Employee turnover is an important part of managing business and human resource management. Get it wrong and you can significantly affect the cost of recruiting and retaining your workforce.
Various studies suggest that the cost of replacing an employee equates to at least double the salary of the person they are replacing.
Think of the time it takes to create a job spec.
Write an Advert.
Conduct interviews.
Select the right candidate.
Induction training.
And so on…
Worse still, if your employee turnover is too high, it could more than likely be that things aren’t quite right when it comes to happiness and engagement.
And when engagement is low:
- Productivity suffers
- Customer satisfaction suffers too
- And your operating profit is often lower, too.
In fact, a recent study suggests that for every 1% increase in customer satisfaction, there’s generally half a percent increase in sales.
Employee satisfaction is a primary driver to creating business success and also improving customer satisfaction.
The problem is, getting the atmosphere and environment right to allow your employees to excel is a hard thing to do. But if you can manage it, it’ll have a massive impact on the success of your business and team.
Measuring employee turnover- or the rate at which your staff are leaving the business, is an indicator of the general engagement level of your employees. If it’s too high, it’ll give you clues as to where you need to investigate further to rectify.
If you can improve your staff engagement, your employee turnover should improve.
And we know what the effects are when the workforce is more engaged…
And the Survey Says…
In fact, in a recent Gallup survey, around 80% of the world’s employees are not engaged.
And the hardest thing; employee engagement is often an intangible factor. You can’t physically pick it up and see it.
You work on clues and feedback.
It’s easy to read and write about it, but it’s harder to implement in the real world.
Why?
Well that’s because there are so many factors that go into improving your staff engagement and employee satisfaction and the factors that affect your employee turnover rate.
Use the following 3-step system to measure your employee turnover and then start improving the working environment to increase your team’s engagement and “Job Embeddedness.” (More on this concept in a moment…)
Step 1: How good is your employee turnover rate?
First thing’s first, you need to establish your current turnover rate.
And that means how often and how quickly your employees decide to leave your organisation.
Do they come and go in a blink of an eye, or do they hang around and become part of the establishment?
Now, this figure acts as one of the main clues to see how well your staff are being managed and how positive your business’s culture is.
To calculate your monthly employee turnover rate, simply divide the number of employee ‘leavers’ over the month, by the average active number of employees during that same period.
Here’s an example:
Once you have your staff turnover rate, it’s best to compare it to other companies of similar type and industry, or at worst, against the average for your country’s economy.
Simply typing, “average employee turnover rate for uk” or” average employee turnover rate for usa” (or the country you reside), will provide a number of statistical figures.
Try to ensure that the data is from a reputable source, like the government statistics website or a trade body’s website, for example.
Perhaps you have information on industry statistics. If you do, then that is even better. But whatever benchmark you have, ensure you measure your business’ employee turnover rate and create a mark in the sand as to where you are against where you should be.
Taking it one step further, why not measure the number of leavers who’ve left within their first year?
Do this by using the following formula:
So what does it say?
Well, the higher the figure, the more your new employees are unhappy in some way, shape or form.
Here’s an example:
Let’s say that you had 12 people leave who had been in your business for less than a year; and there were 60 leavers in that same period, overall.
12 / 60 x 100 = 20%
In this case, 20% of your leavers are from people that have been with you for less than a year.
Now, whether you want to benchmark it against your industry average, or if this figure is higher than your monthly employee turnover rate, you need to think about your recruitment process.
Something may be not quite right. Typical things to look at, could be:
- Did the job match the one advertised?
- Are you asking the right questions to filter out the right candidate?
- Did those processing the job application understand the job and skills requirement? Did they look at the wrong things when recruiting?
- Did the employee get a good induction programme?
- Were they made to feel welcome and comfortable in their new role? If not, there’s another opportunity to get it right next time.
- How did their line manager or supervisor interact with them? Did they lead and coach? Or did they let them get on with it, making them feel isolated?
The point is, when you measure elements of your employee turnover rate, it can give you great clues to investigate what you can improve upon.
The Good Old Exit Interview
The next fix would be to include exit interviews as a part of your HR policies. When people leave, capture why they leave.
When you do, you can then link the reasons why with the data accrued in your employee turnover tracker.
Being in this position of knowing the ins and outs of why your turnover figures are the way they are, gives you an advantage.
You can then start to organise and create actions to put these contributing factors to bed.
themuse.com highlights 4 key questions that you can use in your exit interviews:
1. How did the job match your expectations? Research suggests that the first impression has a big impact on staff engagement. And so, asking it will ensure that the actual day-do-day realities aligned with the job description.
2. Did you feel that the work you were doing aligned with your personal goals and interests? As you’ll see in Step 3 below (Job Embeddedness) aligning a job to the person’s own values and goals can have a big impact on their engagement levels and happiness. If this question is proving to be a weak element for your business, then at least you can start to think about how you can employ the right people with the right synergies to your jobs.
3. Did you have the tools and resources you needed to effectively do your job? No one can deliver outstanding results if the systems and processes are less than to be desired. So too, if the support is sparse, it’ll have a big impact on the performance and engagement of people.
If the support isn’t there, expect frustrated employees! One of the most common problems is that employees point out issues affecting them, but nothing seems to ever get done…
4. Would you recommend this as a great place for a friend to work? Will you get an honest answer, here? I’m not sure, but it’s worth leaving it in, so you can try to get to the crux of what’s good and what’s bad. And if they say no, you can identify the biggest problems that influenced that decision, and get to work to improve it…
Step 2: Understand The Current Mood of the Nation
In tandem with measuring your employee turnover rate, why not also measure the current feelings of your workforce?
How are they getting on right now?
How can we make it a better place, BEFORE people take the drastic action in leaving?
This can be achieved through a simple staff engagement survey.
I’d recommend one being conducted no more than every six months, and no less than every 12 months. It should act as a running commentary as to how good your support environment is working for the employees.
Here’s a basic questionnaire from Gallup and their Q12 questions to measure employee engagement.
Otherwise, why not use the free excel tool and the following steps:
Engagement Questionnaire – Step 1: Print out the Question form, and get each employee to complete. Keep it anonymous and ask them to post the completed ones into a box or tray, that you can collect at the end of each day.
Engagement Questionnaire – Step 2: Set a time limit, so there is a definite cut off. This creates a sense of urgency and allows everyone to see the last day they need to complete the survey and have their say.
Engagement Questionnaire – Step 3: Update the excel spreadsheet to reflect all the answers.
Engagement Questionnaire – Step 4: Use the dashboard to identify where the strengths and weaknesses are.
Engagement Questionnaire – Step 5: Create an action plan to address the weaknesses.
It helps to post the findings of your recent survey and also the action plan, to show to the staff that their efforts are being taken seriously, and that you do care what they say.
The important thing here is to take action and be seen to take action, too!
Can you see the importance of measuring your employee turnover?
When you link the answers to these questions with the exit interview and the staff survey, you’ll be able to see how and where you can improve your employee retention rate and identify the factors that are most important to your employees.
Once you’ve set steps 1 and 2 up, it’s time to move onto understanding how to improve the working environment at a deeper level…
Step 3: Focus on Job Embeddedness
The previous two steps are about understanding the strengths and weaknesses of your current ‘work environment’ and then starting to create ideas to improve areas that could be lacking.
You’ll find that all these answers fall within what’s called, Job Embeddedness.
This term was created in 2001 by Terence Mitchell, Brooks Holtom, Thomas Lee, Chris Sablynski, and Miriam Erez, in their ‘Academy of Management Journal Paper’.
Job embeddedness explains why people choose to stay in their jobs and why they resist leaving.
Think about your position right now. Why are you in the job you’re in?
What are the main factors that influence your decision to stay where you are?
Perhaps you are held in high regard and are well respected.
Perhaps you have flexible hours or your commute is a short stone’s throw from home.
Maybe your organisation provides a comprehensive benefit structure.
You may even have extremely meaningful and deep rooted relationships.
The fact is, there can be many factors that contribute to your happiness at work.
And the more of them you have, the happier you will tend to feel about it.
The happier you feel about work, the more inclined you are to stay and become embedded.
In other words, you’ll be less likely to leave.
To get job embeddedness right for your employees, you have to focus on three key areas. Each area has its own part to play in enabling employees to become embedded in the organisation:
- Links
- Fit
- Sacrifice
Links:
These refer to the connections people have to activities and other people.
Typical examples of these links could be connections to your company, friends, family, your work colleagues, charities, clubs, sports teams, any other institutions that involve relationships with others. It could even be a specific link to certain jobs within your role, that you find particularly rewarding.
Think of it this way – if you form a relationship in any way, you have developed a link. The more links; the more relationships.
And in the context of embeddedness, the more links a person develops within the business and also around the community, the most settled and engaged they’ll probably be.
In contrast to this, moving to a new area and a new organisation could be a lot harder, and perhaps a deterrent, if the links you may have built up would be disconnected. And the thought of losing those links could be greater than starting a new role in another business.
Developing Links in the Real World:
Whilst you can’t dictate every detail here, try to focus on helping your employees develop links within your team or business.
And in the business world, it’s about leading every day.
Leading every day consists of developing a coaching culture and establishing teamwork that empowers team members and opens up communication channels.
Here are some suggestions:
Build Good Working Relationships: Focus on building relationships by allowing team members to open up with one another. Use the Johari Window, to help do this. By opening up, they can develop deeper relationships and this can lead to deeper links created within the business.
Schedule time to socialise and build relationships: Plan a part of each day to make time to talk to colleagues. Even if it’s just small talk, you could pop into someone’s office, arrange lunch, conduct catch up chats with your team, catch up over a coffee. Develop as many links as you can, and encourage your team to do the same, too.
These small interactions can help build strong foundations towards a good relationship amongst your team members and colleagues.
Develop your Emotional Intelligence: A Good level of Emotional intelligence helps you understand your emotions, and be mindful; so you can recognise what they’re telling you.
The higher level of emotional intelligence, the more effective you are at understanding the emotional needs of your team members, too.
Provide positive feedback and acknowledgement: Focus on coaching your team members and give them positive feedback when they demonstrate work well done. Try to provide feedback in a way that comes from your heart and not because you have to do it. You can learn more by downloading for free, The Manager’s Field Guide to Recognition .
But remember, people can see straight through feedback given with little sincerity. So, be genuine and show that you genuinely care.
Build trust by communicating openly with your team members: Trust comes from confidence. Confidence comes in the form of good open communication in a way that is sincere. Focus on conducting daily team reviews, as well as weekly catch ups and monthly 1-2-1 chats and discussions.
Ensure that you provide empowerment and an open communication link, whereby people don’t feel threatened to tell the truth.
Try to stick to the analogy of “Seek forgiveness, not permission.” Allow your team to try things, communicate and reflect together, without the fear of being scrutinised for it.
Develop the Team: Team building techniques can also have a big part to play too. As the team develops, relationships and deeper synergies can develop too. Developing team dynamics can contribute to this. Download your free guide on the Team Building Toolkit.
Fit:
Fit is governed by how well the employee fits within the organisation. In particular, how well the job and the environment suits them.
It also includes how the business aligns with their values and how they align to the culture of the business.
Factors like, whether the business can help support their career goals and whether there is a clear development path can be important factors.
Other factors can be external to the business and how that person fits into the community and environment. Typical things could be:
- “The weather and climate around here….”
- Available amenities
- Entertainment options
- Sport and leisure
- Culture
- Political factors
It’s all about how easily each person fits within the environment. The more factors, the happier they’ll be.
The happier they are, the more embedded they can become within the company.
Developing Fit in the Real World:
Ensure that everyone in your team understands their goals and how they can support the goals of the business. Don’t forget to include plans to help them develop, in line with their own needs, too.
Performance Management: Manage your team every day and turn performance management from a boring hardship which is conducted once a year… to something that’s done daily and motivates and grows your team. Download the free guide to learn how to do it.
Another way to implement the right factors is to follow Hertzberg’s Hygiene theory. Try to reduce the negative factors and increase the positive ones to create an engaging environment.
Another way to increase employee turnover and to create fit, is to conduct good interviews, so you can hire the right people. Download the free guide on structured Hiring.
Asking the right questions during your interview can also help. Here’s a free checklist for you to use to ask the right questions and how to use the ‘Attitude Meter.”. Job Interview Checklists: The Right Questions to Ask and the Attitude Meter
Sacrifice:
Sacrifice is the last element in job embeddedness. It answers the question; “how easily can the links be broken? So, if that person left, what would they have to give up, both psychologically and materialistic?”
For example, leaving your company could mean losing the deep relationships you have.
It could also mean giving up the training opportunities and flexible working hours you might benefit.
It could be a company car and a competitive benefit structure.
You get the picture.
And the more links and perceived fit, the higher the sacrifices would be when cutting ties with the business.
And the higher the sacrifice, the more inclined people are to stay in the business because the losses could outweigh the new gains employed elsewhere.
Developing The Sacrifice Element in the Real World:
Like the other two areas, you can’t have total control on this with your employees, but you can influence them. And if you make it harder to leave, because the working environment is good, then you’ll find that employee turnover will be lower.
You should always try to create a happy, energized and rewarding working environment. Think of it as being both tangible and intangible.
So, from the general work area being well lit, to regular breaks and accommodating an open culture…
It all counts.
Try to encourage a good work-life balance. Don’t just say it but actually pursue it as one of your values.
Take active care in people, and ensure your employees are happy and supported.
Try to ensure that they can see their position in the business and that they’re being heard and acted upon.
Give plenty of praise and feedback. Perhaps you could link good incentives to the right behaviors and encourage a culture of daily standup meetings, so the team can discuss and open up regularly.
Download your free copy of 12 Ways to Optimize Your Employee Benefits Program to help create the right incentives for your business.
Additional Ideas to improve Job Embeddedness could be:
- Identify and cultivate “story-tellers.” These are in-place and loyal employees who serve as mentors during orientation.
- Welcome new employees warmly, introducing them to co-workers and executive leadership in person.
- Confirm that all contacts are aligned to the corporate vision and culture. Have them share key vocabulary and cultural cues, so everyone feels on the same page.
- Assign new employees, small short-term projects where they can succeed. And secure recognition early.
- Introduce employees to their internal customers and their providers.
Steps like these build an infrastructure that embeds engagement. Such a culture increases links, fit, and sacrifice to help reduce employee turnover and increase engagement.