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Why Startups Face High Attrition Rates, And 7 Tips to Reduce It

Why Startups Face High Attrition Rates, And 7 Tips to Reduce It

Discover the most common reasons behind high attrition rates in startups, and seven easy steps to happy and loyal employees.

If you run a startup and find it difficult to retain employees, you are not alone. Startups the world over face the challenge of high employee attrition rates. According to Moneycontrol, attrition rates among new employees are as high as 50% for some startups.

But why do startups have high attrition rates?

The following are some common reasons employees leave startups at a faster rate than in more established companies:

1. Lower hiring budgets: Startups are not always well-funded. While we constantly hear stories about startups raising eye-watering investments and spending millions of rupees, these are exceptions and not the rule. The ground reality is that many startups are bootstrapped. They may not have the budgets to retain top-tier talent, thus losing them to companies with better offers.

2. Inadequate remote working and collaboration tools: While many employees today appreciate the option of working remotely, communication can be a challenge. If startups cannot invest in tools to streamline remote communication and collaboration, they risk frustrating and losing employees.

3. Skewed work-life balance: Working at a startup often requires employees to don multiple hats and put in longer hours, especially in the earlier stages. This can lead to poor work-life balance and push employees to look for jobs that are less demanding.

4. Job security: Startups tend to have a much higher rate of failure than established companies. This eventually causes employees to jump ship and take up jobs that offer higher security.

Why are high attrition rates problematic for startups?

Replacing employees is time- and cost-intensive. Every time an employee needs to be replaced, your:

  • HR team has to go through the entire cycle of finding, screening, and onboarding new employees
  • Teams have to train the new employee, possibly bringing down the overall organisational efficiency for some time
  • Teams may have to take on additional responsibilities while roles are being filled, increasing chances of burnout or exits, and creating a cycle of attrition

A high attrition rate turns a startup’s attention away from building their core capabilities, and instead forces them to waste valuable hours and resources on repeatedly hiring new people. The actual costs of replacing employees, combined with the opportunity cost of this distraction, can add up quickly.

How can startups reduce their employee attrition rates?

Satisfied employees are far less likely to leave an organisation. Startups can improve the employee experience in many ways:

1. Recruit like-minded people

Look for employees who align with your company’s values and mindset. Smart people will ramp up quickly and start performing from the get go. If these employees also share your values and outlook towards work, they will assimilate into and improve your company’s cultural fabric.

“Hire like-minded people who can go on to instill your values among new recruits and strengthen the company’s work culture.” – Sanket Atal, SVP & MD – Salesforce India

2. Improve hiring processes and expand your talent pool with technology

Modern recruitment tools allow you to streamline the hiring processes to attract, filter, and onboard the right talent. This, combined with the burgeoning acceptability of remote working, can enable you to employ people from any part of the world, based solely on skill and need, significantly expanding your access to diverse talent pools.

3. Foster a positive work culture

Flexible working hours and paths for learning, development, and advancement will provide incentives for workers to stay. Culture eats strategy for breakfast; you must have the right culture in the company from day one.

“Employees don’t leave companies. They leave managers. Your managers and leaders need to empower employees with a sense of growth, ownership, flexibility, learning, and purpose.” – Sanket Atal, SVP & MD – Salesforce India

4. Use technology to improve the employee experience

Provide your teams with the tools and technologies they need to be more productive and efficient, collaborate with others more seamlessly, access relevant information easily, and reduce a lot of the grunt work by automating repetitive tasks.

5. Address employee concerns

Introduce automated ticketing and a centralised self-service help desk for employees to raise issues, and seek redressal fast. This will help employees feel heard, while also allowing your startup to stay abreast of employee issues.

6. Identify key employee influencers

In a larger startup, it’s important to identify key employees who can positively influence the way other employees view your brand. They can help you align your entire workforce with the company culture and processes in an organic manner.

7. Engage employees and provide them with a path to success

For successful retention, startups need to engage employees and provide them with a clear path to success. Besides transparent performance assessment and training, provide employees with personalised counselling to guide their career growth.

Controlling employee attrition is key to any startup’s success. Higher employee retention improves organisational efficiency, sends positive signals to outsiders, and allows the workforce to focus on the core value proposition of the startup.

Salesforce’s Employee Engagement solution can help your startup transform employee experiences by turning your HR department into an employee success department. The solution improves your employee experience by

  • providing employees and HR teams with mobile tools for better communication and collaboration
  • creating an HR help desk so employees can get the support they need to succeed
  • personalising employee engagement with access to complete employee data at your fingertips
  • helping create community forums to discuss important issues
  • providing insights into employee performance and needs
  • streamlining HR service delivery

Transform employee experience and engagement.

Click here to learn how.

Salesforce India

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