Crack the Code of Employee Turnover

7 little changes that will make a big difference

Crack the Code of Employee Turnover

Employee turnover rate must be one of your main focuses, whether you work in the HR department or not. This indicator gives you hints about critical problems such as employee engagement, issues with your hiring strategies, and management problems.

If you just took on a new role, analyzing and understanding the history of your department/ company turnover is critical and can give you significant competitive advance.

For me, focusing and listening to this indicator was always useful, whether I was working in automotive, manufacturing, or textile. Losing key players is the biggest fear of every leader.

And it even became more critical when I was in a new position and a nightmare when I just took over a new role that I was not mastering. Almost ten years ago, I took over a CEO position for a manufacturing company. I promoted from CFO, so I never ran a whole business on my own, never had a team of almost 500 people in my direct supervision.

I was terrified of losing the key players, including, but not limited to, the mechanical manager, key quality people, production supervisors, or highly skilled production operators. Their experience and knowledge of the product, the process and quality, the insights and secrets of the technical operations, and relevant relationships they had was tremendous.

I had cases of high potentials, like a production supervisor, who had a team twice as large as any other in the company. The productivity of his department was the highest of all departments, with the lowest level of absenteeism. The discipline and respect among his team members were fantastic and admirable.

At that moment, I had a mixed feeling between both the fear of losing them and the deep respect that I felt towards them. I reviewed the global plan for positions needing much effort and strategy to replace. And in the Key Takeaways below, I will share with you my seven changes that you can implement without much cost, and that applies to all levels of employees.

Yet first, let’s have some quick technical reminders.

Quick Reminders

Turnover generally refers to the replacement of an employee with a new one, and mostly followed as KPI in turnover rate.

Exemplified in a manufacturing environment, the departure of crucial direct blue collars can impact a company resulting in anywhere from one to nine months of decreased productivity, identifiable in the new hire’s abilities, and the corresponding salary.

High turnover can cause bottlenecks in many activities.

This risk decreases with a more automated process, so the higher the speed of qualifying the workers, the better the level of standardization. Therefore, it provides more opportunities to have the person fully productive quicker and results in a better Turnover Strategy.

When it comes to cases of new management, to reach a high level of seniority can and usually does take up to one year.

In a 2017 HBR article, Dr. M Watkins and his Egon Zehnder partners, “Onboarding Isn’t Enough”, cite a study of more than 500 executives that found that “Almost 60% (of study participants) reported that it took them six months—and close to 20% said it took more than nine months” for an effective transition.

During my over 15 years of corporate experience, I saw it applicable to all levels. From middle management to CFO, or CEOs, it’s a challenge to be rapidly operational and as efficient as the previous management.

You can healthily measure and compare your employee turnover to the average of the industry and the area of the relevant action. You can use external statistics to establish trends in a particular organizational structure.
According to Gallup, 10% would seem appropriate, and of course, can vary between companies.

It’s always best to take a look at your own organization’s rate over a longer time frame, to get a sense of your average, and research on the average turnover rates in your industry.

Frequent Definitions of Employee Turnover

To make proper decisions, you should assess turnover by departments, considering many factors, including the types of contracts, activities, locations of employees, seniority in the company, age, gender, and even different levels of management. All this, to establish the main reasons for employees leaving the company and the appropriate response to it.

Before getting into the reasons and actions, you should make a clear distinction between the four types of turnover. If you quantify and analyze, you can improve or respond to it accordingly:

1) Voluntary turnover (When people leave by their own choice)

2) Involuntary turnover (Referring to replacements after the termination of contracts/dismissals/ending of determined agreements)

3) Retirement

4) Internal transfers or promotions

Also, it is useful to analyze and determine if the turnover is desirable (losing underperforming employees) or undesirable (when a company loses high performing and otherwise valuable employees, and replacement is difficult and expensive).

Three Undeniable Facts about Turnover

After a thorough analysis of the data, it may be clear that turnover is not as bad as such. It is to avoid because it can impact business quite harshly. It is good sometimes, as it challenges employees and can help you create a culture of excellence when new people bring fresh ideas.

With proper analysis, you can build appropriate actions. It is critical that you identify who is leaving: your top performers, the ones who bring you the money, or your hangers-on.

With the above in mind, you can shape the problem definition, processes, and management strategy. The bottom line is that with undesirable turnover comes a clear indication of a problem that needs immediate attention.

Thus, we can sum it up by stating the following:

Turnover cannot be avoided. Attempts to eliminate it are idealistic.

• With proper measures, turnover can be predicted and addressed appropriately.

Turnover is costly in terms of time, money, and employee engagement.

What do other companies face?

According to a 2018 LinkedIn , turnover, generally speaking, alludes to employee dissatisfaction. Low turnover rate signifies mostly satisfied employees, with their needs having been met and thus a dynamic alignment between their projects, the goals of the organization, and their relation to their peers and supervisors.

In our 2018 survey, Onboarding and Integrating New Leaders, we asked participants to position their management turnover rate. 20% of the participants declared their companies faced between 30% and 75% turnover.

Why Do People Leave?

You’ve probably heard the quote, seen it, shared it, and maybe dreamt it: “People don’t quit their jobs, they quit their bosses.” An astounding 75% of employees who quit their jobs say they left because of their manager.

There was a study made by Gallup, and a very inspired article named “Turning Around Employee Turnover: Costly churn can be reduced if managers know what to look for — and they usually don’t.”

It says something similar but yet not quite the same:“According to James K. Harter, Ph.D., Gallup’s chief scientist for workplace management, people leave companies because of factors that filter through the local work environment”.

Managers can influence at least 75% of the reasons for voluntary turnover.

People leave their job: See graphic “Why People Change Jobs.”

1. Career advancement or promotional opportunities (31.5%)
2. Pay and benefits (22.4%)
3. Lacking job fit (20.2%)
4. General work environment (or management) (16.5%)
5. Flexibility or scheduling (7.7%)
6. Job security (1.7%)

Coming back to the Onboarding period we find out from a Bersin by Deloitte publication: “Research tells us that:

• 4% of new employees leave a job after a disastrous first day
• 22% of staff turnovers occur in the first 45 days of employment.

These losses can add up, given estimates that losing an employee in the first year costs at least three times that employee’s salary.

What and How Much is Costing?

“The direct and indirect costs of the failures are staggering, far exceeding the cost of the search that found the executive.” For organizations, turnover can expose the organization to many costs. These costs include:

• “50-60% of an employee’s annual salary, with total costs associated with turnover ranging from 90% to 200% of an annual salary” as per Society for Human Resource Management guide: “Retaining talent” 2008.

• Financially, hiring new employees involves advertising, interviewing, screening, and finally hiring.

• Once onboard, training and time management for the new employee is expensive, and it could take up to two years for a new employee to achieve the productivity levels of existing employees.

• On the part of customer service, there is a likelihood and possibility of errors that could take more time and resources in sorting out.

• Turnovers affect other employees who remain. They question their colleagues’ painful decision of leaving, and this can temporarily impact the work environment. Or even can influence their decision about a possible departure.

7 Key Take-aways

Any organization with useful and reliable employees knows it is a long process coming to such levels, so here are some practical ideas to implement to predict, prevent, and fix problems.

1) Make succession plans by identifying high-risk areas. Focus on making operational procedures and instruction manuals. Documentation is vital; yet, it is good to keep good contact with the people.

How nice would it be if you can still ask for their advice or help even after their departure?

2) Have talent management in place: identify top talent and offer them a clear path to guide them through. If you would listen to your employees:

What are their passions? What are their dreams? How can you help them? I always preferred having a happy employee preparing to open his wings, than having someone frustrated about his current situation.

Give them opportunities to grow, and please help them either share your vision or share their own. How would it be like if you would make them part of a bigger purpose?

3) Give equal attention to all levels of effective employee retention strategies, customized to your culture. “Strengthening employee engagement in your organization can also help you retain talent. One report on measuring engagement at Intuit found that highly engaged employees were five times less likely to quit than employees who were not engaged,” giving them the proper recognition, and find their reason why.

For some, it might be money, but for others, it is work-personal balance. What contributes to your employee engagement?

4) Analyze your KPI. Your turnover relates to why employees leave your company, how much it costs, and whatever can be done to cut down on future turnover.

You could put in place a turnover prediction mechanism, for example, adherence to the retirement plans.

Don’t forget about the absenteeism rate. It clearly shows you the relationship between employees and the workplace environment.

How much your workplace is adapted to the reality? How to deal with possible needs that could arise in the future?

5) Have a Frequent Feedback Mechanism in place. These include prevention and treatment, engagement in surveys, periodical, annual surveys with minimum questions, and target recommendations.Please make use of exit surveys and exit interviews, preferably at all levels, and confidential.

What can you do to get authentical results, and make sure people are not tempted to sugar-coating their reasons for leaving?

6) Improve your hiring process. Review your hiring process and strategies.

How much do you take into account both the technical and leadership parts? What is your roadmap in the process? How trained about recruiting are your managers who are participating and making decisions in interviews?
You can also take into consideration psychometric tools, yet please, do not make it The key decision factor.

7) Improve your onboarding process. Having clear roadmaps both for technical and leadership development acts as a booster for employee satisfaction and retention. You can find from practical guides, an inspirational toolkit, and resources for every stage from hiring until confirmation of the trial period.

What is your go-to today when you want to make sure you explored all your options? And how today you look at things from multiple perspectives?

Alexandra Claes

Alexandra Claes

Developping targeted solutions to guide businesses & leadership in transition, to exceed expectations in performance and growth.

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If you fail, at looking seriously at this indicator, or if it takes you longer than the average transition period to adjust, the company will either not be able to capture all the value expected, or worse, they lose money, creating negative value. How do you make sure your career is not impacted in the long-term as well?

It can be even easier to navigate through change and succeed in a new role by having a clear and Structured Roadmap from the beginning.

Mastering the Technical Side of Transition: Strategy, Result is only one part of the equation.
Equally important are the Emotional Mastery Practices we use to establish acceptance, drive change, gain credibility and trust, connect and integrate into the new team, share a vision, and be regarded as a mentor to develop others.
How do you ensure you inspire ingenuity and innovation? How do you ensure results that will improve your expert image even further?

Today, you have Leaders Transition Booster, developing targeted solutions to guide businesses & leadership in transition, to exceed expectations in performance and growth.
We help you, the new manager, or your newly hired leader, if you’re a company, to get you through a job change successfully and make sure you don’t skip the most important steps:

1. Scan and Position. Make a proper evaluation of the new environment. Listen, watch, observe, learn. Assess SWOTs: both yours and your new company’s. Know where you are. Identify where you want to go and why.
2. Develop a strategy to get there. Define what is commonly accepted by all stakeholders for reaching those goals.
3. Define and build your plan. Integrate your resources, both human and material, and negotiate the deadlines.
4. Manage performance in execution. Launch quickly, get early feedback, and adjust rapidly. Establish corrective actions and get your quick wins.

During the transition process, we show you how to reinforce your credibility factors: gain trust, prove expertise and inspire with your vision and mindset.

 Do you have any thoughts to share on Employee Turnover, Employee Retention to share?

We’d love to hear from you. Let us know your opinions, challenges, and successes in the comments below or email:

Alexandra Claes is Associated Certified Coach, ACC ICF, grounded with experience in Business and Leadership. She has more than 15 Years of Business and Industry Background, Coaching Methodology and Leadership development experience. Trainer NLP, Certified in Emotional Intelligence EQI2.0, trained in Neuroscience for Brain Heath and Cognitive Behavioral Therapy Practitioner. Founder or Claes Consulting, a consulting company that teaches leaders practical, evidence-based strategies for maximising performance. Contact Alexandra HERE.

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