While there is no universal list of factors that pertain to every business, it is good to understand the common reasons people leave any place of employment, so you can compare them to your own turnover patterns. This will give you a starting point to respond to employee needs, address common problems, and spot specific ones that cause employee loss.
Basic Financial Needs
While money isn’t everything, any time earnings are below the individual’s minimum financial needs and the situation cannot be resolved at your company, the employee will look elsewhere. Few people reduce their income needs in order to stay with a company, so care must be taken to ensure that employees are able to live within their compensation. This is not to say you must increase compensation to support whatever lifestyle an employee chooses, but just be aware of the consequence of not meeting these basic needs. For example, if an employee is meeting their basic needs during the busy season, but, due to less overtime or even lack of work during the slower season, cannot meet their minimum needs, the employee will be forced to look elsewhere for more consistent, higher pay.
Lack of Competitive Salary
Individuals must not just meet basic needs, but must feel they are adequately compensated for their efforts. Employees don’t have to do a salary survey to know whether they are being adequately compensated. They can listen to other people in similar positions discuss their compensation. If you are paying below industry standards, it will open the door for turnover. For example, you can’t just compare your wages with similar companies in your area. If an employee can go from your company to work in another industry, such as manufacturing, with little training, you must compete with manufacturing wages. In heavy manufacturing areas this is a tremendous problem due to union wage scales. If employees can’t go to another company within the industry, being able to make more money in another industry might cause them to consider leaving.
Inadequate Benefits
With the cost of health care and other essentials rising, more liberal benefit packages are becoming more and more important as a retention tool. On the converse, inadequate benefit packages are often reasons for higher turnover or difficulty recruiting. Employees consider salary and benefits as a package.
Poor Communication
Poor communication causes many problems which reduce tenure. It is essential that employees have a clear understanding of their job and what is expected of them. A recent survey by American Express published in the December 16 issue of USA Today pointed out that the number one factor in improving employee satisfaction was “candid performance feedback and appraisal.” In today’s fast-changing job market and unstable corporate environment, employees want to feel secure in their competence and in their position. Surprisingly, the desire for better communication ranked above compensation and benefits.
Employees who are criticized for falling short of unspoken expectations, feel insecure and soon look elsewhere for work that makes them feel more confident. This very common problem of unspoken expectations is easily prevented when the employee is given a copy of a job description and essential job functions as outlined in SMART STAFFING.
Employees also begin to feel insecure when they hear information about their company or their position through the “grapevine.” In large companies, where jobs hang on mergers, acquisitions, and change, employees have a right to be very sensitive to poor communication from management. Smaller companies are not immune to this lack of communication and employees’ need to know more about what affects them.
Candid and open communication will go a long way to reducing departures, even in difficult times. If one-to-one personal communication is abandoned in favor of high-tech mass communication, employees lose their feeling of connection with the company, owners, and management. While this may not be prevalent in smaller companies, other forms of impersonal communication take place, such as voice mail or pages. Loyalty and trust, which keep employees, are built during informal chats on the job, at company functions, and while working shoulder-to-shoulder.
Negative Work-place Environment
Employees want a feeling of belonging and community. It is this feeling that creates the work-place environment or climate. If there is a positive environment in which people have an affinity for those around them and each feels valued and liked, employees tend to stay. This is especially notable in the multi-cultured, multi-racial workplace. Recently, I returned a call to a company and was pleased to hear the voice mail announcement given in English followed by Spanish. The effort to include and respect other cultures pays dividends, especially in industries such as ours that staffs with diverse individuals. The owner and managers must be especially sensitive to the work-place environment that exists in the company. Few people will give their best effort or stay in their job if the climate is negative.
Lack of Recognition
Lack of recognition is perceived by the employee as lack of success. Regardless of the level, position, or job, each employee wants to be recognized for a job well done. Companies, even small ones that have recognition programs to reward success and effort, have a much better chance of keeping employees than those that don’t. As a matter of fact, those companies with effective recognition programs have higher employee productivity and results. Programs range from formal recognition events, such as annual awards banquets, to informal recognition, such as notes acknowledging someone’s efforts or accomplishments. Employees have a need to feel successful. If they do not feel successful in your company, they will change to one where they do.
Unfair and Inequitable Treatment
All your positive efforts to hire and reward employees can be erased in a moment if an employee feels he or she is not being treated fairly and equitably. Especially in smaller companies where there may not be formal practices and procedures, employees must be treated fairly and, most importantly, perceive rewards and penalties are equitably and consistently applied. Not only will owners and managers open themselves up to accusations of favoritism, the perception of unfair and inequitable business practices destroys trust and causes employees to leave.
Many times employees injure the company through theft, abuse of equipment, or poor treatment of customers when they do not perceive they are being treated fairly. This problem has become so common place, it was even used by Michael Creighton as the basis for Jurassic Park. An employee, who felt he was not fairly compensated, created a scheme to get what he felt was a “just reward” and unleashed a problem. In our experience with companies, many times employee theft comes from the employee’s desire to “balance the scales or get what is coming to them”.
Lack of Challenging Job Content
Positions with the greatest turnover tend to be those that are boring, repetitive, and do not offer a challenge to the employee. This is a problem that can develop over a period of time. The eager new worker of a few years ago may have gotten to the point where his work is no longer a challenge. When employees no longer have to think about the job and it has become effortless and unexciting, they look for new challenges. Sometimes they look outside your company.
Plateaus based on job content are quite predictable if you are alert to them. They generally occur at three levels. The first is noticeable in the first few months, in most positions, when the employee decides whether he or she can do the job and if they will be happy. At one to two years employees who have developed competence begin to ask themselves if they really want to do this job. At about the seventh year, if they are not promoted, they tend to ask themselves if they’d be happy doing this for the rest of their career. At each plateau they are faced with a decision to go or stay.
Lack of Job Security
American business has changed tremendously in recent years and only promises to continue changing. Employees, who many years ago looked at working for a company for a lifetime, now look at a company as their current employer. Mergers, acquisitions, and downsizing have changed corporate America dramatically and those changes have also affected people who work in smaller companies. This lack of stability has caused employees to realize that excellent performance is not a guarantee of continued employment.
When employees feel continued employment is threatened and long-term job prospects are not good, they will take the initiative to find a company that provides it. Employees are very good at sensing when their job security is threatened and react quickly. It would be unreasonable to believe a company could guarantee employment for life, but all companies can reduce turnover by providing for the employees’ need for job security.
Family / Work Conflicts
Companies that are not aware of the employee’s need to have a fulfilling personal life, especially in the two-income family, will continue to see significant turnover. Several years ago Fortune Magazine, in a cover story entitled “Is Your Family Wrecking Your Career or Vice Versa?” reported a revealing statistic. According to the information by the Institute for a New Commonwealth, 84 percent of the couples surveyed reported that both spouses are working. As an employer, we must realize this creates a radically different workplace than that of years ago. This creates a need for management to recognize the difficulty these families have in balancing work life and personal life. In the long-term, if the employee must choose between work and personal life, work loses.
Today’s “Generation-X” younger employees bring new family and work attitudes to the work force. Personal satisfaction and private life is very important to them. They will work hard and expect fair compensation, but require clear boundaries between work and personal life. This may have resulted from them watching their parents and others who worked hard for years for a company only to find themselves out of a job and a victim of corporate restructuring and downsizing. Many Generation X-ers will leave companies that interfere with their family and personal life to take positions, even at lower wages, that satisfy the need for balance in their life.
SUMMARY
While volunteer terminations generally fall into these ten categories and can’t all be prevented, we must realize that turnover must be controlled and minimized. The first step in reducing turnover is to understand why it is occurring. Take the time to conduct exit interviews to identify the real reasons employees leave. Don’t accept the typical reasons given by employees, such as “better job, more money.” Many times this isn’t true. Conduct an effective exit interview to find the real causes.
Many times, as our consulting points out, the solution to the real causes of turnover may not be as costly as you think. It may not require a dramatic revamping of compensation or instituting a much more liberal benefit policy. It may be simply changing some policies, procedures, and most importantly, the way the employees are treated. After all, it may not increase cost to improve communication with employees, but it may save thousands of dollars in direct and hidden turnover cost.
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