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From recruitment to retention: A guide to solving employee attrition

Amrita Kar

Last Updated: 29 March 2023

In this article:

The rate of employee attrition has never been higher. People across the globe are shifting jobs, changing industries, retiring early, or switching unconventional opportunities. The Great Renegotiation, aka The Great Attrition, is at an inflection point. At this juncture, attracting and retaining top talent is a survival necessity for enterprises. 

Unfortunately, businesses are relying on the same old ways to find talent and keep them happy — and that just is not enough anymore. We’ll take you through what you need to know, do, and deploy to reduce talent attrition and enhance your employee experience - from recruitment to retirement. 

What is Employee Attrition?

Gartner defines attrition as “the departure of employees from the organization for any reason (voluntary or involuntary), including resignation, termination, death or retirement.” 

The other nomenclature you need to know is “attrition rate”. It is the rate at which workers quit over a particular period of time, divided by the average number of employees within the company. 

A healthy attrition rate implies a workforce churn that is in tune with your requirements. Knowing your attrition rate is a leading indicator of how well you're performing when it comes to talent retention.

🔍 Discover how Marico, one of India's largest consumer goods companies, dipped its annual attrition rate from 30% to 8 - 12%

What are the types of employee attrition?

1. Voluntary Attrition

Voluntary employee attrition is when an employee chooses to leave their job by resigning. According to the U.S. Bureau of Labor Statistics, voluntary quitting accounted for 70% of total separations in 2022, the highest annual level in the survey's history. Managing voluntary attrition is where you want to direct maximum energy. Why? It is the best yardstick to gauge your enterprise workplace culture, employee experience, and employee branding. So, it is essential to have an early warning system that helps retain talent before it's too late. 

🎯 Lenovo’s attrition rate remained ‘much lower’ than what the industry has faced, throughout The Great Resignation. Discover how Bhavya Misra, Director and Head of HR - India, Lenovo, leveraged Amber to gain “a real-time prediction of an employee at risk of attrition”

2. Involuntary Attrition

When a company chooses to part ways with a worker, it adds to its involuntary attrition tally. This could be because the worker underperformed consistently, threatened company culture, or a combination of reasons. Contrary to popular belief, attrition is a significant cost to the company - up to 35% of an employee’s CTC in backfill costs.

  • Demographic-specific attrition
  • Top talent attrition
  • First year / Infant attrition
  • Technical or niche attrition
  • Remote employee attrition
  • 2+ year tenured attrition

🚨 First-year or infant attrition is the most common. In 2021-22, more than 50% (for large enterprises, the number is ~70%) of exited employees served less than a year in their organization. Read the full report here!

Top factors driving employee attrition: Why do employees quit?

Compared to pre-pandemic trends, the current voluntary quit rate is 25% higher according to the U.S Bureau of Labor Statistics trend data from December 2019-May 2022 that McKinsey analyzed. But before your team dives into managing the repercussions of the quitting phenomenon, let's decode why your workforce is leaving their jobs. 

Screenshot 2023-03-28 at 4.47.46 PM

Source: The Great Renegotiation and new talent pools | McKinsey 


Employees leave a job for one or multiple reasons such as a mismatch between the job role and the employee expectations, lack of opportunities in terms of pay, promotions, and projects, inability in fitting into the company culture, harassment and discrimination, among others. All of them can be clubbed under one or all of the following:

1. Poor Employee Experience (EX)

The number one driving factor of attrition and employee turnover is poor employee experience. It doesn’t take a rocket scientist to deduce that happy employees stay longer in a company. In fact, workers with a positive EX are eight times more likely to continue at a company, and 60% of your workforce will likely not quit

2. Poor Management & Leadership

Imagine going to work, where your boss is a grouch - not something to look forward to, right? inFeedo’s research echoes this sentiment: employees are twice as engaged and 3X committed when their managers are inclusive and encouraging. “70%of workers who quit is because they didn’t feel cared for by their line managers,says Sergio Salvador, CPO at Carsome.

Managers are the bridge between an enterprise’s top leadership and workers — making them the first line of defense against employee burnout - one of the topmost reasons employees leave organizations. They can set clear employee expectations and enable enterprises to tackle employee attrition at ground zero. 

3. Toxic Workplace Culture

A McKinsey report directly links toxic workplace behavior as the number one predictor of negative employee outcomes such as intent to leave and voluntary attrition. A toxic workplace creates a psychologically unsafe workplace, with ripple effects on talent recruitment, retention, and attrition. This is especially crucial for sensitive situations like the one caught by Amber through its Anonymous Bat in 2022.

Screenshot 2023-03-28 at 4.55.39 PM

Source: Amber by inFeedo’s Future of Work Report

🚨 Pro Tip: Identify factors leading to poor EX by deploying continuous listening tools, rather than conducting point-in-time and unidirectional surveys. Improvement in engagement score is the highest when an at-risk case is closed within 2 weeks of being highlighted.

The impact of employee attrition on your business

Losing employees to voluntary attritions is a recurring preventable loss to an enterprise. It has direct and indirect costs along with loss of institutional knowledge and a hit to employee morale. In this section, let’s look at some of the obvious and hidden costs.

1. Direct financial impact

Organizations invest significant resources to screen, onboard, train, and retain talent across departments. If an employee quits, regardless of the stage they’re in the employee lifecycle within the enterprise, the company. It has been reported that attrition and backfill costs add up to 3-5x the cost of an employee's salary.

For technical and niche positions, the cost is more than 100% of the employee's CTC, going up to almost 213% for CXO positions! The Society for Human Resource Management (SHRM) reported that it costs an organization 6 to 9 months of a worker's salary to replace them.

2. Indirect and hidden financial impact

Indirect costs are attributed to interviews, training, onboarding, transferring institutional knowledge, upping organization-wide employee morale, lost productivity, and more. As an example, McKinsey studied the cost of attrition in Call Centers. Despite most exits being entry-level positions, the cost was a whooping USD 10,000 to 21,000 per employee!

A comprehensive guide to manage employee attrition using AI

At a time when retention strategies are accelerated right since an employee is recruited, it is safe to say that retention is the new recruitment. Sergio Salvador, CPO at Carsome believes in processes to “support people managers to become better people managers” But what is the most effective method to maximize your retention strategy? 

1. Conduct exit interviews to understand why employees are leaving

Employees who quit voluntarily are the best source of honest feedback. They empower organizations to understand where they could do better and improve the employee experience of workers who are still with the enterprise. We encourage companies to even follow up with employees after they’ve left. Workers who are no longer associated with your enterprise will not have any incentive to sugarcoat your shortcomings. Leverage their hesitation-free candidness to your benefit. 

2. Foster a positive and inclusive workplace culture

With one foot out the door, employees that don’t feel belonging in the workplace, are less likely to bring their authentic selves to work. Gartner's research shows that companies with sustainable Diversity, Equality, and Inclusion initiatives demonstrate a 20% increase in inclusion, directly leading to high employee performance, greater on-the-job effort, and intent to stay.

The most efficient method to gauge employee experience, especially when it comes to sensitive issues such as DEI, burnout, and toxic workplace culture - is to take employee feedback regularly. Surveys, generic questionnaires, and uni-directional feedback are passe. 

  • Equip yourself with people analytic software that provides real-time employee feedback. 
  • Organize the flow of feedback, encouraging employees to start a dialogue even when it isn’t initiated by the people team. 
  • Closing the feedback loop is imperative. Using analytics, locate disengaged employees, understand the reason behind their dissatisfaction, and actively work on removing the source of discontent.

3. Implement flexible work arrangements

It is important to acknowledge that flexibility means that there is no one-size-fits-all approach. Personalize schedules based on your workers’ requirements whenever possible, without taking away from business growth and efficiency. 

  • Employees need not have an eight-hour work day and are not expected to come into the office every day. Instead, your organization builds a sense of belonging and accountability 
  • Working parents or employees caring for the elderly could have flexibility in terms of working hours. Introduce staggering shifts or the option of rotating days for in-office presence.
  • Ask your employees what suits them and how you can work together to create a healthy work environment for them. Create a safe space for employees to speak freely; this is especially helpful when employees feel their requirements may not be met. Anonymous chat features are available in multiple HR chatbot solutions such as Amber, which encourages candid conversations. 
👩‍💻 Amber combines the power of conversational AI, an in-house NLP engine, and machine learning to understand intent, respond with empathy, remember the entire conversation history, run sentiment analysis, uncover turnover indicators, trigger alerts, and more.

4. Address issues or concerns raised by employees in a timely and effective manner 

Regardless of how many employees your organization has, each employee needs to feel heard. With fewer employees, it is possible to schedule regular one-on-ones but there are significant drawbacks to this approach. Employees may hesitate to voice their opinion for fear of negative repercussions, they may not turn up to the discussion at all, and most importantly, if their concerns were not acted upon in the past, they may feel that the exercise is a waste of their time. 

Overcome the challenges of an incomplete feedback loop by

  • Leveraging AI software to carry out customized conversations with employees. Generic and periodic surveys will not capture the true sentiment of your business. For example, a new recruit will have a different set of concerns when compared to an employee with over 5 years in the organization. 
  • Empower managers to address feedback from all employees to make them truly heard. Amber’s AI Action Suite specializes in helping managers with actionable insights. 
  • Start acting on feedback by following 4 steps:
  1. Summarize: Gain smart summaries with context and key insights.  Identify areas of concern in just one click.
  2. Acknowledge: Share a customized AI-generated email to demonstrate you’re actively listening to your employees’ concerns.
  3. Act: Get contextually relevant recommendations and create quick action plans
  4. Empower: Upgrade the scale and speed of feedback resolution by assigning action plans to relevant stakeholders. Empower them to act and track progress.

5. Offer competitive compensation and benefits packages

Your compensation management program needs to be in tandem with your employee retention plans. Quess Singapore identified that providing an inflation allowance directly and positively impacted their employee retention goals. Your compensation, reward, and recognition could be any (or all!) of these: 

  • Employee stock ownership plan (ESOP);
  • Yearly bonus;
  • Inclusion in corporate training programs;
  • Giving health benefits and incentives;
  • Offering mentorship opportunities;
  • Annual vacation besides PTOs; and 
  • Incentivized upskilling programs such as Executive MBA, training in Machine Learning or entrepreneurship.

6. Provide opportunities for career growth and development

Fostering a sense of loyalty is an integral aspect of retaining top talent. Employees don’t just want a hefty pay package and a bunch of perks — they want to feel a sense of belonging and purpose. In fact, according to Amber’s exit data survey, 69% of people who quit jobs in 2022 felt their work was not challenging enough.

Amber suggests that in comparison engaged employees are 33% happier with their career advancement and personal growth. That said, different employees require different levels of motivation and growth — implying that a company's employee engagement and retention strategy needs to be directly linked with recognizing and nurturing talent.

Here are a few ideas to maximize your career growth and development policies:

  • Coach your team managers to conduct meaningful 1:1s to help your workers reflect on professional development instead of operational performance
  • Initiate a 'Growth Incubator,' where teams are able to brainstorm in-depth skills that will help them meet organization objectives
  • Encourage peer-to-peer learning and virtual upskilling
  • Offer mentorship and coaching programs 

Measuring the success of employee retention efforts

Let’s get the most basic question out of the way: why should you calculate the ROI of your efforts? Without knowing what’s working and what’s not, it’s like driving blindfolded! You need to understand which strategies are best suited for your enterprise, where you could make adjustments, and how much adjustment is possible. With an ROI calculation, you will be in a position to make informed decisions regarding future campaigns. 

1. Tangible Metrics

How much $$ did you save? This is a simple input-output calculation where you can evaluate if your investments in initiatives have yielded the output you desire. 


Return on Employee Experience (%) = Net value of benefits to experience  X 100

                                                                                   Cost of investment 


2. Intangible Metrics

A significant chunk of employee experience comprises intangible and emotional aspects. These include employee engagement, productivity and performance, absenteeism, attrition rates, external company brand image, and reputation. 

Your 2023 flex: Using AI to manage retention and attrition

The Great Resignation is now The Great Retention and organizations are playing on the front foot here. Retaining top talent is far more lucrative than losing talent to preventable challenges, and AI is here to help you navigate your biggest roadblocks. From automating NPS survey results to seamless exit interviews, complete with actionable insights — artificial intelligence is the best, most practical approach. 

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