Employee Turnover: The Top Five Myths and How to Handle It

Most leaders do not focus on turnover until it is already a problem. As the economy slowly continues to recover, surveys are telling us that a larger number of employees are likely to seek out a job in a different organization over the next year. More specifically, The Hay Group, a global consulting firm, tells us that turnover will accelerate in 2014 to 161.7 million employees, a 12.9 percent increase when compared to the data in 2012. Average employee turnover rates over the next five years are expected to rise from 20.6 to 23.4 percent. Furthermore, if employees receive an enticing job offer from another organization, an increasing number of employees are telling us they would accept the offer.

Some of the common misconceptions about turnover include:

1. All Turnover is Bad

   There is good turnover and bad turnover. When a highly valued employee leaves your organization, that is bad. When an employee who does not live by your organization’s values leaves, they can brighten up the whole office on their way out.

2. People Quit Most Often Because of Pay

   Although most people of who quit do end up finding a job with higher pay, pay is not the best predictor if an employee will leave your organization. Research tells us a better predictor is the relationship with their immediate manager or supervisor, promotion opportunities, lack of ability to learn new information or skills, and having to deal with ongoing conflict or stress. Most often, the motivation to conduct a job search was something other than pay.

3. There is Nothing a Manager Can Do to Decrease Turnover

   Many leaders are fond of saying that high employee turnover is part of their industry or business. Although this may be true, some leaders and businesses in the exact same industry have much lower turnover ratios than others. It is important to remember that employees agree to work for your organization because of your reputation (or they just really needed a job). Most often, employees voluntary leave your organization because of a lack of relationship or lack of confidence with their immediate supervisor or manager. Reputation is responsible for recruiting but the reality surrounding leadership and the culture they create is what retains employees.

4. The Numbers Are Not Important

   There is some truth to this. You turnover percentage has to be taken into context. Factors that contribute to turnover ratios include things like industry and geography. A fast food or retail turnover ratio of 30 percent in San Diego may be considered outstanding. An aeronautical company’s turnover ratio in Seattle WA of 10 percent may be considered high. Turnover is a complex topic and the reasons behind the turnover are much more meaningful in planning actions to deal with the problem.

5. Turnover Does Not Impact Profitability

   Some managers believe that since turnover is inevitable, you just have to deal with it and find new workers. Research has demonstrated over and over that companies with lower turnover have as much as four times greater profitability than companies with higher turnover. It makes sense. Long term employees have the ability to build even stronger relationships with customers. Employees with strong customer relationships who leave your organization are at a high risk of taking your clients with them.

   Having conducted employee opinion surveys for the past twenty years, our data consistently indicates that what matters to employees more than pay are the following aspects of their employment:

   • Having a good working relationship with their immediate supervisor
   • Ability to learn and grow in their jobs
   • Promotional opportunities
   • Doing work that is meaningful
   • Feeling like they are a valued, respected member of a team
   • Being recognized for the contributions to the organization’s success
   • Having autonomy and the authority to effectively do their job
   • Having flexibility in hours worked
   • Fair pay

   It is clear that you’ve got to be paying people a fair market wage in order for them to continue to align their efforts with your organization. However, beyond pay, which managers typically have little control over, there are a multitude of other variables that are within your control.

Consider the following tips to help ensure that you’re putting as much focus on your employees as you have been on your own survival during changing times.

Hire Right

Interview candidates carefully, not just to ensure they have the right technical skills, but that they are also a cultural fit for the team and organization. To ensure success, have multiple people interview the candidate. You will receive multiple perspectives and more people will feel committed to the new hire’s success.

Put People First

More than ever before, today’s workforce values a blend between work and life. Acknowledge your people as unique contributors and value their time away from work. Entertain flex schedules and allow for telecommuting. When possible, provide comp time after an extensive project. Try to promote a happy, productive, stress-free environment that acknowledges the fact that people have a life beyond work. Make it a priority on a daily basis to touch base with team members, asking them, “How is it going today? Do you need any support from me?” On a regular basis, let your people know how much you value them. Be visible, approachable and accessible.

Keep People in the Loop

We’ve never done a survey that resulted in employees saying that they received too much information. Now, more than ever, over-communicate. Give people all the information you can, as often as possible. Talk about what’s going well, and share your organization’s vision, goals, and challenges. You can communicate this information in emails, formal and informal meetings, and, most importantly, one-on-one conversations. If you can’t answer their questions, respond honestly, then try to get them answers.

Provide Training Opportunities

When you provide training for your employees, it is a win-win situation for everyone. The organization will have employees who are more knowledgeable and efficient, and the employee will be able to increase his or her value to the organization, improving their future chances of moving up in your organization. This will result in fewer feelings of stagnation and frustration which translates to a more committed workforce, during and after the recession. Investment in the training that your employees need is an investment in the employees’ future and shows your long-term interest in him or her.

Create an Exciting Environment

Focus on keeping the tempo up. Get to know what type of work excites particular employees. Give more opportunities to do challenging work. Delegate something meaningful. Provide training, resources and learning experiences to help the employee grow and learn. Get people involved in determining the team’s vision and setting goals. Be both the coach and cheerleader!

Spend More Time Leading and Less Time Managing

Employee trust in management is at an all time low. Help rebuild trust by giving employees more opportunities to direct their own time and work. Be open to creative approaches for accomplishing work. Listen to your team members and use their input about how to improve a process, handle a customer challenge or increase efficiencies. Serve as a mentor. Model what you want to see. Look for opportunities to praise and recognize work and behavior that adds to the team’s efforts and the organization’s overall success.

Make Retention an Organizational Commitment

Now more than ever, employee retention is critical to your team’s success. Know your employees and what’s important to them. Don’t assume you know; ask and listen carefully to their responses. Ask them to tell you what they like about their jobs, and what they’d like to change. Get their input and use their ideas where possible. Conduct “stay interviews,” asking your team members about what retention factors are important to them. Make changes based on what they say is an important “stay” factor to them.

Review Compensation and Benefit Packages

At least annually, review compensation and benefit plans to ensure competitiveness and alignment with employees’ true needs. This includes not only base and variable pay scales, but long-term incentive compensation, bonus and gain-sharing plans as well as health and wellness benefits.

Conduct an Employee Opinion Survey

Now is a great time to get in touch with the pulse of your organization. More than ever, you need to know your employees’ perspectives on what’s working and what’s not. Before the floodgates are opened and employees have the choice to leave, get a current read on employee engagement and take action to address some of their concerns. Taking this proactive step may well avoid losing the top talent in your organization. Most leaders know what to do, but often become too busy to focus on employees and what they say is important to them. But…if you are too busy now to focus on creating an environment that keeps employees, how will you find the time to replace people when they leave?

Is employee turnover going to increase as the economy continues to improve? Most likely. But, if you follow the recommendations listed above, you will be taking the actions of a great leader. And, great leaders have a higher number of employees who are unwilling to leave when the opportunities arise.