Do you have a high turnover rate?
Ah, the Great Resignation. We’ve read the headlines screaming all year about the masses of employees turning in their notice (or just disappearing) in search of greener pastures or to escape poor working conditions.
The costs of turnover are high: recruiting, screening, training, etc. And the longer an employee has been with you, the higher the costs of replacing that knowledge and experience. One of the questions we’re asked as coaches is how to help employers reduce their turnover.
But before you can jump in and start talking about reducing turnover, you first have to figure out what kind of turnover you have.
There are different types of turnover: the first is involuntary turnover. This is where the employer terminated the employment for a variety of reasons: restructuring of the company, bad fit, poor performance, etc. Usually, when turnover is considered a problem, this isn’t the type of turnover we’re talking about.
Voluntary turnover is what happens when an employee chooses to leave, and this is what leaders are usually looking to avoid. But even with voluntary turnover, there are different reasons people choose to leave.
The first reason is something that is out of the employer’s power to influence. Perhaps the person is relocating for family reasons, for medical care or to be closer to an aging relative, or because of a spouse or partner’s career opportunity in another place. It can even be that this position just isn’t a good fit for that person. No one is at fault here, it just happens. Cover your bases by conducting a thorough exit interview, then offer any practical assistance you can with their transition and wish them well in their future endeavors.
The next type of turnover is what we like to call Flow-through Turnover. This is when an employee just outgrows the position they were hired for, which is the case with many entry-level jobs. These types of low-skilled, low-wage jobs are a necessary part of the economy and an individual’s personal career growth. They help people gain experience, develop skills, and pay for schooling or training. Then, when the time is right for them, they can move on to something better, thanks to this initial employment that benefited the company and the individual. This can cover internal promotions and transfers, or the college kid working for minimum wage while they earn their degree.
Unlike other types of turnover, Flow-through Turnover can be a result of good leadership and an indicator of a healthy culture. It’s a sign that people are being given the opportunity to grow and develop, rather than being held back to fit the needs of the employer. It’s a sign of a regenerative culture, where growth not only occurs but is encouraged and systems are set up to foster that growth, in the people and the culture. And, unlike some types of turnover, it’s not a sign of a dying culture or poor leadership, it's nobody's fault, and it’s nothing that needs fixing. It’s just the nature of some types of employment. Again, treat them well and wish them luck.
Now we get to the third type of voluntary turnover: Dysfunctional Turnover. This is when good employees and high performers choose to leave their job because of a problem, not as a natural step in their career path. The key here is that they are leaving somewhere, not just going somewhere. This is a sign of an unhealthy work culture; too much of this turnover and it’s the sign of a dying culture. This is the cost of poor leadership.
At a workshop with a small business, we asked the employees why they left their previous employment. Nearly all of the answers fit into the “unhealthy culture” category: poor work environment, poor treatment, they felt no one listened to them or cared about them. Ironically, no one once
mentioned poor pay or benefits. The same was true when we asked what they liked about their current work. Answers included: feeling heard, feeling like the owners cared about them, liking the work environment. Again, no mention of pay.
That isn’t to say pay and benefits aren’t important, because they are, but people don’t leave a place that pays market rates if there isn’t something else going on. This is the sign of a degenerative culture, a business that is built on mining it’s employees and stakeholders, rather than building them up to create a self-sustaining, self-healing culture.
Find out what is driving your involuntary turnover. More often than not, you will find the driver is poor leadership, which leads to an unhealthy or dying culture. This can even happen within a company, when employees
are transferring away from a certain section or team at higher rates than other sections. It is poor leadership that is creating a degenerative culture, which in turn drives away the very people needed to make the business successful.
And the sad part is, most people don’t set out to be poor leaders. Usually, it’s someone trying their best but with no idea of what they are doing wrong or how to fix it if they do know. They are stressed, perhaps moving from crisis to crisis, unprepared or underprepared to help build the kind of team and culture they would really like to lead, or to be the leaders they really w
ant to be. Are you investing in developing your leaders? Are you intentionally creating a culture where people feel heard and valued? Where they feel they are a contributing, vital member of a team, whatever role they fill?
Because when it comes to curing Dysfunctional Turnover, the best remedy isn’t more money or a better benefits package. It’s good leadership. Good leadership is good business.