Apr 17, 2007

The mythical attrition numbers

If there is one thing that always raises an outcry amongst organizations is attempting to showcase which one is the better employer, by showing lower attrition numbers.

The problem is that every organization chooses to define attrition numbers as they deem fit.

Since the attrition number is a percentage, it gives an organization ample scope to do some creative statistics and number crunching with it.

Let's start with the basics. If you have 100 employees and 12 resigned, you would have an attrition of 12%, right?

So far, so good.

Now imagine you have 100 employees in January, 2006 and 135 employees in December, 2006. And in between those months 12 people left. What's the attrition percentage now? Ah.... this is where it starts to get tricky.

If you take the starting figure, then you have 12% attrition. If you take closing numbers for the year your attrition percentage drops to below 9%. So to disguise the numbers some organizations take only the closing number. However, the most acceptable way to do it is to use an average. The average would also vary depending on whether you merely have the average of the yearly starting and closing number, or a average of the monthly numbers.

If you do take the first average you get a attrition of 10.2 %

Now let's assume that of the 12 people who left, 2 were asked to leave for reasons ranging from unethical conduct to non-performance. Well, many HR professionals would take those 2 and reduce their attrition percentage to 8.5%.

Some won't stop at that. They further analyse if any of them had left in the first two/three months of joining. This is not really an 'attrition' they rationalise, and the reason varies (from "they are still in training" to "they are in a contract and might pay us back our money"). So of the 10 if 2 had left in the first couple of months of joining the attrition figures drop to 6%. Ditto for people who just fail to show up at work without resigning (called "absconding", the language reminding you of police jargon).

So the next time you hear your company touting its attrition numbers, take the HR guy to a side and ask him how he arrived at it. You'll see your company in a new and less flattering light.

Like most statistics, attrition percentage should be viewed in a context and with an objective. If they are viewed as a feedback to the recruiting and retention processes, then all attrition (either for non-performance, or early exits or no-shows) should be taken into account. That's because each of them makes a statement about the HR or management practices at a firm.