Busting the Retention Intention Bubble
Every HR person at some time in their career has had the attitude that they can find an answer to turnover and maximize retention for their company. Working to encourage retention and prevent all turnover is impossible. The practice usually leads to frustration and wasted resources.
We have established, in leadership models, that turnover is always bad and that may not be the case all the time. This may be a shocking statement but I believe it is true and well worth examining further. In fact, low turnover can be an issue as much as high turnover.
In this article, we are examining the potential causes and impacts of both low and high turnover. There are many factors that must be considered when we look for causation including intent and motivation so I will be looking at many various elements so you have a broad picture to compare to your situation.
Know where your company is at and where you want it to be.
But first you need to examine your current situation: Do you have high turnover or low turnover and what do you consider reasonable? This simple question is very difficult to come to grips with because many leaders feel that the only answer is to have NO turnover and that is unrealistic.
Getting to this understanding allows you the flexibility to proactively plan and manage the entire process with an eye on growth and sustainability. Your goal should be to continually engage and surpass the expectations of your customers to the point that they become your best referral engine.
This can only happen if you focus on engaging and empowering your people so they become your customer ambassadors. When your employees are not your ambassadors it is costing you sales and profits.
Is your business one that someone can provide a good living for their family for decades, is it a transition provider for people moving up in their desired careers or is it a provider of jobs for people who really don’t have any plans for a career or growth? You set this tone through your expectations, values, and standards.
Don’t be surprised if you are confused during this examination because leaders have been idealizing the “Retention Bubble” for decades because that is what we have been taught is good and turnover is bad.
If you determined you have HIGH turnover then let’s look at some thoughts on causation.
While we often want to feel that high turnover is due to a poor manager all the time, that is just a scapegoat. There are many other factors that can attribute to that turnover rate.
Most every study I have read does indicate that employees leave because of a dissatisfaction with something regarding the job. Some of the more common are low pay, poor benefits, poor working conditions.
Some are much subtler such as lack of opportunity, feeling undervalued by leaders, toxic working environment caused by other workers or leaders or even a lack of trust felt by employees because of micromanaging.
However, there are turnover issues where the business has perceptually little control over such as seasonal workers and what I call “Student” driven businesses. The first group can take place where the seasonal work is driven by weather, tourist or other temporary situations and many time the same people do not show up every year.
The second group is where the business is driven by bringing in students from various educational institutions to provide simple, repeatable services that require little training for mediocre success. Some business has become very successful in leveraging these roles and spinning off career paths within the company but they are few and far between.
For example, amusement parks are a perfect example of both groups. They typically generate the bulk of their business between Spring and Fall when kids are out of school so they need to expand their hire for this period. They rely a lot on seniors to fill these positions because they like the idea of working 3–6 months per year so they do come back often, if they are treated well.
What are some of the impacts of HIGH turnover?
There are three negative areas where high turnover can have major impact on your business:
1. Financial
The financial impact is driven primarily by the roles where the turnover is taking place and the amount of skills required to do the job. The more skilled the person leaving the higher the cost of replacing them. Executive positions can cost as much as 30–50% of the annual salary. If the skills required are in short supply, this number can become even more significant both in initial cost and potential for failure if the expectations are not well defined.
2. Lower Employee Morale
We talked earlier about ensuring that your employees should become your best ambassadors to your customers so anything that destroys that can be high impact. If the turnover is surprising, abrupt, or unexplained then expect the rumor mill to work overtime. This is what causes the decline of morale within the rank and file.
When left unexplained or poorly handled this can lead to a flood of people leaving and it will not be the poor performers. When people see their peers exiting they often adopt the attitude that there must be a reason everyone is bailing out.
3. Negative Company Culture
Even if you don’t have a raft of people leaving you may not be out of the woods. The lingering attitude is that the remaining employees will have to pick up the extra work until a new person is hired. This brings on stress and when the hiring is delayed that stress can turn toxic to the entire culture and destroy trust and accountability.
If you determined you have LOW turnover then let’s look at some thoughts on causation.
The good: Companies who have established an engaged working environment with their employees and managers usually find that people to stay in their jobs for a longer period. When the employees are well paid based on industry comparisons and have plenty of opportunity to advance within the company are other contributory factors.
The not so good: When economic conditions are bad people will normally stay put because people are fearful of not finding another job quickly. This condition will last until the economy begins to improve or people get frustrated.
The not so good: There are times when people feel intimidated by their current company into thinking that they are obligated to stay and not look for another position. This can happen when a leader or owner is very micromanaging and continually creates doubt in the employee’s minds. The can be very debilitating for employees and many times happens in small businesses.
What are some of the impacts of LOW turnover?
The good: Many companies with low turnover are very productive and growing because employees trust each other and know what is expected of them. The feel valued and understand the values, vision and purpose of the company. Leadership in these companies are focused on business growth rather than adapting to new staff and changing attitudes.
The not so good: If your company is caught in a downturned economy and your people are not leaving you need to be aware that they are looking and will continue to look. This means that you cannot be lackadaisical in your attitude in dealing with your people. If your people feel you are taking advantage of the situation, there will be major changes when the economy improves.
The not so good: If your company is run as a micromanaging military institution and your people are intimidated into thinking that they have no value to anyone then I will be the first to tell you that your company will not grow. There will be no innovation, expansion, or good customer satisfaction.
Some suggestions:
Now that we have looked at both HIGH and LOW turnover we really need to understand that the results are really based on leadership intent and motivation. When you started your company, I am sure you had some awfully lofty goals and expectations that may have been eroded over the years so now is the time to reexamine those.
Turnover is an attitude that should be examined regularly and be part of your strategic planning. Also understand there are no silver bullet answers, every one’s attitude, intention and motivation is part of the process.
If you invest in open communications, establishing trust and empowering your people to be the best they can be then you will find turnover reduction. When your culture becomes one where people trust, value and respect each other you will find that turnover can be a good thing.
For example, when you have a great culture, there may be people who are doing a great job but they desire to change a direction in their careers or move on to a bigger role that you don’t have open and I believe you have an obligation to be supportive of their decisions. Discuss it at length with them and once you understand it, let everyone know the reasoning. I would even suggest that you help the person find potential opportunities in the area they want to move into.
If you have a person in this situation I would ask them if they have anyone in mind internally who could fill their position. If they do, you just saved some hiring costs and built trust in the process. If your people feel you care about them and you want to empower them to grow then you will find they will become your ambassadors.
Keep in mind this attitude about being intentional, proactive, and motivated should be part of your entire team’s DNA. If even one person doesn’t see it that way there will be a chink in your armor and eventually there will be erosion. Believe it, Live it, Grow it!
Would love to discuss this with you and see how you can capitalize on it. Check out my website at http://tlgcoach.com or call me at 630–454–4821.
