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Let's talk about turnover. Why do employees leave? What are the costs of an employee leaving? And most importantly, what can organizations do to reduce employee turnover? This article will cover the basics of employee turnover research and the topics around it like employee retention - how to keep your best people.
Employee turnover research is exactly what it sounds like, the study of why people leave. Employee turnover research is a critical function within any rapidly growing organization primarily because the costs of employee turnover can be incredibly high. But turnover also affects company morale, productivity, and efficiency. Employee retention is a key element to understanding how to reduce turnover and increase successful organizational outcomes.
But before we dive into the research, let's talk about the top reasons employees stay with a company. This topic is especially important because 93% of executives believe employee retention is the key to organizational success.
My old mentor used to say, employees stay because they can see themselves there, and they can see themselves growing. Let's break down what that actually means. If an employee can see themselves at a company, it means that the company is a fit- either culturally, through their vision or mission, or through the type of work they do, the employee stays because they feel at home there. But that's not all, they also need to see themselves growing with the company. If they feel that they and the company are going in different directions their tenure will be short-lived- but if they're going in the same direction, then they'll have a sense that they're on the right path.
Employees want to be led, to feel that they're on a mission to solve a huge problem in the world and feel that they're contributing to that overall mission. The best employees are those who are passionate about the cause and take company wins and losses personally as part of their own personal mission.
The employees I'm speaking of aren't happy with "a job," they need more. The pursuit of a worthy endeavor. Employees who've felt what it's like to work for a great leader know the difference - and they stay for the long haul.
Now let's talk about some of the causes of employee turnover. High employee turnover, meaning a large percentage of those hired are leaving, most often in a relatively short period of time, can be caused by a number of issues. These can include poor job fit, low wages, lack of recognition or reward for hard work, and/or difficult management styles.
Employee turnover is often attributed to a lack of job satisfaction or a poor work environment, however, there are other important reasons why employees might leave. These can range from a lack of career development and training opportunities, limited ability to use skills and talents within the job role, or a mismatch between an employee’s work values and the organizational culture.
The costs associated with turnover are another important factor in understanding why employees leave. When looking at the cost of turnover it is important to consider not only direct costs such as recruiting and onboarding expenses, but also the cost that might be associated due to lost productivity or a decrease in morale. One of the key solutions that companies who've experienced high turnover are turning to is interview intelligence software. Over the last year, companies using Pillar's interview intelligence software have decreased employee turnover by 50%... but we'll get to that in a minute.
So we've mentioned a few of the reasons that people leave in the last section- potential signs of high turnover. Let's focus on the ways that you can combat high turnover by understanding the different types of employee retention.
Retention is all about understanding what employees need and want in order to stay with an organization. It's not just about offering better salaries, bonuses, or benefits (although compensation is very important)- it's also about creating an environment that makes them feel valued, appreciated, and engaged. Another feeling that many top performers admit to needing is the feeling of contribution. Not only being part of a winning team but also contributing in a big way to those wins. This leads us to our first type of retention.
The first type of retention is an organizational commitment to the employees and team. Organizations that are committed to the success of their people understand the importance of providing a nurturing and supportive environment. This includes meeting basic needs like offering competitive salaries, benefits packages, and career development opportunities, but also creating supportive atmospheres for their people to do great work.
The second type of retention is team-based recognition and reward systems. When employees are recognized for their hard work it reinforces that they're making an impact on the organization's success. It also encourages them to continue working hard and striving for excellence. Employees who work within a supportive team, even in an unsupportive company experience lower employee turnover rates because they're committed to the success of their team.
The third type of retention is focused on employee engagement. Employee engagement includes providing continuous feedback, implementing career development plans, recognizing employees for their hard work, and offering opportunities for growth. Engaged employees are more likely to stay with an organization long-term because they feel appreciated and know that their contributions are valued.
Finally, the fourth type of retention focuses on organizational culture. You could equate this to organizational commitment but it's actually a very different topic. Organizations with strong cultures create an environment where employees feel celebrated, valued, and appreciated. They also encourage collaboration and innovation, which leads to higher levels of engagement and job satisfaction. Employees who feel like they belong to an organization are more likely to stay for the long haul.
Employee turnover research shows that organizations that understand the importance of employee retention and focus on implementing the strategies mentioned above can reduce turnover rates by up to 50%. This is where Pillar's interview intelligence software comes in. Our software helps organizations identify talent early on in the recruiting process, so they can hire people who are more likely to stay for the long haul. If you're interested in learning more about our product, book a demo to chat with someone from our team.
So I have a confession to make. With one exception, the longest I've ever stayed at a company is 24 months. I'm telling you this because I've probably had more conversations with managers and executives about why I'm leaving than many people at the same stage of their career as I have. On the one hand, this is good because I'm constantly learning, adapting, and growing to meet the challenges of a new role. On the other hand, looking back on my career thus far, there are many things I would've learned that I missed out on because of my short tenure.
Either way, these are all the reasons that I've given for leaving a company - and they go hand-in-hand with our topic on the top reasons for employee turnover.
1. Lack of Opportunity. This is an incredibly common cause of employee turnover. When employees don't feel that they have the opportunity to advance or take on new challenges, it's natural for them to start looking elsewhere.
2. Underpaid or Lacking Benefits. Another big factor in why people leave their jobs is because they can find better pay and benefits elsewhere. This could be related to wages or lack of access to important benefits such as health insurance, vacation time, etc.
3. Mismatch of Competencies and Skills. If an employee feels that their skills aren't a good match for the job they're doing or that they don't have the opportunity to use them effectively, they may start looking elsewhere. This could be due to a lack of training or just not feeling comfortable in their role.
4. Poor Organizational Culture. Finally, a poor organizational culture can cause people to leave quickly. This is usually due to things like a lack of communication or an unhealthy environment where employees don't feel respected or valued for their contributions.
5. Siloed Into a Role. Some organizations are so rigid in their structure that employees can become siloed into a particular role or job function, even if it's not what they were hired to do. This leaves employees feeling bored and unchallenged, which is why many leave for greener pastures.
5. Bad Manager. This is one of the biggest causes of employee turnover. If an employee is not getting the support and guidance they need from their manager, or worse, if a manager is acting in a way that's unprofessional or hostile, then employees are more likely to leave for another opportunity.
These are just some of the causes of employee turnover that I've personally experienced throughout my career. Understanding the causes of employee turnover is essential for any organization wanting to reduce its rates. The effects of employee turnover can be crushing to an organization (especially startups and other small teams). That's why it's so important to make sure you're hiring and retaining the right people, providing them with the tools they need to succeed, and creating a culture of respect and appreciation. The rewards will be worth it in the long run.
If you've been experiencing high employee turnover and you'd like to see that change, book your demo of our interview intelligence software today. At Pillar, our team's mission is to help you make better hires and build great teams. Let us show you how we can potentially save you millions in hiring costs but also shorten your time-to-hire and decrease employee turnover rates.