A trillion dollars.
According to Gallup Consulting, a trillion dollars is what U.S. businesses are losing every year due to the voluntary turnover of employees.
Here’s how it breaks down for an individual organization:
- The annual overall turnover rate in the U.S. is 26.3% – Bureau of Labor Statistics.
- The cost of replacing an individual employee ranges from one-half to two times the employee’s annual salary.
So, a 100-person organization with an average salary of $50,000 could have turnover and replacement costs of $660,000 to $2.6 million per year.
Voluntary turnover, in reality, costs much more than money. They include loss of reliable winners, constant innovators, and creative problem solvers.
Internally, it breaks down team morale. It can mean lost customer relationships, and in a few cases, it can even threaten your brand.
How do you find out the reasons for voluntary turnovers?
It is usually too late in the cycle. You get to figure that out during the exit interviews when it is structured as a purposeful exercise. This is a lot of valuable information and a significant source of data. If you heed the exit interview results, you can use that to retain the remaining A-level employees.
Most often than not, exit interviews are done as a process, and they don’t provide any insights.
Make sure that the exit interviews are defined purposefully and use that data effectively.
What is the percentage of people that look for a change?
40% of employees are planning to change in the next six months. 69% of employees are already passively looking. That’s an alarming statistic.
Happy employees rarely look for a job.
We spend a lot of time hiring the right candidates. Once we hire them, we want to retain them. That doesn’t happen because these employees aren’t happy as they are not looked afteremotionally and monetarily.
About 52% of the people who voluntarily quit say their manager or organization could have done something to prevent them from leaving their job. Half of them said that neither their manager nor any other leaders spoke to them about their job satisfaction or future with the organization in the three months before they left.
Think about it. In 3 months, nobody asked them how they felt about their job. Nobody talked about their future. So, it makes sense that they decided that they didn’t have one there.
Here’s how you fix this leak.
Train your managers and leaders to have meaningful conversations with employees about what matters to them. What’s frustrating them? What are their dreams? Where do they want to go?
The most common employee complaints include – no clarity on expectations, no clarity on earning potential, very little feedback on performance, failure to hold scheduled meetings, and no framework to meaningfully succeed.
All of these can be attributed to managers and supervisors, and they ought to address these complaints regularly to sustain employee interest in their jobs.
Allow employees to use their talents and skills
I know a guy who is a stand-up comic, theater artist, character actor in movies, event host, and a partner relationship manager in a software product company.
The company encourages him to pursue all of his interests along with him doing the primary role of partner relationship manager. That encouragement keeps him going, as he is recognized for his skills and talents besides his contribution to his job.
Make sure that you allow employees to strut their talents and skills in a very creative manner.
Make sure your senior management knows that an employee exists.
A-level employees need not be in a senior position, but they probably have the potential to create world-changing products or solutions.
I know the CEO of an organization that had about 1500 employees. That is a large number for a CEO to interact with personally. The CEO of that organization made it a point to have lunch with different sets of people daily at the cafeteria every day. He gets to interact with four people every day, and in a year, he gets to meet almost everyone.
He ensures that he connects with them either at the work level or the personal level in terms of their interests, talents, place of schooling, or the language they spoke.
Not just your CEO, your entire senior management should make sure that they connect with employees at all levels and make them feel a part of the larger organizational picture.
Responsibility goes with authority
No employee wants to have just the responsibilities without the authority to deliver them.
Ensure that you trust your employees with responsibility and authority that would allow them to grow, gain new skills, and ample learning opportunities.
Make sure that you reward your employees appropriately and frequently
The rewards that you provide your employees should speak to their emotional needs in addition to monetary compensation.
Recognition is more critical in this context – can be in front of the entire organization, handwritten notes, wining & dining with the CEO, and being made a part of the power circle.
Offer the right benefits
Make sure that your employees have the right work-life balance.
Consider giving them time off from work at regular intervals, provide paternal leave in addition to maternal leave, offer flexible work schedules, and remote working.
Be prepared for voluntary turnover
Having figured ways to retain A-level employees, do realize that it is not always possible to retain them.
Hence, be prepared to address their absence by having clearly defined processes that will prepare the next level to ensure business continuity.