Leaders across all industries are challenged to retain great employees, uncover new talent, and ensure diversity across the company. In order to do this, they track metrics such as hiring rates, salary and bonuses, gender and racial composition across job types, retention, and more.
While each metric is important, there is one your company might be sleeping on: attrition.
Attrition, which measures the rate at which employees leave the company, can tell an important story about diversity, equity, inclusion, and belonging.
Although studies show a strong correlation between diversity and profitability, many companies still struggle to achieve true diversity across the board. And because different demographic groups are more likely to hold different types of jobs, the impact of COVID-19 on the workforce was not felt equally for everyone. For instance, women and people of color are more likely to hold low-wage jobs, many of which were lost during COVID-19 shutdowns while people in higher-paying jobs were able to transition to work from home.
Your company might be doing a fantastic job hiring women for leadership roles and encouraging people of color to apply for internal promotions. You may already have a formal mentorship or even sponsorship program to help high-potential employees from underrepresented groups prepare for leadership positions. You may have created strong diversity and inclusion programs, but if you aren’t paying attention to employee attrition, you might be hampering your own inclusion efforts.
Digging into attrition data can uncover problems you might miss on the surface. For instance, if Black employees leave in droves in year two of employment at your company, you have a problem. If women are leaving at a 25% higher rate than men are in their first five years of employment, you have a problem. If 70% of all the employees of color you hire leave in their first year of employment, compared to 8% of white employees, you have a major problem.
If Black employees leave in droves in year two of employment at your company, you have a problem.”
Identifying the attrition gap
The first step is identifying the attrition gaps and if the average tenure varies across employees in differing demographics. Armed with this information, you can dig in to understand what the disparities are and why they exist. Uncovering the reasons behind attrition will require you to ask lots of questions: questions in exit interviews, questions of managers, questions about your own policies and culture.
Here are a few questions you can ask to start:
● What is happening in those early years that creates an environment women want to leave in their first two to three years? Could a flexible-work or work-from-home policy give them the flexibility they need, or is there a deeper cultural issue?
● Do employees of color leave because they don’t feel a sense of belonging, or because they don’t believe they’ll have advancement opportunities? Are people of color represented as senior role models in leadership? Do you have active, engaged employee resource groups (ERGs)? Does leadership attend those meetings and take feedback?
● Are employees leaving voluntarily, or are they being involuntarily terminated? If Hispanic women are being terminated at a higher rate than the company average, dig deeper. Is it coming from one specific department, or happening at one job level? Is there a hint of conscious or unconscious bias? Work with the manager or managers to create specific guidelines around termination that can be applied evenly in all situations.
In our DEI measurement tool, we see regular patterns in companies that show women and people of color stay the first year in a company at the same rate as white men, almost as if they are saying, “I’ll give the company a chance to let me know I’m valued.” But by year two both women and people of color leave the organization at significantly higher rates than white men. For people of color, we see that exodus continuing well into the fourth year.
One company we work with told us they assigned one high-level manager to review every single termination or layoff to monitor diversity in involuntary attrition. During the pandemic, this helped ensure that no group of employees lost their jobs disproportionately to the rest of the organization. It meant that even during major staffing changes, someone was responsible for noticing and preventing a loss of diversity, which is crucial for companies to be innovative and profitable.
Ultimately, monitoring attrition can help you pinpoint underlying cultural issues within your organization. You may have benefits that are geared toward men who aren’t primary childcare providers, unintentionally creating a company where women have a harder time balancing work and life responsibilities. Maybe a homogeneous group in senior management likes to continue to hire people for “culture fit,” a squishy term that is often a stand-in for “how much I individually like this person and believe they are like me.” If your company does not have a policy allowing employees to select the holidays they wish to observe, employees might have to take additional time off to observe religious holidays, putting the burden of accommodation on them and making them feel like an outsider. When employees can’t bring their whole selves to work, or when they experience microaggressions due to their race or gender, they’ll find another place where they can thrive.
If you’re an HR or business leader, it must be your priority to measure, analyze, and report on the attrition metric regularly. When you track attrition and address issues that may be plaguing your employees, you’ll begin to see the impact of your inclusion programs–ideally, that impact will show increased retention, longer tenure, and the development of an inclusive workplace that attracts and keeps the best talent.
Cathrin Stickney is the founder and CEO of Parity.org, a not-for-profit organization that asks companies to take the ParityPledge to close the gender and racial gap in business.