In times of rising costs and low unemployment, staff turnover is especially challenging for any organisation. Recent research is suggesting 81% of businesses are having difficulty replacing staff. In addition, other research shows that replacing an entry level employee is 30-50% of their annual salary, a mid-level employee 150% and a high-level employee, executive or specialist 400% of their annual salary. These percentages not only include hiring costs, but also loss of productivity due to time taken to become proficient in the new employee’s job, learning new systems, building collaborative relationships, together with costs resulting from the impact of high turnover on the morale of the remaining employees.
Reducing employee turnover can be addressed under three general categories: the employees’ line managers; organisational culture and employees themselves.
1. The Line Manager
Gallup research indicates 70% of employees’ motivation is affected by their relationship with their immediate manager. That relationship is damaged when managers:
- don’t respect, trust or care for their staff;
- practise micromanagement;
- overwork their staff;
- don’t provide sufficient lead time for major projects;
- fail to develop, coach and train individuals and teams;
- don’t keep their commitments and
- are dishonest.
In other words, when managers don’t have integrity and lack empathy, their relationships with their direct reports suffer and employee motivation dissipates.
2. The Organisation’s Culture
A second cluster of reasons employees resign is due to internal organisational issues, eg:
- employees discover the salaries the business pays is significantly below the market rate;
- the ethics of the organisation in reality are contrary to what it claims (eg: unresolved conflict, destructive employee competition, office politics, gossip, the strong expectation that employees work after hours without paid overtime and/or though their lunch breaks, disempowering management practices and a silo mentality culture among teams);
- the company lacks flexibility in its HR policies such as failure to provide remote/hybrid working options where that is feasible, or provides no parental leave additional to governmental provisions, or lacks effective grievance procedures;
- the business has no talent development system for existing staff;
- the financial foundation of the organisation is insecure and there are frequent rumours of retrenchment or takeovers.
3. The Employees Themselves
While some employees will remain with an organisation despite the types of issues in 1 and 2, many who have strong values, are ambitious or have positive self-esteem will be on the lookout for a suitable job elsewhere. That’s what I have done and I know several capable people who have done the same.
However, there are also employees who resign purely for personal reasons such as: to pursue a new career direction; undertake full time study; enjoy a change of lifestyle (eg. travel overseas or around Australia, have better work/life balance); to relocate because of their partner’s work; or for health reasons. For this latter group there is really not much an employer can do to encourage them to remain.
Conclusion
It’s interesting, as well as concerning, that several organisations continue to haemorrhage employees without addressing the core reasons people resign. Many managers and businesses are content to blame employees themselves – accusing them of being unreliable, not interested or disloyal. Travis Bradberry cites research from the University of California that found motivated employees were 31% more productive, had 37% higher sales, and were three times more creative than demotivated employees. Bradberry also found they were also 87% less likely to resign, according to a Corporate Leadership Council Study of more than 50,000 people.
Certainly, as I have explained, some employees will still resign. However, as the research shows, employees who are motivated and satisfied with their jobs are far less likely to do so. It amazes me that according to research only 34% of organisations always take the effort to find out why their people are leaving. The only way to really know is to ask them. And that best happens through developing a respectful and confidential exit interview system and incorporating the insights gained into the organisation’s employment systems, organisational policies and management practices. Yet, according to research, less than half of all organisations hold face to face exit interviews, let alone make the necessary changes in light of the insights revealed. (For further information see my article, ‘Exit Interviews: When It’s Time to Say Goodbye’ on this site.)
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