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Attrition Analytics-A MarkovAnalysis Attempt for Attrition-ratePrediction and Stabilization WHITE PAPER Author : Suvro Raychaudhuri Wipro Technologies Innovative Solutions, Quality Leadership In a competitive arena, the advantage is taken by the first-mover – and for an environmentwhere Seth and Sisodia’s The Rule-Of-Three predominates, it is not just the first mover, butthe fast -mover who has it all.Every organisation, no matter how stable its quality and people processes, are bound to fallprey to the silent warfare of the fast-movers – which I would prefer to call Corporate SitzKrieg 1 ; and Hertzberg’s “Satisfiers” are today’s HR nightmare – because nothing seems to work!Thus today, HR as a strategic partner in any organisation has lots to do in terms of metrics,HR analytics, prediction of trends and quantifying Human Capital measures.Since attrition is one of the main problems for any organisation struggling to retain itsexpertise and knowledge base, an analytical approach to the same would also help inprediction and necessary remedies.This paper aims to draw on the recent HR trend of referring to the employee as an “internalcustomer” and therefore assumes that manpower attrition is similar to customer switchingproblems in case of products, thus has used Markov Analysis as an Operations Researchtechnique to predict attrition, and therefore form a basis for manpower planning.This white paper is aimed at a greater scope of having more thought provoking ideas in theHR Analytics arena and within its limited scope here, suggests an OR model as part ofmanpower inventory planning in general. WHITE PAPER Page : Table of Contents Table of Contents Attrition Analytics - A Markov Analysis Attempt for Attrition-rate Prediction and Stabilization INTRODUCTION....................................................................................................3THE KNOWLEDGE-HARVEST..............................................................................4WHAT WE REALLY LOSE.....................................................................................5WHAT OTHERS ARE DOING................................................................................7THE VALIDITY OF ATTRITION DATA....................................................................8THE MARKOV ANALYSIS...................................................................................10CONCLUSION.....................................................................................................13RELEVANT LINK.................................................................................................14REFERENCES.....................................................................................................14ABOUT THE AUTHOR.........................................................................................14ABOUT WIPRO TECHNOLOGIES.......................................................................15WIPRO IN COLLABORATION AND KNOWLEDGE MANAGEMENT...................15 WHITE PAPER Page : © Wipro TechnologiesPage :03 of 15 Introduction The Attrition Warfare One of the greatest strategies of War had been the strategy of attrition warfare, defined inmilitary terms as “a strategy of warfare that pursues victory through the cumulative destructionof the enemy’s material assets by superior firepower.”Metrics like body counts and terrain captured measure the progress of battle. On the oppositeend of the spectrum is maneuver warfare. All warfare involves both maneuver and attrition insome mix. The predominant style depends on a variety of factors such as the overall situation,the nature of the enemy and most importantly, on attackers’ capabilities.Though this paper deals with attrition with respect to the War for Talent in Corporate arena,the strategy involved is the same – and even the terminologies quite similar – if “body count”can be a parameter to measure effectiveness of attrition warfare, then in corporate recruitmentstrategies the similar parameter would perhaps be “acceptance to offer ratio” (from theattacker’s perspective).The main point here is, that today, Human Resource professionals are under increasedpressure from a different kind of a Corporate Sitzkrieg – the silent firepower of attrition whichcauses no less harm to Human capital assets, as compared to “the enemy’s materialassets” as in the definition above.The concept of applying warfare terminologies has been an age-old concept amongstmarketers – and human resource professionals are coming to terms with such terminologylike strategic human resource management, and the employee as the “internal customer”as per the marketing concepts – this has something to do with the changing scenario of acompetitive environment, where strategies no longer are framed at the top, but evolves out ofthe environment, cascading through the entire organization and demanding concrete actionplans. The concept of what has been stated above can be put into a simple model as shownbelow. (fig1.) Strategy Technology Structure People Culture Organization fig1 Environment Attrition Analytics - A Markov Analysis Attempt for Attrition-rate Prediction and Stabilization WHITE PAPER Page :04 of 15The pressure of competition from the environment and the evolution of strategy are self-explanatory in the above figure. The point to note here is the extent of the impact, whichinvolves hitherto soft issues like culture and people, and this is the srcin of strategic humanresource focus, the war for talent and the need to garrison the human resource capital asone of the strategic parameters. The Knowledge-Harvest APQC (American Productivity and Quality Centre) has made several recommendationsto raise awareness of the problem of knowledge attrition, which include1.Identifying a burning platform or issue related to knowledge loss2.Looking for windows of opportunity through champions who are willing to try outknowledge retention approaches.AQPC has categorized three knowledge types that are under attack through attrition.This includes1.Cultural knowledge – This includes management practices, values, respect forhierarchy, and decision flows.2.Historical knowledge – this includes the organization’s journey from the day it wasfounded till the present3.Functional knowledge – this includes technical, operational, process and clientinformationA more careful look at figure 1 indicates that there seems to be some good amount ofconvergence with respect to AQPC’s definition of the three types of knowledge and themodel given in figure 1 – particularly the fact that corporate attrition warfare is all aboutgaining (through head-hunting, strategic recruiting, internal job offers, etc) human assets,who bring along with them the three kinds of knowledge, and thereby attack the verystrategic base of the organization.Thus from the attacker’s point of view, depending on which type of knowledge it needsform the competitor, the recruitment strategies are also sorted out accordingly. It is evidenttherefore, that attrition rate among junior employees (2-4 yrs) would be higher for thefunctional knowledge part – associated with technical and operational processes.At higher levels, the attrition warfare would be more for gaining historical knowledge(business portfolio changes down the years, etc) and cultural knowledge from thecompetitors.From the organization’s point of view, the counter strategy is to predict attrition “zones”which depend on the criticality or type of knowledge that is at important to the organization,and thereby evolve plans to counter loss of human assets from those positions.Once we realize this, the next step is to come out with concrete plans to prevent attrition,which can only be forecast using data and trends available. Some of the world’s bestpractice organizations have tried capturing data to predict attrition on the long run, anddone that in different ways. Attrition Analytics - A Markov Analysis Attempt for Attrition-rate Prediction and Stabilization
