High employee turnover is costly, but unfortunately many companies still insist on placing the blame for this turnover on the economy, job market, or on individual employees. If a business wants to take responsibility for it’s own success, however, it can look at its own role in employee turnover. There are a number of common, identifiable, and highly fixable causes, which once identified and met consciously can make inevitable turnover a much less prominent occurrence.
The High Cost of High Employee Turnover
Fifty-eight percent of organizations admit to troubles retaining employees. Estimates range from 30% to 200% of an employee’s annual salary as the cost of replacing these employees. Not only does the company lose this money, but they also lose potential future leadership and innovation from these individuals. The indirect costs for replacing employees include recruiting, hiring, and training of replacements, as well as the costs to the productivity lost by constantly shifting team composition.
If you’re currently a leader in an organization experiencing high employee turnover, or you simply understand the reality of the situation and want to take action to prevent it, there are a number of common but fixable causes for employee turnover to be aware of.
The Root Causes of Turnover
A study by Kronos Incorporated and Future Workplace showed that 95 percent of human resource leaders say employee burnout is sabotaging their workforce.
The top three contributors to employee burnout cited were:
• Unfair compensation (41 percent)
• An unreasonable workload (32 percent) and,
• Too much overtime/after-hours work (32 percent)
When employees feel overworked and under-compensated, the result, even if not immediate, will likely be some kind of seeking after outside employment.
Impaired Relationships: Company Culture & Peer Relationships
An employee retention study conducted by TINYpulse, an employee engagement firm, surveyed 400 full-time U.S. employees. It found that the employee-manager relationship, and the broader company culture in general, explained a lot about employee retention and turnover.
While we’re focusing on common but fixable causes, and culture may seem intangible, there are certain metrics that can define it pretty clearly. One of them is what the employee’s themselves say about their work experience. According to the study, “employees who give their work culture low marks are nearly 15% more likely to think about a new job than their counterparts.”
Additionally, peer relationships factor highly into this. Positive work relationships on all levels can help make tough jobs tolerable, and good jobs fulfilling, and these elements can’t be ignored in addressing the reasons behind employee turnover.
Rather than complaining that employees are consistently seeking only after the greener grass of higher salaries and monetary incentives, it would benefit employers to recognize that paying attention to the culture of the company, and to activities that can establish positive relationships, may be a small investment that will outweigh any salary concerns, for a sizable portion of employees at least.
Impaired Relationships: Managers & Micromanagement
As mentioned above, the study by TINYpulse also found that managerial relationships were large considerations in employee retention.
The study found a strong connection between employee job satisfaction and “freedom to make decisions about how to do their jobs.” As Forbes reports in connection to this study, people leave managers, not companies, “when management is persistently over-involved in unproductive ways, it can quickly become a retention issue.” The study also linked manager-related factors to burnout (as previously mentioned), and to employee development.
Overworked employees reported being “31% more likely to think about looking for a new job than their colleagues who feel comfortable with their workload.” If they had opportunities for professional development the reported being “more than 10% more likely to stay with their current employer.” The report essentially concludes that supervisors can often be the deciding factor when it comes to employee retention.
Not feeling fully valued
Though we’re citing a large amount of statistics simply to provide a measurement to the problem, it’s incredibly important that after these statistics are evaluated and understood, companies go beyond the statistics, and do not make the mistake of viewing employees as statistics.
Liz Ryan, CEO and Founder of Human Workplace, has a very insightful and nuanced way of viewing the problem of good employees leaving. She says that people leave because they feel the organization does not value them or their observations.
She goes on to say that:
The fake reason good employees leave their jobs is, “An amazing job offer flew in from left field and fell in my lap,” and if you believe that story, I’ve got a bridge in Brooklyn to sell you.
People do not want to job-hunt. It’s a huge pain in the neck. They resist it. They rationalize their boss’s bad behavior or their company’s draconian HR policies. They try as hard as they can to make it work.
They are pushed to start job-hunting by countless slights and insults that build up over time.
She goes on to that when people are seen only as “production units in human form,” this view harms both managers and the employees who are seen through this lens. From this vantage point, they are unable to “relax into the awareness that every problem can be solved if we can trust ourselves and other people.”
When manager view employees as statistics or production units, it’s not only the employee’s perception of this that matters, it’s the direct impact on the manager’s ability to actually manage. When the employee feels the repeated effects of this, they are often forced out the door sooner rather than later.
Making the wrong hiring decisions
Harvard Business Review reports that up to 80% of employee turnover is due to bad hiring decisions.
This of course puts a square emphasis on the importance of hiring the right people.
Once you’ve ensured you have a company culture high quality candidates can find fulfilling relationships in, and will have room for growth and development, you can then look for people that are actively seeking this culture.
Additionally, it is important to define the roles you’re hiring for very clearly—both for your own good, and for the sake of the candidates. This is one area where ambiguity is an absolute killer, and you may only see it clearly by the time it comes in the form of a resignation letter.
How to Keep Employees (Happy)
All of the things we’ve point out are common, but very fixable causes for employee turnover.
The first thing to do is to have awareness of the above causes, and make decisions that impact your company culture and policy moving forward with these things in mind. Being proactive within these contexts will signify that employee retention is a core value of your company, and will safeguard you (as much as is possible) from the negative consequences of high attrition.
Other ways you can keep employees around for the long haul include:
Cleaning up performance reviews: Use this as an opportunity to recommit to your employees, and show them that the performance review is something with their long-term well being in mind.
Prioritizing employee happiness: You can do this by recognizing and rewarding employees. As well as by just checking in. In addition to performance reviews, give employees the chance to give you feedback without the fear of punishment. These insights will provide the best guidelines to how you can proceed to meet your company culture and employee well-being goals.
Pay attention to engagement: If you notice employees withdrawing and showing signs that they may be checking out, mentally and emotionally if not physically, take preemptive action to see what you can do to re-engage them. While you may not need to start throwing them the life preservers of higher salaries or incentives, you can do a quick checklist review of the above factors, and ask yourself: Am I working them too hard? Am I showing appreciation enough for what they contribute? Have I shown them a clear path to growth and advancement?
With awareness of these factors you can help invigorate your team. By creating a channel for streamlined communication as the basis of a relationship-driven company culture, you will by default have helped to create a company that keeps employees around longer.