What Is Attrition?

by David Dierking

1 min read

Attrition refers to the downsizing of a company’s workforce. Companies faced with challenging financial conditions often choose to increase their attrition rates as a means of reducing costs. Attrition could also result from employees choosing to leave the company voluntarily.An employer-sponsored attrition initiative can take a number of different forms. A business owner wishing to take a gentler, more gradual approach may choose a hiring freeze. In this scenario, open positions would not be filled, while employees would be allowed to leave the company voluntarily over time due to retirement, external opportunity, lifestyle change, or any other personal reason.A more moderate voluntary attrition solution would be one in which employees are encouraged – but not forced – to leave the company. An early retirement package would be an example of this. Certain employees would be offered a financial incentive in exchange for leaving the company. Bonuses could increase or be offered to additional employees until the desired level of attrition has occurred.A mass employee layoff would be one of the most acute ways of reducing a business’s workforce. Terminating a group of employees immediately accomplishes the goal of reducing salary and benefit expenses, but also comes at the cost of employee morale. Layoffs create fear of workers losing their jobs and gives the impression that the company may be in financial trouble.Another form of attrition is employees leaving the company on their own. Workers may quit due to a better job offer elsewhere, a change in personal career goals, or a family-related reason. Voluntary attrition could also occur due to a negative experience with the company. Employees may be disgruntled with the work environment, perceive a lack of opportunities for advancement, or feel unappreciated.

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