Employee Retention Issues? Look in the Mirror (Part 1)
Part 1 of 2-Part Series on the Important and Timely Issue of Employee Retention
There is a saying that employees don’t leave companies, they leave managers.
Today they are leaving more than ever. According to recent U.S. Department of Labor statistics, the average tenure of an employee in the U.S. is now only 1.5 years.
We have ample statistics that clearly indicate money is NOT the reason for employees leaving a company. They do not resign on impulse, or in a “Jerry Maguire” moment of anger, delirium or a personal epiphany. When they decided to join your company, they initially saw the opportunity as a great fit for their career and wanted it to be a successful long run. Unfortunately, somehow the wheels they thought fit came off. If you take the time to thoroughly investigate the true reason for their leaving – AND YOU SHOULD – you will likely uncover that it’s not the products, customers, industry, competition, location, coworkers, commute or tools they have at their disposal.
IT’S THE LEADERSHIP!
When employees or ex-employees grumble about “culture,” or that “communication is poor,” or express frustration at the lack of career progression and professional development— they are telling you that it is the leadership they are unhappy with and leaving. Clearly, company leaders are responsible for setting the culture, communication and career development within a business.
For the sake of your company, and more importantly your people, take one moment as a leader and be brutally honest with yourself in answering these questions:
- Do you find yourself behind closed doors a good portion of the day as you strategize or execute in private?
- Do you put your personal gain over your employee’s best interest when making decisions?
- Do you consistently affix blame on the departing employee for “not following the process” or working hard or smart enough? (Have you ever blamed yourself?)
- Do you promise the “stars” in career progression, but consistently find an excuse why the company cannot deliver them?
It’s time to look in the mirror and answer these questions.
A “company” is a legal entity. A “business” is a collection of assets and liabilities. No one resigns because of that. It’s the decisions, the motivation, the atmosphere, the ethics, the support, the training, the vision, and the direction set by leadership that will properly engage employees to stay with you in a highly productive manner.
If they are not engaged, then take another look in that mirror!
The next time an employee resigns, resist your patterned behavior to shrug it off as, “another underperformer who didn’t follow the process.” Take a moment to reflect in that mirror on what it actually is they are resigning from. Too many times it is not the departing employee who doesn’t “get it.” It’s not the company they are leaving.
IT IS YOU!
So you looked in the mirror and – employee retention issues are your fault. Admitting that is a good first step.
Should you act immediately to improve employee retention challenges? Can’t you just add it to the projects scheduled later this year?”
Check out these two recent findings published in a recent Kiplinger report as to why you should act NOW.
- Unemployment held at 4.1% in December 2017. Look for 3.8% by the end of 2018 as it becomes harder for employers to find suitable candidates. The short-term unemployment rate (less than six months) has fallen to its lowest level in 65 years.
- Further proof of a tightening labor market is evidenced by lots of job openings in certain sectors, including heath care, food services, construction, transportation and warehousing. Openings in health care and food services are at their highest level in 15 years.
If you lead a company of 500 or fewer employees, the urgency is heightened.
The shortage of qualified workers is starting to squeeze small businesses. In industries, such as manufacturing and construction, many small firms are finding themselves being forced to hike wages. Not just to lure new hires… many smalls need to pay more just to keep their current workers from jumping ship. The problem will only worsen later this year. The economy is accelerating, and many small businesses want to expand in order to cash in on rising orders. But those expansion plans will bump up against the constraints of a tight job market.
What are retention or engagement warning indicators you should be looking for?
According to the U.S. Department of Labor:
- 55% of Employees are currently searching for other job opportunities.
- 40% of organizations report that losing key employees is the top concern.
- 33% of new hires quite their job in the first 6 months.
- 33% of employees know within 1 week if they will stay with that company long term.
What do the statistics look like for companies with highly engaged employees? They are:
- 2x more likely to remain with their current company.
- 3x as likely to do something good for the company that was not asked of them.
- 51% are more likely to have engaged employees when companies’ values are properly communicated, clear, and understood by all.
- 78% of employees communicate they would retain/stay longer with their current company if they could see a clear career path for their career.
“So how much is subpar employee retention costing my business?”
Employee turnover costs include more than job posting fees and recruiter commissions. Some costs include, but are not limited to:
- Revenue loss from unfilled Jobs.
- Pre-& Post-employment administrative functions and expenses.
- Pre-employment screening and interviews for replacement hires.
- Training Costs for new hires and promotions.
- Loss of Productivity due to overworked remaining employees.
- Loss of knowledge transfer opportunity.
Click here for the full list of 20 Retention Cost Metrics available upon request.
To help you identify your company’s specific cost of retention, we found this calculator on bonus.ly that you may find helpful. Just remember to check the “assumptions” that these automated calculators use to make sure they accurately represent your company’s situation.
Up Next: Click Here for Part 2 of 2 – Strategic Solutions to Improving Employee Retention Rates