5 Ways Turnover Is Hurting Your Company

A recent Gartner survey reveals that 91% of HR leaders are concerned about employee turnover in the immediate future (source). They’re right to be worried. Depending on your industry, between a quarter and a third of your employees are looking for a new job right now (source). CEOs and CFOs know that this level of turnover both limits growth and undercuts profits. In fact, turnover costs your company more than you realize. If you’re ready to turn around your turnover woes, visit ReduceTurnoverStrategy.com to schedule your complimentary strategy session.

Empty Seats Don’t Deliver

You don’t have to be in the widget business to see how an empty seat can affect productivity. Client project delays can damage relationships and reputations. Late delivery of internal projects can have ripple effects on other departments, product quality, or market share. For public-facing roles, an open position may limit your capacity to sell, serve, or (in the case of hospitals) save lives. When the open seat belongs to a management or leadership role, teams may suffer from a lack of direction or a sense of disconnection from the company’s mission.

With overall unemployment around 4 percent (“full employment” is considered to be 5.0 to 5.2 percent), it’s clear that the competition for talent is heating up. This is especially true in our clients’ industries, where unemployment is even lower:

What this means for hiring managers is that it’s going to take longer and cost more to replace an employee who leaves.

Even after you hire a replacement, the new employee needs time to get up to speed. Learning the company culture, setting up their laptop, meeting new team members, adapting to new processes, completing employment forms. These things take time. I’ve worked in companies where it took two weeks just to get access to all the internal software I needed to do my job, not to mention learning to use the software! That’s just the start. People who transferred from another department may need to learn new skills or procedures before they’re completely up to speed. Someone who did the same job at another company may need time to absorb the context of the company or even the industry. Don’t expect to fill your empty seat on Monday and be running at full capacity by Friday. It just doesn’t work that way.

Recruiting Costs Money and Time

When a role needs to be filled, someone has to find candidates for the job. Recruiters don’t work for free, nor should they! It’s not an insignificant amount of time to write the posting, review resumes, screen candidates, schedule interviews, follow up, negotiate offers, verify references, and (in some cases) conduct background checks. Booths at job fairs, position listings on job boards, and ads on job sites all cost real dollars. Applicant tracking systems also cost money.

Hiring managers typically dread undertaking a selection process, and for good reason. They need time to develop selection criteria, assemble and onboard a selection committee, conduct interviews, compare candidates, and make final decisions. Multiply this effort by the rounds of interviews required, and the number of candidates involved. Hiring managers typically also manage the onboarding process (to the extent one exists), helping new hires obtain tax forms, login credentials, and needed training. Then there are dozens of introductions to be made and hundreds of unanticipated questions to be answered.

“Greener Grass Syndrome” Is Contagious

Employees usually leave for a reason. They were bored or felt unappreciated in their role. The new company offered them double their current salary. Or their boss from three jobs ago called with an opportunity that spoke to their exact ambitions. Whatever the reason, something about the new opportunity appealed to them more than staying put did.

The Bad News

They won’t tell you the truth about why they’re leaving. Employees typically don’t want to burn bridges with former employers. They may be evasive about “pursuing new opportunities” when the reality is much more concrete. You won’t hear about the lack of development opportunities at the current company, or that they don’t see a clear career path for themselves. They may not tell you that they’re tired of the way a certain colleague derides them in meetings or takes credit for their work.

The Worse News

They probably did tell their colleagues exactly why. For example, if Pam learned that she was making 25 percent less than her peer Jim, you can bet that every woman in your department has heard about it. If Rohit was offered a big promotion to move to a competitor, his colleagues are probably wondering what opportunities they’re missing out on. The more egregious the reason, the more likely it’s being talked about, and the less they’re going to want to talk about it to you, their manager.

I call this “Greener Grass Syndrome,” and it is highly contagious. It infects the imagination of the departing employee long before they give their notice or pack up their desk. It also has the potential to spread to others on the team. Colleagues see their former peer thriving in a new role. They begin to think, “Maybe I should get my resume together. Am I really happy here? What’s next for me?”

Contagion can reach catastrophic levels when a popular manager leaves. Why? Good managers tend to take great people with them. They might wait a little while to get their footing in a new environment. They might wait out a non-compete clause. But eventually, they will call, saying, “Hey, it’s great over here. Why don’t you come?” And the thing is, because now they’re gone, they probably know every single sticking point that employee has at their current location. They know exactly which buttons to push to get them to move to a competitor.

Let’s be clear: the grass isn’t always greener at a new company or in a new role. But when one of our peers moves on to a new pasture, it’s hard for us not to want more opportunity for ourselves.

Burden Falls on the Team that Remains

Your team has noticed the work doesn’t stop just because someone left.

What happens while you’re backfilling that role? The work spreads out among the team. So now instead of eight widgets a day, each remaining team member needs to produce ten widgets a day to try to keep pace. The hours get longer; the work gets more intense.

Add to this burden that the people who remain are also sometimes responsible for finding and onboarding a replacement. So now on top of all the work that they already had, and the additional work that they’re getting to try to keep pace because their peer has gone, you’re also asking them on top of that to help with the selection process for a new colleague. And, let’s be honest, you’ve probably not trained them on that. Let’s be honest. Whether they’re expressing frustration to you or not, they are probably experiencing it.

Multiply this frustration times the number of LinkedIn posts they’re seeing from their former colleague, who’s “excited to be starting a new journey.” He’s making more money, feels more appreciated, and doesn’t have to deal with whatever drove him away in the first place.

A few more colleagues leave, and people start to wonder, “What does everybody else know that I don’t?” Once this starts, it can take on a snowball effect that can make be very difficult to recover from.

Reputation among Job Seekers

Think about it. If you’re a hiring manager, you’ve probably reviewed a resume or work history of someone you considered a “job hopper.” You start to wonder, don’t you, what is it about this person that makes them not stick with a job? How often did they change positions? Was it upward mobility, are they never satisfied, do they not pick well, or are they difficult to work with? We tend to fill in the gaps with worst-case scenarios.

What we may not realize, though, is applicants have the same concerns about us and our companies. Especially when unemployment is this low, when there are more jobs than people available to fill the spots, when wages are going up. When culture is shifting, when worker expectations are changing. Job seekers see the same position posted for a long time. Or posted several times over a few years. “What’s wrong with that place?” they may wonder.

In Summary

In the current talent environment, the less turnover you have, the better. The more you can do to prevent the turnover in the first place, the less it’s going to cost you.

For example, new clients say to me, “We really want to do a better job of recruiting, especially diverse talent. We see that this is a problem in our organizations.” My first question to them is always “How are you ensuring that you keep the diverse talent you have on staff right now?” If more talent is going out than is coming in, you might as well be putting your recruiting dollars in a paper shredder.

Ninety percent of executives and HR leaders worry about turnover right now, and for good reason. If you’re one of them, and you’d like to do something about it, schedule time with me at ReduceTurnoverStrategy.com. Let’s work together to keep your employees — and keep them engaged.

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