Employee Retention

The Bureau of Labor Statistics states that the average time a worker will spend in a job today is 4.6 years. That’s it. Consider this alongside on-boarding costs – the Society for Human Resource Management estimates that the average American company spends about $4,000 and 42 days hiring an employee. These costs of course vary company to company and even hire to hire, but the process is expensive for everyone, especially smaller organizations. If we can reduce these costs, we should.

Last week we mentioned how to develop employees using the Situational Leadership Model. We mentioned this insight, but did not expand on it. Employees are volunteers. If you’ve hired the right people, they have plenty of other options – they choose to come in and work for you every day. The point at which someone is thinking about other options is the point at which you’ve already lost. Even if they aren’t actively seeking another job, when a job comes seeking them – and it will – they will listen.

Most companies tend to come at the problem by asking how to make employees want to stay? But this leads to materialistic thinking. If we just throw a little bit more money at them or a few more benefits, they might hang around. Instead of this, BIG tends to approach this issue from the opposite direction – what makes employees want to leave? By thinking about it from this angle, we can head off problems before they start and empathize with our employees better.

Speaking of materialistic thinking, when someone leaves a company, it is often not about money. Glassdoor, the well-known salary website, conducted a study on employee turnover. They concluded that a ten percent pay raise only decreases the chance of an employee leaving by 1.5%! This is a very expensive way to maintain loyalty. Yes, if someone is drastically underpaid, they will go elsewhere, but this is a symptom of deeper issues that ultimately cause turnover. A lack of appreciation, underutilization, job stagnation, etc. are all felt daily by employees and hit at their deepest motivations and insecurities.


Office Horror Stories

For instance, consider the case of one of our consultants before he worked at BIG. He had been hired onto the engineering side of a small manufacturing company. Working on site back in the days of the Palm Pilot, he had created a simple user interface to control a new machine that was going to enable further developments within his industry.  He thoroughly enjoyed the process, which brought great satisfaction to this young engineer. However, once he showed this to a supervisor, they moved this innovative project to another division for commercial development. Describing this as “plucking it out of his hands”, our consultant knew there was a disconnect between his employer and him. His engineering job was evolving more and more into a sales job, which he did not want. Money was not even a consideration in his decision to leave.

Consider also the case where talented people are hired into a job only to soon feel like they just don’t seem to fit into the organization. Unfortunately, it is not uncommon to find talented individuals in nearly every organization that complain about going into work every day and just sitting at their desks, never being assigned either menial tasks or no work at all. Despite what your first instincts might tell you about not having to work, this gets very discouraging very quickly. Of course it is bad for the company, paying employees for work they aren’t doing, but the employees themselves feel the stagnation as well. If you don’t have work for your people, they will find it, usually outside your company.



Rather than rectifying this problem the right way, many companies (large ones especially) tend to find benign ways to trap their employees. Rather than treating them like volunteers, they treat them like well-compensated indentured servants. The “golden handcuffs” as they are called. They offer benefits that are tied specifically to the job and often require a number of years to actually take advantage of, things like stock options, certain health benefits, company cars, and other perks that tie an employee’s hands financially and make them dependent. Other contractual obligations restrict employees even more. Non-compete agreements, stagnated pay with stocks, remuneration for education expenses – all these things, while maybe not even intentionally malicious – restrict employees.


People Don’t Leave Jobs…

It’s been said before and it will be said again, but people really don’t leave bad jobs. They leave bad bosses. The average employee does not feel much beyond the things necessary for their day to day functioning in their job, not the overarching concerns of the company. If their direct boss creates a negative culture, they will flee that.

Getting back to where we started, rather than asking what we can do to make our people stay, we should ask what makes them leave and simply not do that.

But aside from what not to do, also consider these things you should do.  Create a healthy culture that fairly distributes credit and prestige fairly.  Maintain a healthy respect for their home life.    Provide development opportunities.  Keep employees engaged with challenging work that they can recognize as furthering their career. Create an environment where employees not only feel like they belong but are truly valued and are able to thrive.  Show your team that you care about them.  If you win their hearts, you’ll earn their hands – the talents and skills that provide value to your customers.  If win their hearts, you’ll earn true commitment and loyalty.  You won’t have to try to keep them, they won’t want to leave!

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