Employee Retention

Definitions Of Employee Turnover

As you are probably aware, there are many different definitions of employee turnover. Unfortunately, each one comes with certain inherent weaknesses.

So we have the attrition rate (total turnover rate) : the total number of exits during the period, divided by the average number of people employed. Trying to make sense of such a raw number can be almost impossible. There's no clue as to whether this number is dominated by retirements, by dismissals, by redundancies, or by the loss of productive employees.

The retention rate: the percentage of employees that were employed at the beginning of the period and who remain with the company at the end of the period. Those that joined and then subsequently left, during the period of time you are looking at, get ignored by this definition.

Voluntary turnover: this time retirees and employees dismissed or made redundant, are not included.

Dysfunctional turnover: here the focus is on the loss of good performers. But the problem comes when you start to think about how this number is generated. How many departmental managers are going to admit to experiencing more than the occasional unwelcome departure, for fear of inviting an investigation into the reasons behind these exits?

Regretted turnover: similar to dysfunctional turnover.

There's no easy answer. No sensible way of discovering what you really want to know; which is how many people did we lose, that we would have liked to retain, and that given a few small changes, we would have been able to keep.

Some while ago I did write a short guide on employee turnover definitions. In truth it is probably best to track several different definitions, and to be cautious about benchmarking against other companies or even sector or industry figures.

Retention Research 1: Realistic Job Preview

A quick overview of this proprietary research: 5 key elements that when put together tend to produce a reduction in regretted employee turnover of approximately 18%, all other things being equal. So if your rate was 15%, you could reasonably expect it to move towards 12% once you had put in place these 5 elements, assuming economic factors remained unchanged.

The idea of a realistic job preview has been around for a long time. The reality of actually giving prospective new recruits, and sometimes even internal candidates, a good sense of the day to day nature of the role, is less easily achieved.

My proprietary research suggests that additional focus on this element can produce real dividends in terms of a reduction in the number of departures within the first six months.

So do take the time to review your realistic job preview to see whether there is room for improvement. If you aren't currently including this element within your recruitment process, then it is certainly worthy of consideration if you are experiencing early turnover - normally defined as within the first 6 months, though sometimes a different time-frame may be more appropriate.

The other four retention elements will be discussed over the next few weeks.

Talent Retention - Negotiate To Win

If you are familiar with my line of thinking on talent retention, you may have noticed the underlying principle of success through negotation. While there are several key elements to my approach, this concept of retaining talent by having an on-going dialogue, negotiating small changes every so often, being flexible, creating real value in their life, is a route to success that you rarely see elsewhere.

So if you want to keep hold of your most valuable human assets, be prepared to negotiate a little.

Applying Systems Thinking To Employee Turnover

It is certainly worthwhile taking a few moments to apply some systems thinking to any clear pattern of employee turnover within your company. It could well be that it is the system itself that is driving turnover.

For instance some firms are set up so that at certain points there are very few opportunities for promotion, so the natural movement is out. This should not be a problem so long as the organisation recognises and adapts to this pattern. Expected turnover is far less damaging than the sudden announcement that an employee is leaving in a few weeks.

Not All Turnover Has The Same Impact

As you may have noticed, I tend to take a business perspective on all matters turnover and retention. Much of the current literature on employee retention seems to have missed the point. And it is this: some departures matter more than others.

You are trying to meet your business goals for this year then over the course of 6 weeks, 3 key people decide to leave. Any chance of reaching your targets has just vanished. Of course you can get replacements, but there is no chance that you can get them up to speed in time. On reflection you wish you had put a little more effort into retaining your 3 key people; maybe you wouldn't have been able to keep all of them but there's a fair chance you could have prevented one or two of the departures.

Another department also loses 3 people. One of these departures is not far short of being a relief to all concerned. Another is disappointing because they are a nice person but in terms of productivity it won't be much of a loss as replacements can usually find their feet soon enough. And the third was long expected, their replacement is an in-house promotion that has been lined up for months, prepared and ready to start.

Retention and Appreciative Inquiry

Not something I've mentioned to date, but certainly worth considering, is the use of Appreciative Inquiry, or alternatively, Solutions Focus, during what might be described as the diagnosis phase. In this instance, diagnosis probably isn't the correct term as you'll be focusing more on what's working rather than identifying problems.

Both approaches have proved to work wonderfully well in certain situations. Again, you need to think carefully about what you are hoping to achieve.

Retention is largely just common sense

Perhaps not the sort of statement that someone who devotes so much time to the subject, should be making, but it is dangerously close to the truth: the art of retention is largely just common sense.

Now I know there is a small industry devoted to the issue, with their own secret methodologies, and yes I do have my own too, and it helps to be familiar with the likes of appreciative inquiry, to understand loyalty, to grasp the whole concept of value, but when you get to the essence of retention, it is largely common sense.

While I'm on this subject, I'd just like to remind you of the whole War For Talent fiasco. McKinsey consultants came up with a strategy that looked remarkably similar to the one used by their own firm, then suggested that it was appropriate for others to adopt. Now how does their ABC strategy do when put to the common sense test? You don't need me to tell you that it fails miserably; common sense screams "this is insane!".

So if you find that your budget doesn't stretch to covering the fees of someone like myself, ask yourself - What is the common sense answer to this situation?   

Job Sculpting II

I did touch on job sculpting back in May. If you haven't already read it, you might want to have a quick look at this short guide on job sculpting I created on the topic. Also well worth reading is the original article on the subject by Butler and Waldroop, in the Harvard Business Review.

In truth, there are situations where job sculpting is close to being more trouble than it's worth. You've got to be sensible. Think carefully about the constraints, about your priorities. Be open-minded but don't be reckless.

Apologies for the lack of posting recently. The other website is being redone and it's taking a lot longer than I'd hoped. It should be finished soon. Likewise the research mentioned earlier, will appear as soon as possible.

Lessons From Successful Retention Projects 3

Early last month I discussed some of the lessons from successful retention projects. Today I'd like to say a few words about one of these lessons.

Highly targeted retention projects produce far more impressive results.

Perhaps the key here that people tend to miss, is that different groups of employees can experience very different rates of turnover. While a company may have one employee brand, it will almost certainly have several different employee value propositions.

Not surprisingly, highly targeted retention projects are far more successful than those that assume all groups of employees are the same, and will react in the same way to the proposed change. What influences one group, may have negligible impact on another.

Employee Turnover: Push Factors and Pull Factors

If you think carefully about the various factors that cause an employee to leave their current employer, it is quite easy to see that you two categories: push factors and pull factors.

Pull factors are those reasons that attract the person to a new place of work. So in this category we would have the likes of a better paying job, a career advancement opportunity that they wouldn't have got in the short term had they stayed with their present employer, and so on.

Push factors are aspects that drive the employee towards the exit door. They make the person want to leave, make them start thinking about other options, about talking to recruiters, looking at the job ads in the paper, on the internet etc. In some instances employees will even go so far as to leave without a new job lined-up.

You just have to accept that pull factors are going to exist. From time to time competitors will make offers to some of your employees that you simply cannot match. Job opportunities will arise that are so attractive that the employee is almost certain to leave.

But what you can do is minimise those push factors. To download a short white paper on 10 reasons employees leave, simply click on the link and wait a few seconds.

Employee Turnover: 10 Reasons Employees Leave