Update - Attrition Trends by Employee Experience - January 2022

With growth returning, attrition is on the rise. IMA India’s October 2021 Attrition Benchmarking Study reveals that overall, cross-industry attrition in FY22 is back at pre-pandemic levels. After dipping briefly in the first quarter (Apr-Jun) employee churn is projected to jump over the remainder of FY22. Voluntary attrition rates are also on the rise, especially at the entry-level, signalling that job opportunities are opening up but also that people may be re-prioritising lifestyle/career choices. In general, attrition rates are inversely correlated with years of experience but the relationship is not purely linear. What drives these trends? What can organisations do to counter it? The paper, which is based on the results of the study as well discussions among CXOs, looks at attrition trends by employee experience levels, and shares some broad observations.

Attrition Rates: New joiner vs Experienced

Our data indicates that ‘new-joiner’ attrition (people with up to 2 years of experience) outpaces that in other experience bands, as it has for the last two years. It peaks among those with 1-2 years of experience, falling steeply thereafter. Interestingly, y-o-y declines are expected across most groups – possibly owing to lingering uncertainties around the pandemic that are causing people to ‘stick around.’ However, the least experienced (< 3 months) workers are projected to see a sharp increase (110 bps) in attrition in FY22 compared to FY21. A more dynamic job market, growing feelings of disconnect with and shifting attitudes to work are key contributing factors. Further, with the war for talent intensifying, entry-level salaries are seeing big jumps – it is no longer unusual to get a 40-80% pay hike, for either switching or not switching jobs. Established businesses are also losing staff to new-age start-ups. Flush with cash and in the process of hyper-scaling, they are attracting people with above-market pay, more flexible work arrangements and lucrative employee stock options (ESOPs). Among the more experienced (>10 years), attrition rates remain low (5.8% expected in FY22), but with a slight increase over FY21. For this group, goals such as personal development and the empowerment to learn are at the epicentre of the new ‘work deal.’

‘New joiner’ attrition will remain high in FY22

Rates of churn generally decline past the 2-year mark

Financial quick-fixes may have a limited impact on longer-term attrition

Turning Attrition into Attraction

Companies are throwing money at the problem by paying above-market wages and boosting their salary budgets. Clearly, these are expensive solutions that are hard to sustain – and they may not ultimately do much to reduce employee churn. Our survey findings suggest that the pandemic has irreversibly altered people's expectations of work. Freshers are more concerned about making ends meet, whereas more experienced employees value personal fulfilment and purpose. On their part, employers need to come up with different solutions for each group. For younger workers, businesses must re-examine the employee value proposition (EVP) and perhaps redesign jobs to make them more attractive and meaningful. For more experienced workers, the focus must be on reskilling efforts that help them develop and progress while ensuring that they realise their personal ‘purpose.’

Regardless of their experience levels, today’s employees seek deeper, more enriching experience at the workplace, something that is becoming harder to achieve within hybrid models. For leaders, this makes it imperative to step back and reflect on future strategy. Consider the following questions as you plan to bolster your internal systems and processes:

Revisit and focus on improving your overall EVP

  • Do we have the right leaders and managers in the right places?
  • Do we have a positive work culture that people want to associate with?
  • Are our benefits aligned with employees’ priorities?
  • Do we have optimal workspaces and systems for employees to freely express their creativity?
  • Can we provide employees with enriching career paths and developmental opportunities?
  • Are we building a sense of community?
In sum, the relationship between attrition rates and numbers of years of experience offer interesting insights for organisations to revisit their employee hiring and engagement strategies, and optimise their organisational culture to build a more stable talent pipeline.



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