bell curve on performance and they shall not be promoted/salary hiked as per expectation, or they after getting a hike negotiate with the other company once their yearly appraisals are over
    formula used = (Number of employee left during the period)/opening number of employees at begining of the period (thats why year on year is better
    now retention : somebody said it quite well, no company wants zero attrition they want the non performer, cultural mis fits to go
    anybody doing a project on attrition should start with various factors that acounts for it like
    – performance
    – job (which shall have job role clarity)
    – boss (people leave their bosses and not their companies)
    – location (applicable for some organisation)
    – salary (include timely, as per expectation, as per efforts – perceived value of his vis a vis salary given)
    – inter personal relationships(with others :derivative of culture)
    – rating in last appraisal
    data collection three ways :
    one from those who are leaving (exit interview feedback/ forms if they are objective)
    second call them after they have left: they tell you more
    third to collect reason from those who are joining you
    for every specific thing need to drill down further as to what is expectation
    believe you me if we can have a strong communication very objective about each and every body’s performance we shall be able to tackle this issue to quite an extent



    Hi Mia!
    What is your industry?.Retention factors vary between industries especially call centers have wide range of factors that might not be applicable to other industriies.
    The expecations of employees in each industry differs.For instance, a mechanical engineer might have a mind set of having a long term association with his company than a call center agent.The market accepts a call center agent with 1 year exp as a team leader with more than 70% pay hike where that’s the opposite for a mechanical engineer.Hence, to stop a call center agent would be more challenging since he needs to feel that stayong in the current company could be better rewarding than 60% hike in pay and a position hike that he will get if he leaves the company.Stats shows that out off 79000 employees who resigned from call centers in india, 59000 have joined another call center company.
    Assuming that you are trying to analyse it for the manufacturing company, the following might be some pareto’s factos.
    1. Very monotonous work (despite the fact the pay factor is better then most of the competetors).The subfactors are less oppurtuiniy or learning
    2.Lower Pay and less benefits: An employee might be getting lesser than what is called a ‘market standard’..This also inlude the variation of employee pay for a perticular desination.For instance, a Graduate engineer trainee might be getting $40K, whereas another collegue of same deisgnation might be getting $75k.No body like to undersell afterall…
    3.Poor work culture : There are companies that would be target oriented and few activity oriented.People who work in the first category companies will feel extremely diffivult to cope up with the second category companies.People need freedom afterall.Who like his boss to be behind him on everything he does.The sub factors might be less oppurtuinities or time for employees to interact with collegues, unethical management principles being implemented by few managers, Management sacking people often for poor performance and the system is not transparent etc.
    4.Less prospects for growth : A guy might be working for 2 years without a promotion and finds another new joinee as his senior who had been workjing with a competor for about an year!(does happen).
    5.Bad appraisal policies: How often does your employees see a guy with bad performance getting promoted supersiding good ones.This does happen in many companies(even in good ones).But, it’s the matter of how often?
    These are just as few when compared to all the reasons. Sometimes the reasons are specific to companies and doesn’tfall under a general category.
    The best thing to start with is to conduct an employee satisfaction survey.You can use sites like .Make an effective survey and circulate it to your employees.Get their opinions and feedback. Categorize them with Pareto’s chart and see how we can tackle it.
    Please let us know your industry ..hope this helps.

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