Prediction of employee attrition

Abstract

Attrition can be defined as a reduction in employee strength either through retirement, resignation or death. An employer normally has no direct control over the number of people lost to attrition. Attrition can happen due to many causes such as dissatisfaction with company, or employees getting higher position in another company, etc. Attrition generally proves to be quite costly for the organizations primarily because the companies invest a lot of time, resources and effort in training and development of the employees so that they can work more efficiently and effectively in their respective roles, but the employee leaves the organization before providing required returns. Due to attrition, the company has to go through the same training process again when a new person is hired, this increases costs. Attrition varies from industry to industry, business to business and the types of responsibilities shouldered by the employees. If we look at the industry wise trend, IT providers have the highest attrition rates at 26% followed by General Insurance Companies (22.1%) and consulting companies (21.9%). IT service providers are also the biggest recruiters and therefore skew the overall average to the higher side. 1 The IT companies in India have grown tremendously in the last few years which has created ample job opportunities. This has also allowed the employees to easily quit their present jobs. If the supply is more than demand and qualified workforce is available at low costs, then good performance can be sustained even if the attrition is high. However, if the supply is less than demand and the workforce is costly, then the risk of losing an employee increases in the organization especially if the tacit knowledge is quite important. Sometimes, employees leave the company when their skills are in high demand in the market, or if they are getting higher pay and benefits.