A record number of American workers hate their jobs and/or employers. If they haven’t done so already, they’ll soon be posting their resume on job websites. According to the research firm Work Institute, a staggering 41.4 million US employees voluntarily quit their jobs in 2018 to look for better opportunities or work environment. Employers are losing millions of dollars each year due to unnecessary turnover. This doesn’t even take into account the negative impact workplace turnover has on company moral or a firm’s customers.
Have we reached a crisis level? Well, it depends on who you ask. Employees are currently in the driver’s seat, benefitting from the demand of growing companies and historically low unemployment rates. Employers on the other hand, are experiencing a real hit to their bottom line – whether they realize it or not – due to turnover, vacancies, stressed out employees, training costs and low morale.
In a recent report by the Work Institute titled Retention Report 2019 we gain insight into this major problem facing American companies: employee turnover.
The report is based on over 250,000 employee interviews, of which 35,000 were with employees who quit their jobs in 2018. The report focuses on preventable turnover and excludes less preventable turnover such as relocation (10.2%), involuntary (6.7%) and retirement (6.3%).
According to the Work Institute, and using data from the Bureau of Labor Statistics, the total turnover cost to US companies in 2016 was $617 billion. Based on a voluntary quit rate of 77%, the controllable costs to US companies was $475 billion. These numbers were calculated based on a median wage of $44,564 per year and a conservative cost of $15,000 per employee turnover.
If US companies could reduce this voluntary turnover rate by only 10%, savings of over $47 billion would be realized annually.
First year turnover rates are high with 38% of all employees giving the company only one year of their service. And 43 out of 100 new employees turn their back on their new employer sometime during the first 90 days.
So, what are the main reasons for voluntary employee turnover? According to the Work Institute’s research it is:
- Lack of Growth and Development Opportunities
- Work-Life Balance Issues
- Management Behavior: Poor communication; unprofessionalism; lack of support
What can companies do to reduce turnover and retain, develop and motivate their employees? My suggestion would be to implement a retention strategy that is well researched, supported by management and employees and funded as required. Here are some steps I would take:
1. Identify the problem(s) and opportunities
You’ll need to put together a team of managers and employees to work on this project. HR should lead the team and collect the necessary data.
2. Listen to your employees
Find out, through exit interviews, why people are leaving your company. The person(s) or outside firm conducting the exit interview has to project a sincere desire to learn from the leaving employee what went wrong and how the company could improve so that others don’t leave. Stay studies/surveys should also be used with your employees to find out what your company is doing well and what the areas of improvement might be. Do everything possible to create a work environment where employees feel comfortable sharing their frustrations, expectations and suggestions with management and HR.
3. Analyze data and develop a plan
The working group mentioned under point 1 reviews all the collected data and rank-orders the issues based on importance, impact, priority and investment. Develop a project plan which is flexible and gives management options.
4. Present the plan
The working group presents their findings and project plan to senior management. Agreement is reached on what can and should be implemented, resources and funding. Goals must be monitored, and people held accountable for achieving the agreed-to goals.
Management communicates the plan to employees: why this is important; management’s commitment; desire to learn and get better.
6. Monitor, adjust, communicate
Just because the plan has been implemented doesn’t mean that the problem of voluntary turnover is solved. The process needs to be on-going, monitored, funded and well communicated.
The days of life-long-loyalty to one employer (think GE, IBM, Ford) are long past. Today’s employees are looking for reasons to leave your company and join someone else. Remember, they are looking for 1) growth and development opportunities; 2) work-life balance; 3) managers who care. They won’t stay with one company for ever but companies that can address their needs and concerns, might get them to stay one, two or even five years longer. The positive impact on the bottom line could be huge.