First Year Attrition – A Company Killer

Enter the words first year attrition in to any of the traditional search engines and you will notice a lack of results - aside from universities and some of the more discerning education establishments who, in order to determine how successful their courses are, have first year attrition as a Key Performance Indicator. Given that high first year attrition can have an enormous impact on any corporate business, particularly those companies’ employing less than 1,000 staff, this is very surprising. First year attrition is simply not measured by corporate organisations and as such, it is often left to fester.

HR best practices are readily adopted and the results from a search on ‘staff retention’, ‘span of control’, ‘employee engagement’ will number into the hundreds, possibly thousands as it is widely recognized that these best practices for managing talent add value. However, the most effective way to ensure you develop staff, motivate, train, coach and ensure the employees deliver value to the business is to make sure the right employees are being employed by the company in the first place; thus reducing first year attrition.

The performance metric of first, first year attrition needs to be recognized and successfully recorded and the results of which acted upon by ALL organisations regardless of size. The damage first year attrition can cause is extremely disruptive at best and disastrous at worst. The smaller the organisation the greater the impact of high first year attrition as this resonates across the company far more quickly.

It is estimated that average first year employee attrition with recruitment agency use runs at >25%. Effectively, more than a quarter of all employees leave organisations with the first 12 months of their employment. Such high first year employee attrition damages a company because it is in the first year of employment when the most investment in a new employee is made: the costs of sourcing the employee, mostly via an agency; the on boarding; the initial training; the on the job mentoring; the real expense is considerable and ALL before any return on investment is realized by the company.

1st year attrition Most companies will readily invest in innovative retention programs, increasing types of employee benefits, and company facilities - gyms & restaurants, coffee bars - help create a ‘valued employee culture’ but the real investment needs to be made in the recruiting process ensuring the RIGHT people are employed in the first place.

Sourcing the right candidate is key - most companies will use recruitment agencies to source a large number of their new employees. It is not just the use of agencies but how a company engages with them that causes the problem with first year attrition. The focus of agencies is purely to source a candidate as quickly as possible; the consultant at the agency will be measured totally on billings, revenues they bring into the agency, so placing candidates already on the market – active candidates, is the quickest and easiest way of recruiting. Agencies are not rewarded on candidate retention. Interestingly those agencies who are deemed successful by companies due to the volumes of candidates they provide may actually be the worst agencies due to the number of candidates hired from them leaving within the first 12 months; resulting in a high first year attrition! If you are going to use a recruitment agency make sure they are engaged, understand the business, the role and ultimately what the Hiring Manager is looking for. Closer engagement will increase the chances of finding the right candidates. Closer monitoring of first year attrition will also enable you to determine how successful an agency truly is.

You would be forgiven for thinking the current economic climate may help solve this problem. Unfortunately, the increased volume of applicants adds to the difficulty of finding the right person for your business if your sourcing methods are weak.

first year employee attrition Organisations are becoming more aware of the strategic importance of recruiting high quality employees at a sensible cost, but it is also important that every recruitment channel is aligned to the quality of sourcing and selection standards which reduce first year attrition. For example, a well-managed ‘Employee Referral Scheme’ should help to deliver quality employees at the right cost, but internally referred candidates are often not qualified to the right level because a ‘referred candidate’ is pre-judged as being suitable for the role and company because they have been ‘recommended’ – a dangerous assumption.

Reducing First Year Attrition, Thorough candidate qualification is crucial, before you are ready to hire you need to consider the following:

Can the role be filled an existing employee, one who is already proven & known to the company;
Having an up-to-date job description for the role. Quite often the role may have changed since an original job description was established and may well be out of date;
Developing a role profile, which details in summary what attributes, skills required over and above the job description – requirements and qualities which reflect company needs, taking into consideration existing team capability
Try not to hire ‘like for like’ candidates if the employee is leaving because their role lacked scope or career development;
Keep a consistent recruiting process for ALL candidates regardless of source and make sure candidates are qualified against the same criteria throughout the recruiting process and scored accordingly;
Recruit for ability – a candidate with the right ability can always learn new skills and someone who is learning and developing is, generally, a more satisfied & engaged employee.

If you follow the above then this will go some way towards helping source the right candidates in the first place and reduce first year employee attrition.

High first year attrition can be the silent killer of your business – measure it to your advantage, ignore it at your peril.

[cph has a track record of drastically reducing organisations first year attrition. It works on client sites directly sourcing candidates removing the reliance on agencies. cph is measured on a number of value added recruiting metrics including; cost per hire, time to fill, interview to offer ration, candidate experience and first year attrition]

Newsletter
Click here to subscribe

Join us >>