Employee Turnover

Employee Turnover: simply the act of replacing one employee for another. Turnover most often comes in two types: voluntary (the employee chooses to leave) and involuntary (the employee is asked or forced to leave) turnover. Additionally, there are levels of turnover we describe as regrettable vs. acceptable turnover.

​Voluntary turnover occurs when an employee voluntarily leaves the organization. This type of turnover is often a result of a lacking in one of the 5 ENGAGEMENT MAGIC keys:

  • Lack of Meaning or Purpose or mis-aligned values
  • Lack of Autonomy, being micro-managed, lack of clear expectations
  • Lack of Growth opportunities, limited in promotion or salary, no or limited individual training and development programs
  • Failure to see the Impact their work is having on the customers, or lack of recognition for good work
  • Limited Connections with manager or team, unsolvable conflict, or no connection to the company mission or purpose

Changes in an employee’s circumstance may also necessitate changing jobs. Death, illness, education opportunities are examples of circumstances that may require a job change and have nothing to do with the MAGIC keys.

Acceptable or functional employee turnover occurs when a low-performing employee chooses or is asked to leave the organization. Rather than going through a process to prove the employee is not right for the job, the organization will help the individual find their way out of the organization. Regrettable of dysfunctional turnover occurs when a high-performing employee leaves the organization. Regrettable turnovers is often very expensive for an organization and should be a focal point for human resource professionals and executives alike.

Scholars, consultants, non-profits, and companies have been researching the ROI of employee engagement for quite some time. The correlative data revealed in their research initiatives is significant. Here are some findings:

EARNINGS PER SHARE & TURNOVER

  • Companies with highly engaged employees have earnings-per-share levels 2.6 x higher than companies with low engagement scores.*
  • Organizations in the bottom quartile of engagement scores experience 41% higher turnover.

PROFITABILITY & ATTRITION

The Corporate Leadership Council studied the engagement level of 50,000 employees around the world to determine its direct impact on both employee performance and retention.  Here are two important findings:

  • Engaged companies grow profits as much as 3X faster than their competitors.
  • Highly engaged employees are 87 percent less likely to leave the organization.

Download: The ROI of Employee Engagement

Every organization has three implicit or explicit contracts: Brand, Transactional, and Psychological. When we consider how to master employee retention, most of the intangible moments and nonverbal interactions in a company fall squarely within the oft-neglected Psychological contract.

Contempt is an extremely difficult obstacle for a relationship to surmount. For example, in an organization I recently worked with, the senior leadership had plenty of great ideas, grandiose projections, and noble values. But none of it was producing company connection because the employees, the boots on the ground, weren’t buying it. For various reasons, they had concluded that their leaders were out of touch and misguided and, as such, every attempt to prove otherwise was perceived in the worst possible way. 

This kind of contempt can occur when a company violates their Psychological Contract to the point that employees lose trust and no longer give their employer the benefit of the doubt. If you want to preserve employee relationships, avoiding the contempt that results from broken contracts needs to be your number one focus. Understanding the contempt in your organization will see immediate impact on your employee turnover.

In business terms, we’re talking about transparency and streamlined top-down communication. But in simple relationship terms, we just want partners who aren’t hiding anything. We want trust. Business has a built-in conflict of interest. Employees work hard but often feel their efforts only benefit the CEO’s bottom line. As such, it’s important to deliberately swing the pendulum far back the other way in order to foster confidence. Be open with mistakes. Acknowledge doubt. Be quick to take painful accountability.

Another way to improve our transparency and vulnerability, and reduce employee turnover, is to be aware of how often we make and accept bids. A bid is a small gesture designed to elicit attention or trust. Imagine a scenario where an employee approaches you, her boss, with an idea or suggestion that is objectively terrible. One of the most frequently low-scoring items on our employee engagement surveys is, “This company responds well to suggestions and ideas for change.” That’s a lot of unanswered bids and a lot of missed opportunities to nurture trust.

Employees need to be valued equally, even while their roles remain equitable. That is to say, everyone contributes in a unique way but all roles are equally valued and respected. For example, don’t ever say something like “even the lowest-level employee.” You may not mean it the way it sounds, but you can understand why someone could hear it that way.

Loyalty begets loyalty. If we want employees to be loyal to us, showing loyalty to them is critical.

Here are two simple questions you should ask your direct reports to help design an employee experience that will keep them around for the long haul. Each year, and especially when you on-board a new employee, ask them two simple questions.

  1. What does a good day at work look like? Other variations include: When are you the most engaged in your job, or describe for me what makes you eager to come to work?
  2. When does it feel like a bad day at work? Other ways to ask this same thing are: What is something that demotivates you, or when do you dread coming back to work on a Monday morning?

Have them be specific in their answers, and, if possible, encourage them to provide you with their responses in writing. Don’t promise them that you can fix everything, but you can commit that, whenever possible, you will try and taken into account their stated preferences.

Lack of Opportunities

Lack of opportunity for personal growth or career development is the number-one reason for employee turnover. So what’s it like in your organization? Have you implemented growth into your employee retention strategies? Do your employees grow or go? According to a survey by Glassdoor and Harris Interactive, more applicants—52 percent—wanted to hear about growth opportunities when interviewing for a job than about any other perk. The same survey also found that one-third of employees left a job because of—wait for it—lack of career growth—than for any other reason.

When professional growth opportunities are absent in an employee retention strategy, you get stagnation, boredom, and finally attrition. People work on autopilot. They aren’t present; their minds are not on their work. Errors happen. Quality drops. Indifference sets in. Work becomes routine. It may still get done—how many times have you driven a familiar route mindlessly, only to end up safely at your destination with no memory of getting there?—but nothing new happens. Innovation grinds to a halt.

How IM Flash Leveraged Their Employee Value Proposition to Decrease Employee Turnover by 50%

IM Flash is a joint venture formed in 2006 by Intel and Micron that manufactures the most technologically advanced flash memory in the world. They are recognized as one of the anchor companies in the fast-growing high-tech industry along the Wasatch Mountains in Utah, better known as the “Silicon Slopes.” The company employs over 1,700 people, mostly engineers and technicians, in a highly competitive industry.

DOWNLOAD THE IM FLASH CASE STUDY IN PDF

To maintain growth and achieve revenue goals, IM Flash is focused on recruiting and retaining top engineers and technicians in its fabrication department. These highly-skilled and experienced workers are the backbone in the production of the flash memory chips that are found in most of the digital devices we use every day, such as cell phones, tablets, and laptops. The employee turnover rate at IM Flash hovered around 10 percent annually, already lower than the industry average of 13 percent. Company executives knew they could do better but didn’t have clear data on where to start. They needed a better understanding of what would attract, retain, and engage their workforce.

Partnering with DecisionWise

IM Flash decided to partner with DecisionWise to conduct an Employee Value Proposition (EVP) study. This project was intended to provide clarity around the value proposition the company offered that was most important to employees in different demographic groups. The company could then make changes to attract and retain the best talent. IM Flash implemented the recommended changes over a one-year period. During the following two years, turnover steadily decreased to an average of five percent, down from the previous average of 10 percent. Not only did turnover decrease, but the company culture improved, with employees iterating on the next survey how much they appreciated the new changes.