1. Predicting Employee Attrition
• Bhavin Shah
• Krishan Dadlani
• Mrityunjay Gunjiyal
• Nirali Shah
• Yamini Toki
• Yash Gupta
How it will help if we know the top reasons of attrition?
Group 6
2. Agenda
1. What is employee attrition?
2. Why do we care?
3. Objective and business value
4. Analysis
5. Modeling results
6. Take away
3. Employee Attrition
• Attrition in business can mean the reduction in staff and
employees in a company through normal means.
• It is imperative for every organization to understand
factors driving the employees to look for better work
opportunities and provide better satisfaction in terms of
salary and kind of work.
4. Why do we care?
Cost: Replacing an employee costs as much as 210% of the
employee’s annual salary
Talent Retention: Since executive and C-level employees
are especially hard to replace, these roles typically take
longer to fill
5. Objectives and business value
• Predict drivers of employee attrition.
• Predict potential cases where employee might leave the
company.
• The factors analyzed in the study will help the
organization to identify the weak areas that need
attention in order to improve employee satisfaction and
retain valuable employees.
• Thus, save business costs that range from quantifiable
numbers to hidden costs.
6. • Employee Number: Unique id of employee
• Age: Age of employee
• Distance from home: Approximate distance of
workplace from home
• Education: Employee’s education degree
• Environment Satisfaction: Satisfaction from the
surrounding
• Gender: Male or Female
• Hourly rate
• Job Involvement: Employee’s involvement in the job
• Job level: Level of job performed
• Job role: Designation
• Job satisfaction: Satisfaction from job
• Martial Status: Married or Single
• Years with current manager: Years completed working
with current manager
Target Variable: Attrition
• Monthly Income: Employee’s monthly income
• Number of companies worked
• Overtime: Expressed as ‘yes’ or ‘no’.
• Percent Salary hike: Increment factor in salary
• Performance rating: Rating ranging between 3 - 5
• Relationship satisfaction: Expressed in terms of
number.
• Total working years: Work experience
• Years at company: Years completed serving the
current company
• Years in current role: Years completed working in
current role
• Years since last promotion: Number of years
completed after last promotion
• Is Promotion Due: Recoded Field -Has the employee
ever been promoted after joining this company.
Predictors and Target Variable
8. Variables Data Transformation
Years At Company Recoded from the date field ‘Date of Joining’
where, Years At Company = 14 - RIGHT(A2, 2)
Years Since Last Promotion Recoded from the date field ‘Date of Last Promotion’
where, Years Since Last Promotion = 14 - RIGHT(A3, 2)
Years Promotion Due Since Joining Recoded from ‘Years At Current Company’ and ‘Years
Since Last Promotion’
Recoding has been done as follows:
=(Years At Current Company – Years Since Last
Promotion)
Is Promotion Due Recoded from ‘Years At Current Company’ and ‘Years
Since Last Promotion’
Recoding has been done as follows:
=IF(Years At Current Company – Years Since Last
Promotion = 0, "N", "Y")
Data Re-Coding
9. Impact of Attrition
False Negative:
When an employee has not been predicted to leave by the model, but still leaves the company.
For this unexpected case of attrition the company will have to bear the following costs:
● Hiring Costs of new Employee
● Training cost of new employee
● Productivity issues during the learning curve
Training and hiring costs usually depend on the Job Level of employees. Typically these costs are 150% of the
annual salary of the employee.
Weighted average cost to company of an Employee leaving = ∑ (Attrition rate * Cost) = approx. $ 76,000
Job Level Attrition Rate Average Salary at
this level
Average cost of replacement
(% in terms of annual salary)
Cost of Attrition to company
C-level 4/65 = 6.1% $ 228,229 210% $ 479,280
Managers 6/89 = 6.6% $ 192,190 150% $ 288,285
Consultant 14/149 = 9.3% $ 119,880 120% $ 143,856
Mid-level Exec 31/389 = 7.9% $ 64,260 80% $ 51,390
Executive 75/433 = 17.3% $ 32,616 70% $ 22,831
10. Impact of Attrition
False Positive:
When an employee has been predicted to leave by the model, but was actually not going to
leave the company. In this case the company would be bearing the cost of incentives offered:
● Better Stock level options
● Increased pay for overtime or additional hiring of staff to take load off from existing
employees
● Increase in pay.
An increase in 1 level of Stock option would typically cost the company at least 10% of the
annual salary offered.
Also an increase of 10% in the workforce will lead to 10% more cost to the company in terms of
salary.
Similarly a 5 to 10% hike might be required in annual salary to retain an employee.
So if an employee is offered any one of the incentives the cost to company would be 10% of
their salary.
13. Significant Predictors
• Over Time: In case of Overtime the attrition rate jumps to 22% from 11% and amongst
the employees not doing overtime it drops from 11% to just 7%.
• Stock Option Level: The employees with Stock Options are less likely to leave based on
Tree decision model. Employees with Stock Options 3 and 4 in the company have only a
3% chances of leaving while employees with lesser stock option levels at 1 and 2 have
attrition rate of 22%
• Monthly Income
• Marital Status
• Employee Satisfaction
• Work Life Balance
