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It’s all about the money – or is it?

Fundamentally, one of the biggest challenges any company can be faced with is employee turnover. Whether you subscribe to the theory that losing someone costs 1.5X their salary, or whether it is double that or half of that amount, or whatever; the bottom line is that it costs you money. So it would be in your best interest, as organizational leaders, to make sure you understand WHY you may be experiencing turnover so that you can address the root cause of it.

MoneyIn far too many companies, the senior leadership group simply does not want to hear about, or understand, the reasons for turnover in their organization. For many of them, anything beyond someone leaving for more money, they take as a personal affront and don’t want to address the issue. It is much easier for them to understand cash. It is clean, simple and transactional. That is, the employee was making $40K at your company, their new employer is paying them $60K; therefore, it is a simple economic decision. So, now we just have to replace them again with someone who will accept $40K.

Nine times out of ten this approach is wrong…well, maybe more like 99/100 times. All other things being equal, unless your compensation structure is severely out of whack, people aren’t going to leave you for $3-4K more in gross salary. The job search process takes time, effort and is very stressful. People get comfortable with where they work, the people they work with, the predictability of their routine, etc. Unless the place is a complete hellhole, a few bucks more isn’t worth it to go through the job search process and leave where they are at now and walk away from their friends, tenure and pension.

As most good HR Pros know, it is typically something within your organizational environment or culture that drives the decision for employees to want to move on. Perhaps they work for a manager who is a tyrant, can’t be trusted or doesn’t support them. Maybe there is nowhere for them to grow in the organization anymore.   Perhaps a lack of communication from sr. management is causing them to be insecure about the company’s future, or maybe their work assignments just aren’t challenging enough and they need to move on in order to grow. It could be any one or a combination of those factors that drive them to look elsewhere.

On the rare occasion it is about money, you need to make a decision. Does it appear as though all of your voluntary attrits are leaving to make 15% or more wherever they are going? Than it is possible that you have a compensation issue and you need to do a serious market evaluation to ensure you aren’t completely out of whack with the industry you are in. If you need help, drop my colleague Sabrina Baker a line at Acacia HR solutions and I am sure she would be happy to help you.

If it is just a case of a “one of,” than you need to decide if paying someone completely outside of your compensation structure is worth it. It has been my experience that if you have a solid compensation system, it never pays to make counter offers to bend to the whim of adjusting salaries when staff is looking to leave. The person receiving more money is simply a mercenary who will only be happy until they figure out how they can leverage you (or someone else) for more money elsewhere. I would simply wish them good luck in their new role and move on.

In most cases though, you usually don’t have a compensation issue you have a culture issue. As an organization, you need to peel the layers back and look into the underbelly of your organization. As leaders, you need to decide if you really want to “fix” the issue by getting to the heart of the matter or if simply want to gloss over the root cause and ignore what ails your company. This is the difference between putting duct tape on a leaky pipe vs. replacing the old pipe with a new one. It means a lot of organizational introspection. It means being open and honest with yourself, your managers and your employees. It means that you understand the importance of talent and the value they bring to your company. It means accepting that there isn’t a people tree to simply pluck your next hire from. It means that you “get it” in that you can’t simply just “plug and play” new people into your organization and their roles and expect no impact to productivity or morale. Ultimately, by (wanting to) deal(ing) with the root cause of your attrition, it means that you truly understand that your people really are your human “resources.” As always, I welcome your comments and feedback.

Image courtesy of sheelamohan/FreeDigitalPhotos.net


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