Hi, I priyanka working in Bpo industry as a HR Executive.Can anybody tell me how to improve attrition rate in organization.what is the formula to calculate attrition rate.
From India, Chandigarh
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From India, Chandigarh
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Hi Priyanka,
Attrition rates are calculated on the basis of Annualized and roll-up. Both methods are slightly different; it depends on the company's management which attrition calculation they choose.
Annualized Attrition Formula: MTD and YTD
(MTD) Monthly Annualized attrition Formula - Total number of attrition of that month/Total Headcount * 12%
(YTD) Year-to-date formula: Assume that I am calculating it from Jan07. The current month is November. This is the annualized format, okay.
(Total number of attrition Jan07 to Mar attrition period will be Feb 06 to Mar 07.
For April month, it will be Mar06 to Apr 07; for August month period will be July06 to August07.
The formula will be the same; only months will change.
Hope this will help you.
To find out how to control attrition, please do some analysis on the data. Find out the reasons for leaving and advise the recruitment team accordingly. It may be better prospects, personal domestic commitments, or other reasons. Try to find out the reasons. Meet your employees, make a good rapport with them.
From India, Mumbai
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1Attrition rates are calculated on the basis of Annualized and roll-up. Both methods are slightly different; it depends on the company's management which attrition calculation they choose.
Annualized Attrition Formula: MTD and YTD
(MTD) Monthly Annualized attrition Formula - Total number of attrition of that month/Total Headcount * 12%
(YTD) Year-to-date formula: Assume that I am calculating it from Jan07. The current month is November. This is the annualized format, okay.
(Total number of attrition Jan07 to Mar attrition period will be Feb 06 to Mar 07.
For April month, it will be Mar06 to Apr 07; for August month period will be July06 to August07.
The formula will be the same; only months will change.
Hope this will help you.
To find out how to control attrition, please do some analysis on the data. Find out the reasons for leaving and advise the recruitment team accordingly. It may be better prospects, personal domestic commitments, or other reasons. Try to find out the reasons. Meet your employees, make a good rapport with them.
From India, Mumbai
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Hi Priyanka,
I am also working in a BPO in Pune.
Attrition rates are calculated on the basis of annualised and roll-up methods. Both methods are slightly different. It depends on the company's management which attrition calculation they choose.
Annualised Attrition Formula: MTD and YTD
(MTD) Monthly Annualised attrition formula is:
Total number of attritions of that month / Total Headcount * 12%
(YTD) Year-to-date formula: Assuming that I am calculating it from Jan 07. The current month is November. This is an annualised format.
(Total number of attritions Jan 07 to Mar attrition period will be Feb 06 to Mar 07. For April month, it will be Mar 06 to Apr 07, and for August month, the period will be July 06 to August 07. The formula will be the same; only the months will change.
Hope this helps you.
To find out how to control attrition, please do some analysis on the data, find out the reasons for leaving, and advise the recruitment team accordingly. It may be better prospects, personal domestic commitments, or other reasons. Try to find out the reasons. Meet your employees and build a good rapport with them.
If you have any queries, you can call me at 09881372388.
From India, Mumbai
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I am also working in a BPO in Pune.
Attrition rates are calculated on the basis of annualised and roll-up methods. Both methods are slightly different. It depends on the company's management which attrition calculation they choose.
Annualised Attrition Formula: MTD and YTD
(MTD) Monthly Annualised attrition formula is:
Total number of attritions of that month / Total Headcount * 12%
(YTD) Year-to-date formula: Assuming that I am calculating it from Jan 07. The current month is November. This is an annualised format.
(Total number of attritions Jan 07 to Mar attrition period will be Feb 06 to Mar 07. For April month, it will be Mar 06 to Apr 07, and for August month, the period will be July 06 to August 07. The formula will be the same; only the months will change.
Hope this helps you.
To find out how to control attrition, please do some analysis on the data, find out the reasons for leaving, and advise the recruitment team accordingly. It may be better prospects, personal domestic commitments, or other reasons. Try to find out the reasons. Meet your employees and build a good rapport with them.
If you have any queries, you can call me at 09881372388.
From India, Mumbai
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High Attrition Rate: A Big Challenge
Defining attrition: "A reduction in the number of employees through retirement, resignation, or death."
Defining Attrition rate: "the rate of shrinkage in size or number."
Introduction: In the best of worlds, employees would love their jobs, like their coworkers, work hard for their employers, get paid well for their work, have ample chances for advancement, and flexible schedules so they could attend to personal or family needs when necessary. And never leave.
But then there's the real world. And in the real world, employees do leave, either because they want more money, hate the working conditions, dislike their coworkers, seek a change, or because their spouse gets a dream job in another state. So, what does all that turnover cost? And what employees are likely to have the highest turnover? Who is likely to stay the longest?
Background of the article
The IT-enabled services (BPO) industry is being looked upon as the next big employment generator (Nasscom predicts 1.1 million job requirements by the year 2008). It is, however, no easy task for an HR manager in this sector to bridge the ever-increasing demand and supply gap of professionals. Unlike his software industry counterpart, the BPO HR manager is not only required to fulfill this responsibility but also find the right kind of people who can keep pace with the unique work patterns in this industry. Adding to this is the issue of maintaining consistency in performance and keeping the motivation levels high, despite the monotonous work. The toughest concern for an HR manager is, however, the high attrition rate.
In India, the average attrition rate in the BPO sector is approximately 30-35 percent. It is true that this is far less than the prevalent attrition rate in the US market (around 70 percent), but the challenge continues to be greater considering the recent growth of the industry in the country. The US BPO sector is estimated to be somewhere around three decades old. Keeping low attrition levels is a major challenge as the demand outstrips the supply of good agents by a big margin. Further, the salary growth plan for each employee is not well defined. All this only encourages poaching by other companies who can offer a higher salary.
The much-hyped "work for fun" tag normally associated with the industry has, in fact, backfired, as many individuals (mostly fresh graduates) take it as a pastime job. Once they join the sector and understand its requirements, they are taken aback by the long working hours, and later monotony of the job starts setting in. This is the reason for the high attrition rate as many individuals are not able to handle the pressures of work.
The toughness of the job and timings are not adequately conveyed. Besides the induction and project training, not much investment has been done to evolve a "continuous training program" for the agents. Motivational training is still to evolve in this industry. But, in all this, it is the HR manager who is expected to straighten things out and help individuals adjust to the real world. I believe that the new entrant needs to be made aware of the realistic situation from day one itself, with the training session conducted at night, so that they get accustomed to things right at the beginning.
The high percentage of females in the workforce (constituting 30-35 percent of the total) adds to the high attrition rate. Most women leave their jobs either after marriage or because of social pressures caused by irregular working hours in the industry. All this translates into huge losses for the company, which invests a lot of money in training them.
If a person leaves after the training, it costs the company about Rs 60,000. For a 300-seater call center facing the normal 30 percent attrition, this translates into Rs 60 lakh per annum. Many experts believe that all these challenges can turn out to be a real dampener in the growth of this industry. This only raises the responsibility of "finding the right candidate" and building a "conducive work environment," which will be beneficial for the organization. The need is for those individuals who can make a career out of this.
All this has induced the companies to take necessary steps, both internally and externally. Internally most HR managers are busy putting in efforts on the development of their employees, building innovative retention and motivational schemes (which were more money-oriented so far) and making the environment livelier. Outside, the focus is on creating awareness through seminars and going to campuses for recruitment.
Major Worries for the Industry
Reckless Start-ups - a vast majority of the 310 start-ups are headed for a dead-end (according to Nasscom). Their capacity utilization is less than one of the three shifts. Many of these companies that converted their empty basements and warehouses into BPO units or firms with $10 million-20 million VC funds that ran out of cash without creating anything more than white elephants. They have driven down prices to grab business but have failed to deliver. They were always clueless about people, processes, or technologies - the three key elements of the BPO business.
Poor Infrastructure - the industry has more to worry about than just reckless start-ups. Primary among those is infrastructure. While telecom networks are state of the art, getting a connection still takes up to three months. Unreliable power supply is forcing units to create their own backups. Roads are bad, and airports are in dire need of repairs and upgrades.
High Attrition - another major problem is the high attrition and growth aspirations of the workforce. At least 60,000 of the 171,000 workforce change jobs every year. About 80% of them look for better leaders. Team leaders want to upgrade to supervisors, quality professionals, or operations heads. The HR problem threatens to soon become grave. Good agents are becoming hard to find, and with tardy infrastructure, big moves to the much-talked-about smaller towns will take longer. This means costs will rise, making it difficult for small VC-funded companies to survive.
Attrition rates
US 42%
Australia 29%
Europe 24%
India 18%
Global Average 24%
* Source - Times News New York
Purpose of Writing this Article
Staff attrition (or turnover) and absenteeism represent significant costs to most organizations. It is odd, therefore, that many organizations neither measure such costs nor have targets or plans to reduce them. Many organizations appear to accept them as part of the cost of doing business - a sign of increasing job mobility and decreasing staff loyalty perhaps, a matter to be regretted but just 'one of those things.' They add a sum in their budgets for 'temp staff' and 'recruitment' and forget about it.
However, it seems to be one of the areas in which HR can make a difference - and one that can be measured in quantifiable, financial terms against targets.
An attrition rate in call (or contact) centers has become legendary. Indeed, the attrition rates in some Indian call centers now reach 80%. This is an extreme figure, but the average attrition rates in Indian call centers are up around 30-40%.
However, it is interesting to note that the attrition rates in India - and the costs associated - are so high that they can override the benefits of lower wage costs. While wages in call centers in India are less than one-eighth of those in Northern Europe, it has been reported that Hewlett-Packard has found the cost per 'ticket' (the cost of processing a query) has doubled "due to the inability of the staff to resolve customer queries efficiently because of language barriers and inexperience." It is said that this increased cost has made HP's move from Ireland to India "completely pointless," and that it can never recover the (substantial) costs of the move. It is further reported that GE Capital has moved a call center back to Australia "after staff attrition rates of 70% wiped away any potential cost savings."
The issue is not with the quality or education of the staff - and still less with the investment in technology. It is simply attrition - people do not stay long enough to be taught or to learn the job. The staff may be cheaper, but if they cannot do the job, what's the point? Managing attrition is not just a 'nice thing to do' in Indian call centers. It is the route to their survival.
Far from accepting attrition rates as part of the cost of doing business, it is surely something that all organizations should address, and equally surely it is an area in which HR can take a lead - measure attrition, seek its causes, set out solutions, and target performance.
Components to be taken into consideration while calculating attrition rate
I request HR professionals not to drive their own formulas to calculate the attrition rate. In terms of numbers, the attrition rate means:
Total Number of Resigns per month (Whether voluntary or forced) divided by (Total Number of employees at the beginning of the month plus total number of new joiners minus total number of resignations) multiplied by 100.
If calculating in monetary terms, it includes the following:
Costs Due to a Person Leaving
Calculate the cost of the person(s) who fill in while the position is vacant. Calculate the cost of lost productivity at a minimum of 50% of the person's compensation and benefits cost for each week the position is vacant, even if there are people performing the work. Calculate the lost productivity at 100% if the position is completely vacant for any period of time.
Calculate the cost of conducting an exit interview to include the time of the person conducting the interview, the time of the person leaving, the administrative costs of stopping payroll, benefit deductions, benefit enrollments.
Calculate the cost of the manager who has to understand what work remains and how to cover that work until a replacement is found.
Calculate the cost of training your company has invested in this employee
From India, Coimbatore
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Defining attrition: "A reduction in the number of employees through retirement, resignation, or death."
Defining Attrition rate: "the rate of shrinkage in size or number."
Introduction: In the best of worlds, employees would love their jobs, like their coworkers, work hard for their employers, get paid well for their work, have ample chances for advancement, and flexible schedules so they could attend to personal or family needs when necessary. And never leave.
But then there's the real world. And in the real world, employees do leave, either because they want more money, hate the working conditions, dislike their coworkers, seek a change, or because their spouse gets a dream job in another state. So, what does all that turnover cost? And what employees are likely to have the highest turnover? Who is likely to stay the longest?
Background of the article
The IT-enabled services (BPO) industry is being looked upon as the next big employment generator (Nasscom predicts 1.1 million job requirements by the year 2008). It is, however, no easy task for an HR manager in this sector to bridge the ever-increasing demand and supply gap of professionals. Unlike his software industry counterpart, the BPO HR manager is not only required to fulfill this responsibility but also find the right kind of people who can keep pace with the unique work patterns in this industry. Adding to this is the issue of maintaining consistency in performance and keeping the motivation levels high, despite the monotonous work. The toughest concern for an HR manager is, however, the high attrition rate.
In India, the average attrition rate in the BPO sector is approximately 30-35 percent. It is true that this is far less than the prevalent attrition rate in the US market (around 70 percent), but the challenge continues to be greater considering the recent growth of the industry in the country. The US BPO sector is estimated to be somewhere around three decades old. Keeping low attrition levels is a major challenge as the demand outstrips the supply of good agents by a big margin. Further, the salary growth plan for each employee is not well defined. All this only encourages poaching by other companies who can offer a higher salary.
The much-hyped "work for fun" tag normally associated with the industry has, in fact, backfired, as many individuals (mostly fresh graduates) take it as a pastime job. Once they join the sector and understand its requirements, they are taken aback by the long working hours, and later monotony of the job starts setting in. This is the reason for the high attrition rate as many individuals are not able to handle the pressures of work.
The toughness of the job and timings are not adequately conveyed. Besides the induction and project training, not much investment has been done to evolve a "continuous training program" for the agents. Motivational training is still to evolve in this industry. But, in all this, it is the HR manager who is expected to straighten things out and help individuals adjust to the real world. I believe that the new entrant needs to be made aware of the realistic situation from day one itself, with the training session conducted at night, so that they get accustomed to things right at the beginning.
The high percentage of females in the workforce (constituting 30-35 percent of the total) adds to the high attrition rate. Most women leave their jobs either after marriage or because of social pressures caused by irregular working hours in the industry. All this translates into huge losses for the company, which invests a lot of money in training them.
If a person leaves after the training, it costs the company about Rs 60,000. For a 300-seater call center facing the normal 30 percent attrition, this translates into Rs 60 lakh per annum. Many experts believe that all these challenges can turn out to be a real dampener in the growth of this industry. This only raises the responsibility of "finding the right candidate" and building a "conducive work environment," which will be beneficial for the organization. The need is for those individuals who can make a career out of this.
All this has induced the companies to take necessary steps, both internally and externally. Internally most HR managers are busy putting in efforts on the development of their employees, building innovative retention and motivational schemes (which were more money-oriented so far) and making the environment livelier. Outside, the focus is on creating awareness through seminars and going to campuses for recruitment.
Major Worries for the Industry
Reckless Start-ups - a vast majority of the 310 start-ups are headed for a dead-end (according to Nasscom). Their capacity utilization is less than one of the three shifts. Many of these companies that converted their empty basements and warehouses into BPO units or firms with $10 million-20 million VC funds that ran out of cash without creating anything more than white elephants. They have driven down prices to grab business but have failed to deliver. They were always clueless about people, processes, or technologies - the three key elements of the BPO business.
Poor Infrastructure - the industry has more to worry about than just reckless start-ups. Primary among those is infrastructure. While telecom networks are state of the art, getting a connection still takes up to three months. Unreliable power supply is forcing units to create their own backups. Roads are bad, and airports are in dire need of repairs and upgrades.
High Attrition - another major problem is the high attrition and growth aspirations of the workforce. At least 60,000 of the 171,000 workforce change jobs every year. About 80% of them look for better leaders. Team leaders want to upgrade to supervisors, quality professionals, or operations heads. The HR problem threatens to soon become grave. Good agents are becoming hard to find, and with tardy infrastructure, big moves to the much-talked-about smaller towns will take longer. This means costs will rise, making it difficult for small VC-funded companies to survive.
Attrition rates
US 42%
Australia 29%
Europe 24%
India 18%
Global Average 24%
* Source - Times News New York
Purpose of Writing this Article
Staff attrition (or turnover) and absenteeism represent significant costs to most organizations. It is odd, therefore, that many organizations neither measure such costs nor have targets or plans to reduce them. Many organizations appear to accept them as part of the cost of doing business - a sign of increasing job mobility and decreasing staff loyalty perhaps, a matter to be regretted but just 'one of those things.' They add a sum in their budgets for 'temp staff' and 'recruitment' and forget about it.
However, it seems to be one of the areas in which HR can make a difference - and one that can be measured in quantifiable, financial terms against targets.
An attrition rate in call (or contact) centers has become legendary. Indeed, the attrition rates in some Indian call centers now reach 80%. This is an extreme figure, but the average attrition rates in Indian call centers are up around 30-40%.
However, it is interesting to note that the attrition rates in India - and the costs associated - are so high that they can override the benefits of lower wage costs. While wages in call centers in India are less than one-eighth of those in Northern Europe, it has been reported that Hewlett-Packard has found the cost per 'ticket' (the cost of processing a query) has doubled "due to the inability of the staff to resolve customer queries efficiently because of language barriers and inexperience." It is said that this increased cost has made HP's move from Ireland to India "completely pointless," and that it can never recover the (substantial) costs of the move. It is further reported that GE Capital has moved a call center back to Australia "after staff attrition rates of 70% wiped away any potential cost savings."
The issue is not with the quality or education of the staff - and still less with the investment in technology. It is simply attrition - people do not stay long enough to be taught or to learn the job. The staff may be cheaper, but if they cannot do the job, what's the point? Managing attrition is not just a 'nice thing to do' in Indian call centers. It is the route to their survival.
Far from accepting attrition rates as part of the cost of doing business, it is surely something that all organizations should address, and equally surely it is an area in which HR can take a lead - measure attrition, seek its causes, set out solutions, and target performance.
Components to be taken into consideration while calculating attrition rate
I request HR professionals not to drive their own formulas to calculate the attrition rate. In terms of numbers, the attrition rate means:
Total Number of Resigns per month (Whether voluntary or forced) divided by (Total Number of employees at the beginning of the month plus total number of new joiners minus total number of resignations) multiplied by 100.
If calculating in monetary terms, it includes the following:
Costs Due to a Person Leaving
Calculate the cost of the person(s) who fill in while the position is vacant. Calculate the cost of lost productivity at a minimum of 50% of the person's compensation and benefits cost for each week the position is vacant, even if there are people performing the work. Calculate the lost productivity at 100% if the position is completely vacant for any period of time.
Calculate the cost of conducting an exit interview to include the time of the person conducting the interview, the time of the person leaving, the administrative costs of stopping payroll, benefit deductions, benefit enrollments.
Calculate the cost of the manager who has to understand what work remains and how to cover that work until a replacement is found.
Calculate the cost of training your company has invested in this employee
From India, Coimbatore
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Attrition-rate. xls
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HR Challenges.doc