Posted January 29, 2020 in Education
Losing a valued employee is not only frustrating, but costly as well. Have you ever wondered what drove that employee elsewhere? Trying to keep them from leaving by throwing money at them isn’t always the answer. In a recent article by Steve Lowisz, he explains that Money isn’t everything when it comes to employee retention.
“Money isn’t everything.”
“People don’t quit jobs, they quit bosses.”
We’ve all heard these adages. Though they may seem like nothing more than old sayings, there’s an enormous amount of data to back up the general ideas.
A quick Google search on why employees quit will reveal countless studies supporting these concepts. However, as is usually the case, the full story is more nuanced. It’s important to understand why people choose to quit, because it’s the first step for improving retention.
Putting the Retention Issue in Perspective
Now, we all know turnover is expensive. To put the issue in perspective, one study found that the median cost for replacing one employee is 21% of their annual salary. Furthermore, if you don’t think retention is an issue at your company, you’re kidding yourself: 51% of the American workforce is either searching for new jobs or keeping their eye open for new job opportunities.
With these numbers in mind, it is crucial that businesses strive to improve retention to cut down on these losses. Nearly every business could improve in this area, but in order to address the issue, we have to understand why people are leaving in the first place.
I was curious about the subject myself, so I decided to perform a simple anonymous survey on the reasons why people quit their jobs. Respondents were asked to pick the primary reason for leaving their last employer – they had to choose one answer from several options.
A few weeks later, I had my answer. As I suspected, money was not the most common reason for quitting!
Reasons People Chose to Leave Their Last Employer
1. Lack of Appreciation or Recognition (20.17%)
2. Money/Cash Compensation (15.00%)
3. Lack of Opportunity (14.29%) – tied with #4
4. Didn’t Get Along With My Manager (14.29%) – tied with #3
5. Ethical Concerns (9.29%)
6. Complete Career Change/Function/Role Type (7.86%)
7. Harassment of Any Kind (5.00%)
8. Change in Personal Situation (4.29%) – tied with #9 and #10
9. No Clear Objectives for My Role (4.29%) – tied with #8 and #10
10. Location/Relocation (4.29%) – tied with #8 and #9
11. Workplace Fling (0.71%)
Money Isn’t Everything
As the second most common reason cited, it is clear that money is still an important factor to many people making the decision to quit. However, we can’t lose sight of the fact that 85% of our survey respondents said they left a company for a different reason.
In other words, the vast majority of employees were leaving for a reason other than money! In fact, most of the reasons people chose to leave were factors that employers can control.
Paying a competitive salary is obviously an essential component of attracting and retaining talent in today’s cutthroat market. But there’s an important take-away from this survey: even when you don’t have it in the budget to pay employees more, there are plenty of other steps you can take to bolster retention.
Conversely, we can’t fall into the trap of thinking the retention issue can be solved by simply throwing money at the problem.
As a veteran of the recruiting industry, you wouldn’t believe how many times I’ve come across individuals who are willing to take a considerable pay cut for a role that somehow offers a better employee experience or advances their career.
You Have More Control Over Retention Than You Think
I mentioned above that employers can control most of the non-monetary reasons why employees are leaving – let’s dig into that a little further.
Sure, we might not be able to stop someone who leaves because of an office fling, or because they want to relocate to a different state.
However, I firmly believe that employers have a large degree of control over the following factors:
· Lack of Appreciation or Recognition (20.17%)
· Lack of Opportunity (14.29%)
· Didn’t Get Along With My Manager (14.29%)
· Ethical Concerns (9.29%)
· Harassment of Any Kind (5.00%)
· No Clear Objectives for My Role (4.29%)
When you total these responses together, you can see that employers can control 67.86% of the most common reasons for leaving a company!
Getting Creative With Retention Strategies
Now, it’s easier to see the solution to some retention issues than others. For instance, addressing a lack of appreciation or recognition is relatively straightforward – recognize employee achievements more consistently. Likewise, it doesn’t take a strategic genius to see that the answer to harassment is strict disciplinary measures for such behavior.
Other issues require a little more effort and creativity to solve. How do we address entry-level staff who feel they lack opportunity in a role? What about when an employee doesn’t get along with a manager?
Many leaders make the mistake of viewing these issues as simply a cost of doing business. However, that couldn’t be farther from the truth.
Think Outside the Box to Retain Top Performers
Consider the problem of employees feeling a lack of opportunity. In nearly every organization, there will be roles for which there is no traditional career ladder. Some organizations might not have an established career advancement path for secretaries, while at others the dead-end role may be data entry.
Regardless, the solution is to think outside the bounds of traditional career paths. If an employee shows an aptitude for a different role in the company, let them try it for a few months. Give them the option to stay in the role if they excel or return to their prior position if they prefer. If it’s in the budget, you can also offer stipends to promote professional development and continuing education.
Lastly, you can offer entry-level employees new responsibilities and opportunities at the company if they have spare time, and even promote them to an entirely new role if they’re adding new value to the company through these auxiliary duties.
Not all advancements or opportunities need to be strictly vertical!
We Can Use People Analytics to Further Boost Retention
I can hear you thinking: “Okay, but we can’t really control it when someone doesn’t get along with their manager, right?”
Sure, there’s no way to make employees magically love their managers. And yes, there will always be conflicts and personality clashes in the office.
However, leaders often give little thought to group dynamics and employee relationships until they become an issue. Furthermore, we often treat all of our employees in much the same manner, even though we know they have wildly different behavioral drives and needs in the workplace. Inevitably, this strains relationships in the workplace and creates unnecessary stress.
People analytics offer immense value in this area. These tools give us a scientifically validated method to understand what drives an individual and the unique needs they may have in the workplace. They give us concrete data on group dynamics, and help us understand how to manage employees so that they’re more satisfied in the workplace.
People Analytics Boost Retention – as Well as Engagement and Performance
Ultimately, that’s the value of people analytics – empowering you to drive retention, engagement, and performance with your staff. These advanced tools allow us to gain data on a given employee than we could ever learn from interviews, resumes, or first-hand experience with their work style.
When we understand what drives an individual, we can better understand how to make them feel valued and appreciated in the workplace. By understanding their particular needs, we can help provide a satisfying and fulfilling employee experience. In short, it allows us to develop highly effective strategies for retaining and engaging talent that we can’t afford to lose.
Businesses and leaders alike shouldn’t be judged based on a poor retention rate. Every organization will have their ups and downs with talent drain.
A more accurate measure of a business and its leaders is how they respond to poor retention – do they tackle the problem head on, or wait and hope it resolves itself?
More often than not, this decision is the difference between success and failure.