I’m going to be honest here, I almost titled this article 5 Top Tips to Tackle Turnover, but I didn’t want to mess around. Turnover is just not a joking matter. It’s a big issue for a lot of companies, and I want to pass along some battle-tested ways to retain your people and save the cost of losing them.
As we go through the second half of 2021, turnover is at an inflection point. The Great Resignation is upon us. According to a 2021 report by The Predictive Index, 48% of today’s employees have considered changing careers. This is a terrifying number for many employers, and these numbers go way up when you factor in things like manager burnout and poor leadership. Think about how many employers out there just can’t find people to fill their open jobs – it’s extra painful when they’re losing great team members as well!
What is turnover exactly?
In general terms, turnover occurs when an employee leaves their job. Involuntary turnover occurs when the organization makes the decision to part ways, and voluntary turnover is when the employee makes the decision to do so.
Sometimes, turnover is good, like when a poor performer is exited or otherwise elects to move along. However, when we talk about turnover, we are generally referring to the bad kind. Sometimes we even call it “attrition”, which sounds even worse.
Voluntary turnover is not good for a company for a whole lot of reasons. If a competent employee leaves their job, obviously their work is now on hold. If that’s a revenue-generating position, top line sales suffer. Normally, either someone else tries to cover it and adds it to their own workload, or the job just doesn’t get done. Either way, the vacancy begins to weigh on the rest of the team. It will also weigh on the business. Some estimates put the cost of turnover at up to 200% of that employee’s annual salary. So if a company loses a key employee making $100,000, they could also realize a direct or indirect financial loss of $200,000. It’s a shocking number. See why it’s no joking matter?
Intrinsically, a company that has a high turnover rate has other, less measurable struggles as well. It’s hard to establish a great culture when there’s a revolving door of constantly rotating employees. Great employees who we would normally consider extremely loyal and dedicated to the company eventually burn out, and begin to look for other jobs themselves. Engagement declines, employees stop putting in their best effort, and the goals that the organization is working so hard to reach become unrealistic. It’s a tough place to live for a business.
However, there’s good news. There are some quick steps a business can take to reduce turnover. With a little elbow grease and leadership commitment, turnover is a relatively easy thing to reverse. And with this reversal comes the inverse of all those intrinsic struggles: top employees thrive, culture and engagement improves, employees invest discretionary effort, and the business effortlessly hits its goals. So without any additional delay, here are five worthwhile tips that will help a business to slow down the rotating door and begin to reverse its negative effects. And you can start today.
First, measure your turnover
The calculation for turnover is a little complicated, but it will help a lot to start with an understanding of your turnover rate. Frankly, the easiest way to calculate turnover is to have your HRIS do it for you, and generate a report. Many HRIS platforms come with this kind of people analytics, and if this applies to you, feel free to skip past the next few sentences. If you were to do it by hand, you’d first take the number of employees who left the company during the time period you’re measuring (i.e. over the course of a month). Then find the overall average number of employees over the course of that time period (add the headcount on day 1 to the headcount on day 31 and divide by 2). Divide the first (turnover) number by the second (average headcount), and multiply by 100. This is your turnover rate. The average right now in the US is somewhere in the 25% range, last I looked.
OK if you skipped all that, I don’t blame you, and here’s the punchline: Measuring turnover will give you a great understanding in black and white terms whether you’re winning or not. Without it, it’s easy to unintentionally over- or under-estimate it based on feel. By using the calculation, you can determine if your strategy is effective or not over time, and either celebrate your wins or change tactics. Remember, if you want something managed, measure it.
Stay Interviews
Everyone has heard about exit interviews, and we’ll talk about those in a second. Stay interviews are like exit interviews, but they’re much more proactive and positive. Instead of trying to get some information out of an employee who has already made up their mind to leave the company, a stay interview gives a leader the opportunity to understand what is making a great employee stick around. Asking an employee what they like about their job, how to make it even better, and if they need anything to continue being happy and productive isn’t just good for retention, it’s also just good leadership. Also, leaders should not be afraid to find out what’s bugging their people – what can they take away and fix? Many times, this is the tougher conversation, and managers should avoid the tendency to skip this part – this is where a good leader earns their credibility.
It should be noted here that taking good notes and using this information to address what’s not working (and maintain what’s going well) is important. However, it’s critical that the leader follows through on what they committed to. Employees will be watching to see what happens, now that they’ve opened up. If a manager doesn’t take any action, they will irrevocably damage the trust their team has placed in them. It will make the situation worse because the team will not believe their situation can be changed. Frankly, the only thing worse than not collecting this feedback is collecting this feedback and then not doing anything about it.
If an employee needs confidentiality to feel comfortable discussing some areas of their job, the manager should absolutely provide it. They should use their discretion if they need to bring in a trusted advisor such as their manager or an HR partner. Many employee concerns can be addressed with anonymity and discretion, and this is another area a leader can gain credibility with their people.
A stay interview should be part of a cadence of regular feedback meetings or one-on-ones. The interview can be conducted with a group as well, but more regularly with individuals. Both direct leaders and invested shareholders such as HR partners, level-up leadership, or dotted-line leadership should feel comfortable meeting with employees. These check-ins should be frequent enough that they are not considered a formal event and thus should not evoke any worry in the employees. Open and honest conversation between a manager and employee is a good thing, and drives engagement.
OK, here’s my Captain Obvious point of the day – engagement is good. It’s when an employee is so committed to their job that they consistently go above and beyond. It’s also an ancillary benefit of stay interviews. Managers and employees spending time reviewing their portions of the business, providing each other feedback, and generating good discussion is extremely beneficial, both in terms of the solutions produced and the relationships that are strengthened.
Career Development
Did you know the number one reason for employees to leave their jobs is because of insufficient career development? It represents 22% of the population that turned over, according to this large 2021 study. I was surprised reading this, as I’d have said it was because of bad leadership, but it was third at 11%. We’ll address that one too, but for now, let’s start at the top.
I’ve seen this one happen first hand, and probably you have too. A top employee with a ton of potential turns in their resignation, and it turns out a competitor down the street offered them a modest increase and a path to career growth to jump ship. Many times, it’s the same path you had in mind for them. Unfortunately, you most likely can’t save that great employee – even if you match the increase, they’re already gone.
“Well gosh,” we say (this is an HR article after all). “Gosh, how do we even make a start with career development? We don’t know for sure what that employee wants to do in the future! What if they stop being great? We can’t make them any promises!” Here’s the easy button: Career development should really rest mostly in the hands of the employee. They’re the only one who knows what they want to do with themselves. They know how far they want to go, and how hungry they are to get there. They may not know yet if they’re going to step off the path and get interested in something else one day, or if their family situation might require them to make different sacrifices. But they have all the information they need to make a start. The company, their boss, their mentor – they’re just guides on the journey.
What’s a company’s responsibility in all this? It’s primarily providing support and structure. Behind the scenes, leadership should be aligned on the employee’s future potential and current performance. A quarterly talent planning meeting should allow leadership to calibrate around their peoples’ developmental needs, and this way they can all support each person’s development path. The employee’s direct leadership should be comfortable having a solid career conversation with the employee on a relatively frequent basis. A good tool to use here is an Individual Development Plan, which pencils in the employee’s future developmental activities, strengths, weaknesses, and future plans. Is a development conversation a promise of any kind? Absolutely not. If the company holds up its end of the bargain, the employee takes on the hard part.
Lastly, a final thought about career development. I’ve spent a few minutes framing this around high-potential employees for the sake of explanation. However, some of our most valuable employees are those who simply want to do a great job in their current role, and not take on new or different assignments. Many times, these employees, who are the backbone of many companies, are forgotten because they’re good at what they do and are relatively quiet.
Until you lose one, that is.
Each individual deserves at least a good solid conversation about what they would like in terms of their development. Maybe it’s just continuing to get better in their current job, and some quick tips and tricks to make it easier. Maybe it’s taking on a mentor role for new employees. Either way, it’s critical not to forget those folks who do a great job and don’t want to do anything different.
Bad Leadership
I’m encouraged that a bad manager is only the third highest reason for employees to leave companies. Sounds funny, but I am. It means bad leadership is on the decline, and managers are beginning to understand the importance of keeping their environments positive, constructive, and professional. But unfortunately there are situations where you can begin to see a trend of employees leaving a particular business unit. Whether someone is courageous enough to file a complaint, or your turnover reporting shows more attrition from one department than the others, the indicators will begin to line up. It’s important for senior leaders to address leadership issues, especially the low-hanging fruit.
I don’t think anyone wakes up in the morning intending to be a bad leader. “By golly,” they say (Yup, still an HR article). “By golly, I’m going to carve a smoking trail of destruction through my direct reports today”. Intentional or not, it does happen sometimes, and senior leaders have to be prepared to intervene.
There are many ways to intervene in a poor leadership dynamic, and they’re all dependent on the situation. Is the leader new and just needs some guidance? Are their leadership mistakes inadvertent and minor? Or does an experienced leader have a temper problem, or an issue not understanding boundaries, or doesn’t lead from the front? Each situation is different and requires a varying level of response. The important thing is not to ignore it, and address it to scale and per company policy.
Strategically, when there’s time to do so, the talent planning event we discussed earlier can provide senior leaders the opportunity to discuss high potential employees or even newly promoted managers. They can identify any potential leadership issues ahead of time, and work with their people to eliminate them before they become a liability. I do recognize that this is the long game, and although it will result in less issues long-term, it won’t solve a current pain point. That’s up to the senior leaders in the moment, and is why they should be prepared to take action as needed.
Exit Interviews
Lastly, the exit interview. By definition, if you’re conducting an exit interview it means you’ve lost that employee, unfortunately. Yes, there might be a longshot chance of talking someone out of leaving, but mostly an exit interview is an after-action report. When done properly, an exit interview can give us good information we can use to solve for similar turnover in the future. For example, we might learn of unpleasant conditions, difficult technology, frustrations with coworkers, or poor leadership. We can then use that information to eliminate those pain points for existing or future employees, and thus potentially reduce future turnover.
Exit interviews have to be conducted properly in order to be effective, so a good process is important. Companies with good exit interview processes generally have better turnover, because they have systematically developed solutions to the major reasons why employees leave.
One part of this process is to have the exit interviews be conducted by an objective third party. If an employee is leaving due to bad leadership, but their manager is conducting the exit interview, the company will not receive accurate feedback. However, if someone who is viewed as completely objective conducts the interview, there’s a much greater chance they’ll get the honest truth. Some companies use completely external partners to conduct their exit interviews, because employees recognize that they can be completely honest with them. An external third party has no need to influence the data they collect, so they’ll present it back to the leadership team objectively. Also, completing the exit interview as close to the employee’s last day as possible, or even on their last day, generally results in a higher level of transparency.
Brutal honesty is what we’re looking for in an exit interview, no matter how painful. It gives us the chance to grow and learn from the feedback, and hopefully correct any concerns. If an employee knows they still have to put in a couple weeks of work after they have their exit interview, they’ll most likely soften their feedback. Some companies even wait until the employee is completely gone before conducting the interview. They may not get as many responses, but what they do get can generally be expected to be accurate.
So you can see through these exit interview tips why a solid company process on exit interviews is necessary. A good process will include an objective third party to conduct the interview. They’ll schedule it with the departing employee for a time when the employee is more likely to be honest. They’ll impartially present the feedback to critical decisionmakers, who can take any appropriate action to correct the reason for the turnover in the future. And so on, and so on, until turnover is sufficiently reduced.
In Closing
One of my favorite business partners mentioned their perspective on turnover to me one day many years ago. We were going through some HR measurables for their business unit, and I remarked that their percentage of voluntary turnover had been steadily declining. It was great. Of course I asked how they were moving the needle. They said they took turnover personally. Each person that left was leaving them, not the company. So, they worked extremely hard to maintain as positive and constructive a work environment as possible for each individual person they had a privilege to lead that day. That really resonated with me.
I write these articles many times geared toward helping organizations to find ways to improve their people-related processes and systems. But sometimes we just need to make the business of people personal, and remember our obligation as leaders to the human beings we are privileged to serve. As it relates to turnover, this may really help. And while you’re viewing your business through the lens of your people, try these five tips. They might just make a difference!
Patrick Ingham has been helping business leaders deliver better results through the lens of their people for almost 20 years. He is the founder of John Patrick Consulting Group, an HR, people ops and talent optimization consulting agency. For more tips and tricks on how to optimize your business performance through people operations, check out his other articles or reach out for a free 1:1 consultation today.