Job Turnover Soaring – Costs Escalating

If you think people are changing jobs more often, you’re right. Retaining talent is a monumental challenge and things are only going to get worse. Smart companies are designing retention strategies to avert the crisis.

Consider these facts:

1. The average tenure at one organization across all industries and job categories is 4 years (source: Bureau of Labor Statistics, 2005).

2. On average a 22 year-old will have 10.2 jobs in his/her career (source: Bureau of Labor Statistics, Longitudinal Study)

3. The over 55 age group will multiply 4 times faster than any other age group (source: Monthly Labor Review, Bureau of Labor Statistics and Projections).

4. There are 10,000 job and career-related websites on the Internet and that number is growing fast (source: Fast Company magazine, September, 2000).

To complicate the challenge of recruiting winning talent the overall graduation rate for U.S. teenagers entering high school today is a dismal 68%. So our most seasoned employees are retiring and our selection pool is drying up.

What is the cause of all of this turmoil? Some would say that the reason is the loosening of bonds between employer and employee. Lower levels of loyalty – whether due to the layoff waves of the past decade or a shift in attitudes among Baby Boomers and Gen X-ers. For many the prospect of switching job is now less stressful. Boomers and X’ers expect to change jobs more frequently than their predecessors. More and more workers no longer tolerate bad bosses. Simply more employment options are available. Whatever the reasons, labor statistics indicate hiring and retention problems could get worse before they get better.

Recruitment vs. Retention

Most CEO’s and Human Resources professionals have at least a general understanding of the financial impact of employee turnover on an organization. The truly smart CEO’s and HR professionals know their actual annual costs. The U.S. Department of Labor very conservatively estimates a company will spend the equivalent of one-third of an employee’s annual salary to replace that individual. When replacing a manager it will cost companies an average of 1½ times the manager’s salary to replace him/her. The cost of attrition is phenomenal.

Does it make sense to fight these trends by offering money and perks to attract good people? Take the nursing shortage as an example. If you read the want ads you will see all kinds of sign-on bonuses, cars, educational allowances, housing allowances, etc. While these techniques might work for attracting candidates, they aren’t working for retaining them.

Keeping the Best

In today’s competitive job market, understanding early warning signals through behavioral observation and acting with an early intervention can prevent the team member’s concerns from growing into thoughts of defection. Not every early warning signal means someone is leaving. There may be other reasons for the team member’s behavior such as a personal, non-work-related situation. The key is to find out the meaning of the signal you observe. As a team leader, be constantly aware of any cue that may be signaling that one of your key team members is dissatisfied.

Top Ten Early Warning Signals

Some of the primary early warning signals to look for include:

? A noticeable change in behavior pattern; loss of enthusiasm

? A non-complainer expressing personal discontent

? Bringing up salary surveys and benchmarking, particularly regarding a key competitor

? Sudden increase in personal calls

? Increased sick time

? A drop in effort

? Increasing criticism of organization problems

? Complete disagreement with management – “they can’t get it right.”

? Mentions “burnout”

? Frequent web surfing/browsing

You must rely on early detection of early warning signals to alert you to a potential retention problem. Taking time to monitor ongoing signals can help you prevent an unwanted resignation and ultimately help the organization reduce some of the costs of attrition.

Surfacing Team Member Retention Needs: Conversation Guidelines

The ultimate goal should be to create a climate where your team members feel comfortable coming to you if they are thinking of leaving before they get to the resignation stage.

When you see an early warning signal, arrange to meet privately with the team member and openly discuss the team member’s possible concerns. Use the following action steps to guide the discussion:

1. Thank the team member for meeting with you and explain the purpose of the meeting.

2. Refer to the early warning signal and probe to determine if it represents a deeper concern(s).

3. Summarize the response from the team member’s perspective and, if necessary, ask additional questions to clarify concerns.

4. Ask for and suggest ideas for addressing concerns.

5. Decide what actions each of you will take to address the concern(s) and set a follow-up date.

6. Thank the team member for being candid and reinforce the mutual value of the business relationship.

Organizational Retention Planning

Knowing the signals and surfacing team member retention needs is not enough. It’s only the beginning. Companies suffering from turnover need a retention plan. Companies need a thorough understanding of attrition triggers, such as downsizing/reorganization, that increase risk. Understanding the ripple effects of the attrition triggers and the business impact on co-workers, other departments, the organization, the customer and the market perception is essential. Managing the ripple effect and business impact is like working in a medical emergency room. You need to act quickly and methodically to cover everything – missing any key element can be fatal.

Identifying retention strategies and tactics in the context of a corporate/organizational plan improves retention rates, saves recruiting dollars, improves productivity, and ultimately impacts the success of the entire organization.

The Bottom Line – You Can’t Afford to Ignore Attrition!

Retaining your top talent leads to

? continuity of productivity and intellectual capital

? supporting innovation

? new and better products

? quicker time to market.

which in turn leads to customer retention, a core ingredient in short and long-term market success.

The retention model is a cyclical issue. The more successful you are in creating an environment that leads to business results, the more team members will want to stay and the more recruits will want to join. Retention gives you a competitive advantage in the marketplace. Retention is a true bottom-line business issue.