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The Turnover Recipe – (Hint -it isn’t always about compensation)

Alert – totally unscientific post ahead! I was recently asked by a Sr. Operations Leader from another company, “Do you think employees really leave organizations just because of money?” “If not, why do they leave then?” The long answer to this is that depending on what survey you read, who conducts it, and where/when it is completed, the #1 reason people leave organizations is, in fact, based on compensation. But then again, I also read that the #1 reason employees leave companies is due to their manager. I also read that the #1 reason they leave is a lack of engagement. On and on it goes….survey after survey. So what are the “real” reasons why employees leave? Well, I firmly believe that it depends on the specifics of your own company. You can’t look at a survey of 1000 employees in Nebraska and because compensation is the #1 reason they leave determine that that is the problem at your company.

RecipeSo how do you determine what is going on with your company? Well, hopefully you conduct proper exit interviews on all staff that voluntarily leave your company. Preferably this is done by HR or someone in a confidential capacity that has the trust of the staff. This, along with retention questions asked at performance review time coupled with “stay” interviews should give you a pretty good indication of what is going inside your organization from a broad based perspective. Then, there is the real truth. I have worked for several companies where the organizational heads have believed that almost everything starts and ends with compensation. They believed that people only left because of more money. Depending on who the departing employee was, we may or may not have been able to provide them with more compensation and if we couldn’t, it was often rationalized with a comment like, “well if we pay them any more we will be out of business.” Huh!? Of course, the exit surveys all showed compensation as the number 1 reason so the Operations Directors were pleased with themselves that it all came down to a numbers game and depending on client contracts, there was nothing they could do about it.

But let’s think about that for a second. Set aside the surveys and stats, do we REALLY think that the majority of staff leave solely because of compensation? Are they really going to move on to something else for $2K more gross salary or even $5K more? I ask these questions of operations leaders and they typically respond with, “well that is what the survey’s show.” To which I indicate, “That is because it is the easiest box to check off that they feel won’t burn any bridges.” Seriously, by indicating it is compensation it is something tangible for everyone to sink their teeth into and all parties can rationalize why they have parted ways. You know, ABC Company offered them $5K more and we simply can’t match that in these economic times. Easy peasy right?

I have a totally unscientific theory as to why someone leaves – it is called the Armchair HR Manager Recipe for Turnover (patent pending):

Start with: Compensation – from an equity perspective. An employee has been with their company for several years and is a good performer. Someone new, with less experience, is brought in at a higher rate, performs relatively the same as the other person, but continues to make far more. This gap is maintained throughout the employment life cycle as the only way the 1st employee ever gets increases is through the paltry annual increase process.

Add: Lack of Respect – this employee has discussions with their manager and manager’s manager about how they feel their pay is out of line internally and externally. They show the work they have been doing, how their performance has helped the company and what the market is paying. This is all met with a “leave this with us to look at” followed by a 2% annual increase which doesn’t even keep pace with inflation.

Subtract: Professional development and training opportunities – that have been reduced as part of cost cutting measures and/or because of the employee’s current workload.

Add: Work life/balance issues – that are causing undue personal hardship for the employee to which an unsympathetic manager (or incapable manager) is not wanting/willing to address.

Layer: With organizational communication issues. This is a lack of feedback from organizational leaders about the direction of the company, financial status, how the employees contribute to the company success, etc. It is most often prevalent with the attitude from the top that the smart people will make the decisions and the little people will just do the work.

Pair with: A side of lack of recognition. This is a common short-coming in many organizations. The failure to recognize the little wins, the incremental gains, the above and beyond. People just want to know that what they are doing matters and a lack of recognition is a sure fire way to drive disengagement.

So there you have it: Equitable Compensation + Lack of Respect – Professional Development & Training + Work life Imbalance covered in Communication issues and lack of recognition = TURNOVER.

And who said HR people weren’t good at math?

As I told you before, totally unscientific but I challenge you to find the gaps in the recipe. Now the key is to find out which parts of the recipe you can address within your organization and how you can make sure they don’t become key ingredients. Now, I need to get something to eat as I am starving…..

Image courtesy of Simon Howden/ FreeDigitalPhotos.net


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