The two biggest challenges that organizations will be facing over the next few years is hiring the right people and keeping the best and brightest from leaving.
In past articles I have talked about strategies for hiring the most appropriate people. If you have been applying some of those principles, great work. Now, you can improve your retention techniques.
The average employee turnover is 14.4 per cent annually, according to the Bureau of National Affairs. Rates are on the rise. High turnover increases costs and lowers productivity. Researchers have studied the hard-dollar costs of losing valued employees.
Labor Statistics estimates average cost to replace a labour worker in private industry at $13,996. Other studies have shown that for professionals, it is one and a half times their annual salary.
There are many indirect costs not captured by the statistics and some of these hidden costs can significantly outweigh the traditional, hard-dollar calculations. Organizations are incurring huge, unseen losses in productivity, customer satisfaction, reputation among job-seekers and in the morale of the departing employee’s co-workers.
Estimates have determined that the knowledge loss cost of a departed employee can be as high as 50 per cent of that employee’s salary for the year; and this figure grows by 10 per cent for each year of employment.
A few years back, PWC published findings of 19,000 exit interviews within their organization. A key questions asked of employees was simply, “What was their reason for leaving?” The four most common reasons of dissatisfaction were:
1. Limited career opportunities; 2. Supervisor did not show respect and did not support them; 3. Compensation; 4. Job duties were boring and they did not feel challenged.
This is consistent with the findings discovered by a Gallop Poll in which employees from 44 organizations and 10,600 business units were interviewed. Gallup found an almost identical top four reasons for employees voluntarily leaving.
Now that we have a better understanding why good employees are voluntarily leaving, we can take management action.
Notice that compensation was third behind opportunity and respect. When you go deeper in the topic of compensation, it is more about fairness and how their companies keep employees who do not pull their weight and do not do their fair share. Many organizations still maintain a culture of paying for seniority, even if individuals do not perform and display negative attitudes. High performing constructive employees will not stay in that environment.
On the other hand, managers should be concerned about staff who are only focused on money. Why? Because, that often shows they don’t place much value in other areas of a constructive workplace like culture, training and career development. It is also a signal of other issues as it is easier to ask for a raise than it is to ask for respect.
A recent report suggests that around 86 per cent of employees plan to look for a new job in 2013 a sharp increase since 2009. What are most employees really looking for? As with everything in the area of talent management, there is no one simple answer. It appears that job stress is relevant. Stress occurs when employees do not feel like they are in control of how they do their jobs. Unfortunately, many managers have not been trained to develop their people so they can delegate appropriately and empower their more competent staff.
What can the organization do?
Managers must take the time to coach staff appropriately. Managers often say to me that they just do not have the time. The organizations must ensure that their managers are managing people rather than only production.
To remain effective, managers must have a mindset of continuous learning. The skills that made a manager successful in the past are not enough anymore. Top companies I work with mandate that their managers receive management skills training every year. All employees want to know the big picture and will perform better when there is a high level of trust and transparency. Companies need to be able to react to market shifts quickly. Only if employees have all the information necessary and trust their manager will they be able and willing to do this.
My question for managers this week is, “What is your organization doing to develop managers’ skills which will retain the best and most productive of your employees”?
Joseph Sherren, CSP, HoF, P.E.I.’s Management Effectiveness Expert, has spoken to more than 4,000 audiences in over 25 countries worldwide. For information on workshops and speaking, contact Kevin at (902) 393-7177.