Business Challenge #1: Turnover

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A great business challenge today is turnover.  There is something about turnover that is very difficult for me to stomach.  Maybe its the prospect of seeing someone who was in the “family” be transported out of the “family.” Sometimes this is good and sometimes it is tough to swallow.

In exit interviews, I have heard reasons such as: “I just don’t feel good about leadership anymore.” and “I have accomplished all that I can ever accomplish.” and “I do not feel good about the relationship with my manager.” and “I am no longer connected to the vision and purpose of the organization.”  These are voluntary reasons for turnover.

I hold three theories for why people leave their job and head off in another direction:

1) Leadership: Employees long to follow leaders that care, inspire, direct, are strategic and decisive.  Leaders that lead with anxiety, fear, differing values or toxicity can alienate their people.

2) Lack of Intrinsic Motivation: Employees that no longer feel that what they do matters will begin updating the resume. Employees that do not know or understand the greater impact of their work, may flee for another opportunity.

3) Ceiling of Complexity: Exceptional performers need to be continually challenged.  If the job becomes mundane or algorithmic, then employees dart for more challenging work.  If the job maintains, the heuristic nature, then employees continue to feel challenged.  This can be a difficult tension because the employee needs to be challenged enough, yet not so much that they fail repeatedly.

Check out the cost to the business:

1) According to the SHRM 2011-2012 benchmark study, the average turnover rate across most all industries is 15%.

2) Consider 1.5x the new hire’s salary.  Think of it this way, if you hire a replacement of a high potential employee, you not only need to pay them their wage, but you also have to train them on what the high potential person took with them when they left.  So, for every two high potential people, you are essentially hiring three new people.

3) The subjective cost of how turnover begins to eat away at your organizations health.   You can give all the excuses you want in staff meetings. The reality is that people feel the impact of great people leaving the organization and it begins to erode at your culture.

4) According to a 2008 SHRM study, the cost of replacing an employee is roughly 60% of an employees compensation.

What can you do about this business challenge? It comes down to leadership ultimately.  At the end of the day, a leaders job is to create a strong vision for the business, connect it to their employees, help them find their purpose in it and then do that over and over again.  Yes, it is a leaders job.