Early Attrition Affecting Company's Performance? Avoid It With The Right Hiring Practices

A company’s attrition rate is the rate at which people leave. To calculate it, we divide the number of people who have left the company, by the average number of employees over a period of time. Early attrition is the % of people who leave within a specific period of time.

Let’s say 100 people joined your company in the past 90 days but 20 of them quit in the same 90-day period. Here's how you would calculate the early attrition rate —
Early Attrition Rate = (No. of employees that left / Total of employees) x 100
Early Annual Attrition Rate = (20/100) x 100 = 20%

There are different kinds of attrition:

 

Type Of Attrition	Explanation
Voluntary Attrition	When an employee leaves by their own choice
Involuntary Attrition	When an employee is let go
Internal Attrition	When employees move to another department
Demographic-specific Attrition	When a specific group (age, gender, ethnicity) leaves

 

The most common type is voluntary attrition, followed by involuntary attrition and internal attrition. Demographic-specific attrition is the least common one. Employee retention rate is a big challenge that HR departments in volume hiring companies face.

A high attrition rate indicates that employees are leaving your company too quickly. This rate will vary based on the size of the company & industry. In banking, BPOs, insurance, financial institutions, retail, etc, the early attrition is usually high. But that doesn’t mean it should be accepted as a norm.

Reducing attrition leads to

1) Timely delivery of projects leading to company growth

2) Boost in employee productivity as less time is spent training new hires

3) Attracting talented employees because a low attrition rate will build a positive reputation in the industry

4) Increasing employee satisfaction as a result of correct expectations, proper goal setting, etc.

In this post, we'll discuss ways to reduce the attrition that doesn't involve throwing more money at the problem.

Here are the top 5 ways to ensure low or no attrition (without raising the compensation!):

 

Hire Through Referrals

 

Here are three interesting stats about referrals that relate to retention:

1) 45% of referral hires stay longer than four years, compared to only 25% of job board hires.

2) Employees who refer others also stay 20% longer than employees who don't refer.

 

3) 88% of employers rate employee referral programs as the best source of applicants they want to retain for long.
(source)

 

If you are hiring via only job boards, agencies, or campus drives you are losing out on the benefits of referrals. Referred candidates usually fit your culture very well as they know about the company through their friends beforehand, they are excited to work with their friends and usually don't want to disappoint their friends by leaving the company pretty quickly.

On the other hand, people who refer stay for as long as they believe in the company's mission, values, and work. That is what would have prompted them to refer others. To stay consistent with their ideology, they would stay with the company longer than people who don't refer others.

Setting up a referral program is not complicated if you use the right technology and create excitement amongst employees about it. RippleHire's gamified employee referral system can help you leverage your workforce as ambassadors to bring in quality talent.

Hiring Managers Should Set The Right Expectations

Mis-alignment between what the candidate expected vs what the work actually entails and looks like leads to distrust and high attrition.

When your company is trying to hire hundreds of people per week, the process is rushed which leaves no room for setting the right expectations. The information generally flows one way — from the candidate to the employers. Employers are so busy collecting the information that they forget to talk about the company, job type, working culture, etc. Regional HR (RHR) systems of handling recruitment also create dissonance between expectations and the actual job.

To manage candidate expectations better, hiring managers should reserve some time in the interview to give a clear, honest picture of what the job requires. It’s beneficial to highlight the not-so-great aspects of the job that have demotivated others in the past. Write the goals associated with the role and what it would take to achieve those. Hire only the candidates who align on achieving those goals, without shying away from hard work.

If the candidates pass through the hiring manager interview stage, you can educate them once more at the offer letter stage. It would be a great opportunity to talk about the company's culture, demographic, locations, remunerations, leave policy, etc. so that other expectations other than the actual work are also aligned.

Assessment Kit For Hiring Managers

In most cases, it's the nature of the job that compels people to churn rather than the pay scale, location or perks. Most people are not going to do the work they don't like again and again, without feeling like they should get out of it and figure out something else (which might seem easier to them!).

Letting the candidate know the nature of work, style of communication, time shifts, engagement with customers, etc. is the responsibility of the hiring managers. They are the best people who can judge if the person is suited for the role in the long term. Simply filling the position for once only to see it getting empty in a few weeks is a waste of time & resources.

To ensure that hiring managers match the candidate with all aspects of the job, create an assessment kit for them. You can include questions like 'Did you ask the candidate how long do they plan to stay with the company?', 'Is the candidate okay working night shifts?', 'Is it okay for the candidate to travel at least 3-4 locations every day for collecting the information?' etc. These can be based on the industry and type of role.

Conduct Background Verification Before Interview

Doing background verification is a huge task requiring employment verification, reference check, educational check, confirmations, going through records, etc. On top of that, it's not very cheap to hire third-party agencies for background verification when you are hiring at scale. A huge number of fake candidates in your system also creates the risk of losing out on talented candidates who get lost in the "sea" of resumes.

You might think that it makes no sense to do background verification on hundreds and thousands of applications you receive every day. And that's where most companies leave a crack in the system for people who are highly likely to leave in a few weeks.

But what if people & technology can work together to filter fraudulent candidates quickly? Using AI-based fraud detection systems, such as the one provided by RippleHire, you can flag duplicate or suspicious applications. The system parses through millions of records to spot fabricated details and bring them in front of you to take action (reject, delete, or block).  This saves time, resources, and effort for everyone in the recruiting team and also the hiring managers

RippleHire is the ideal solution for a busy CEO, HR leader, or People Team that wants to scale their distributed workforce hiring without facing the burn of early attrition.

 

The Ultimate Solution: Technology

To solve early attrition it is important to have a tech ecosystem that connects all the stakeholders in the process of hiring, and retaining an employee. This will give a clear picture to everyone of why employees leave, what type of employee stays the longest and at which points can you make changes to decrease attrition.

It's usually the talent acquisition folks that are blamed most of the time, which is incorrect. They are involved in the process of hiring from start to end but don't have control over all the steps such as expectation setting, offers, etc. Attrition is a problem that can't be solved by one department, it needs collaboration to understand.

At scale, collaborations are messy, confusing, and almost impossible to execute efficiently. That's where technology can help. Systems like RippleHire, which are designed for markets like India where hiring, attrition, referrals — everything needs to be done at scale & efficiently. Request a demo to see how RippleHire can help you lower attrition without having to increase any compensation package or offering unnecessary perks to candidates.