Employee retention still a risky issue for companies today: Part 1
In 2012, one of the predicted trends by ERE.net was that Retention Issues would continue to increase and become a very risky issue for organizations.
Surveys reported in their article mentioned predictions as high as increases of 25% voluntary turnover in 2012, true to this prediction in February 2012, 2.1 million people were reported by the US Dept of Labor to have resigned from their jobs, the highest month reported since the beginning of the Great Recession.
So why, with the economy in the state it’s in, millions still out of work, and organizations still gun shy to add headcount or backfill roles would employees feel compelled to leave?
Individual organizations that have exit interviews and surveys in place will typically get more ambiguous feedback than this, mostly responses at the individual organization will be lacking honesty and enough detail to make meaningful improvements or changes to retention strategies. Most organizations report their top 4 reasons employees report leaving as follows:
1. Better opportunity
2. Industry change
3. Better working conditions
4. Lack of development
A recent research study conducted at a large multinational technical firm showed that a significant number of employees (96 per cent of those interviewed) admitted they did not provide the “real” reason for departure (Kreisman, 2002). The number one reason cited is that an employee simply finds providing the real reason too risky.
According to the Society for Human Resource Management and Aon Consulting, a study discovered the top three reasons employees voluntarily leave a company:
1. Poor management
2. To advance their career with greater opportunities for training and career development
3. Better compensation and benefits package
It is the role of the manager that most influences an employee’s decision to stay or depart from an organization.
However, in order for a company to actually customize their employee retention strategy, these 3 buckets are simply too vague to be actionable to any length; a more thorough understanding of these buckets and what each of them mean is necessary to find a valuable way to impact retention issues in your own organization.
A company must find better ways to understand who they are as an organization and how they interact and are perceived by their most valuable asset- their talent.
The Wall Street Journal reports the total cost of employee turnover ranges from a low of 50% to 60% (The Hay Group) to 100% to 150% (Hewitt Associates) of the employee’s annual compensation. Imagine the expense to your organization if your already existing bill of employee turnover increases by up to an additional 25% as predicted in 2012. The expense can be simply too much for many organizations that have been deeply impacted by the recession to recover. Even if manageable, is it necessary?