Turnover is an elusive monster, unfortunately it is not mythological and yet the most dangerous thing about it is how most companies don’t even believe it is real. A company can lose as much as 10% of earnings every year due to turnover, because of the high costs associated with recruitment and training. So, if you are dealing with a turnover problem, we are here to help a scannable quick read on the myths and facts about the monster under your desk:
Yes, that statistic sounds wild and inaccurate, but it is still true nonetheless. As tools like LinkedIn have grown in popularity, so has the ability to consider multiple positions simultaneously. The age old saying “you want what you can’t have” is true, especially when it comes to employees. Recruiters are reaching out to employed candidates more than ever because they know they’ll be able to place them with higher compensation packages than unemployed candidates. That also means you have competitors and recruiters constantly trying to poach your best performers, and that no amount of money will keep them happy forever, you have to invest in affective commitment and life enrichment in addition to competitive compensation packages.
Myth: Turnover Is A “Normal” Cost Of Business
Yes, millions of employees leave their jobs every year, and yes, 2021 is poised to have one of the highest turnover rates in the last decade, but that does not mean that your company will be detrimentally impacted. Did you know that nearly 77% of turnover can actually be prevented by employers? Surprised? Yes. That means that instead of scrambling to recruit and paying hefty placement fees, you could proactively prevent turnover by investing in your employees through educational stipends (proven to increase engagement), additional paid time off (proven to decrease sick days and increase engagement), or even hosting social activities like happy hours or museum tours that build friendships and make your employees significantly less likely to abandon ship.
Fact: Turnover Is Highest In The First Two Years
Employees can usually tell within the first few months of working at a new job how they fit into the social fabric of their new workplace, but many feel stuck and pressured to stay through the training period and into the second year so that they don’t receive too many questions about their short tenure. This causes employers to pay for the training of an employee who will not give them a return on their initial investment and will even potentially negatively impact the company culture that is already in place by disrupting the flow of work or the atmosphere. The best way to avoid this expensive social disconnect is to hire with social fit in mind. Hiring for social fit can be done in a number of ways, but the most effective way is through project based hiring. Project based hiring allows an employee and a company to “date” before getting “married” by having the candidate complete a goal oriented project while meeting with their new manager and team members regularly over a designated time period. This “dating” period allows both parties to get to know one another and their work styles, so that no one is forced into making a commitment they can’t keep.
Myth: Most Employees Leave Because Of Stagnating Wages
Of course compensation is a big deal, but it is always part of a larger problem: value. Giving your employees a raise is only one small way to show them you care about their work and it usually only happens once a year. The truth is that many companies give raises and expect employees to work harder and longer hours to “pay” for that raise, when many employees would rather have stronger boundaries between work and home life instead of a measly 2k pay bump. When managers don’t recognize good work regularly and schedule unexpected calls on the weekends, employees feel undervalued, like their time and their lives outside of work are being disrespected. The reality is that your dollars will go farther if you invest in your employees and allow them to have a life outside of work without expecting them to “repay” your “generosity” when they only signed up to work a 9-5 but you expect them to work an 8-7 after giving them a raise. The key to avoiding turnover due to compensation is managing expectations for both employees and managers, while understanding the value that each team member brings and reminding them of that value regularly.
Fact: Remote Work Decreases Turnover By 25%
You’re right, Covid-19 sucked and working from home without office friends or socialization was tough. However, when you control for the psychological impacts (anxiety, depression, PTD, addiction relapses, etc) of the pandemic and you focus on the retention numbers of pre-covid life, remote work was an excellent tool to decrease turnover. The flexibility of remote work allows employees the ability to take care of their other responsibilities, like parenting. It also allows employees more free time since they are released from the time-suck of commuting. In addition to flexibility and time, remote work can save your employees thousands of dollars a year by enabling them to live in lower cost areas, put less mileage on their cars, and even pay less for childcare. So, maybe don’t rush back to the office? And maybe even move your office to a smaller building with lower rent, or a smaller and nicer office in a better location? By encouraging remote work or adopting a hybrid model, you and your employees all have cost saving options that allow you the flexibility to focus on what matters.
There is no one-size-fits-all for turnover and every company has to deal with a combination of factors when confronting their turnover monster. However, there are commonalities between most companies struggling with a stubborn turnover problem which usually include 1. competitive poaching, 2. a mismatch between your company culture and your employees' personalities, and last but not least 3. neglecting advancement opportunities, enrichment activities, social connections and employee appreciation.While every monster is different we hope this quick read gave you the tools you needed to find and slay your own.