5 Types of Turnover You Can (and Should) Prevent
Turnover is a natural part of every organization, and there are a variety of reasons behind it. Some turnover is outside your control, like when someone chooses to move closer to family or decides to leave the corporate world to become their own boss. Yet, there are other instances of employee turnover you can actively work to prevent.
Retaining Employees Matters More Than Ever
Voluntary turnover is a greater concern for employers now more than any time in recent history. In the U.S., the number of job openings currently exceeds the number of workers seeking work. Skilled workers have numerous options and can easily jump ship in today’s robust economy. In fact, the U.S. Bureau of Labor Statistics found workers are quitting their jobs in record numbers: total employee resignations have risen every year since 2010, and they exceeded 40 million in 2018 alone. For all of these reasons, it’s more important than ever for employers to focus on preventing turnover as much as possible.
5 Types of Preventable Turnover and What You Can Do About Them
1. When someone is in a role that’s not the right fit
You hired Andre a year ago thinking he’d be a great addition to your company. You are not wrong; Andre is a good culture fit. However, he struggles with his daily tasks even though he’s received solid training and support from his manager. Andre is in a customer-facing role, but he dislikes talking to people constantly. He prefers systems and processes and wishes he had a job in company operations. But because Andre is concerned about keeping his current job and doesn’t see any internal opportunities, he quietly looks for new jobs outside of your organization. One day, seemingly out of the blue, Andre gives his two weeks notice.
Chances are, you have employees in your organization like Andre—people who are in the wrong job due to a mismatch between the essential duties of the role versus their interests, skills, and talents.
How this happens:
The breakdown in this situation is almost always a lack of communication. It can be scary for employees to speak up about the changes they’d like to see in the workplace, especially if managers don’t actively encourage feedback. Employees may worry that any critical feedback they offer will hurt their chances for advancement or even result in termination.
On the other hand, if your organization has a culture where people are constantly overworked and stressed, managers may feel they don’t have the time to check in with each employee and invest in their ongoing development.
When these kinds of conversations are perpetually on the back burner, employees get the message that they are only valued for their immediate results and communication is not a priority. Because of this, they’re likely to emotionally disengage from their work and look for better options somewhere else.
How you can fix it:
Instead of pretending these problems don’t exist, start encouraging your employees to talk about the changes they want, and make listening a priority. The key is to create a safe place for employees to address job concerns, then make a visible effort towards improvement.
You might follow the approach Robert Glazer, CEO of Acceleration Partners, took with his employees. He explains, “It all starts with people being open and honest about their challenges, if they’re feeling happy or fulfilled in their role, and removing the taboo of talking about leaving.” Additionally, he committed to being direct with employees when their performance was lacking, and giving them enough time to look for jobs elsewhere.
Once employees express their desire to move to a new role, be honest with them about what you can and can’t do to help. In some cases, an employee may have interest in moving to a different team within the company. If there is a business need for what they want to do, and the employee has most of the skills needed, then it’s simply about developing a transition plan. Other times, an employee may want to be in a certain role (or level) but your organization does not have a need for the role. Or perhaps, your organization isn’t doing the type of work the employees craves. In these cases, it’s okay to be honest with the employee about the situation so they can make an informed choice about their next step.
Either way, having open, honest discussions with employees about their development shows them you respect and support their needs and aspirations, which can encourage them to stay with your organization
2. When managers hoard talent
Hiring internally across different teams or functions allows your organization to develop and keep high performers engaged as well as improve the transfer of knowledge and best practices within the company. If you notice transfers don’t happen very often at your organization, it might be because your managers are hoarding talent. Hoarding talent refers to when managers deliberately prevent their top talent from leaving the team, forcing them to remain longer than what is good for the employee and the company.
When star performers sense a lack of mobility, they are likely to flee. These workers are driven to achieve and advance, so they will search for another organization that will empower them to move up when yours doesn’t.
How this happens:
When an organization creates an environment where each team has to compete against one another for budget, resources, and recognition, managers have no incentive to let their star performers move onto another team. Managers don’t want the pain of replacing the employee, and some may worry that if they do let an employee move on, they won’t get the budget to hire a strong replacement.
How you can fix it:
Know how to recognize this behavior in your managers. There are several signs from managers to look out for, such as under-rating top employees, telling the employee they’re “close but not quite ready” for the next position, and more.
If you identify this problem in your organization, one of the best things you can do is be intentional with your incentives so as to not stifle employee mobility. For example, stop rewarding bonuses to managers based entirely on their team’s performance. Reward managers based on their ability to cultivate talent that stays within the firm (retention rate for people who previously reported to the manager).
You might try more unconventional practices. Companies like Google have tried to minimize talent hoarding by allowing employees to nominate themselves for a promotion. Cisco uses their own recruiters to source and place the best internal talent. Here at PayScale, we promote from within whenever we can. All employees have access to all the available job postings across the company through an internal portal and can raise their hand for a position.
3. When high performers are underpaid
When high performers are underpaid relative to the market or feel like they’re not rewarded appropriately for their accomplishments, they are especially likely to quit.
How this happens:
There are two pieces to this issue. One possibility is the market salary has moved up for that particular role or job category (this is known as “market underpayment”). When someone is in an in-demand position, they’re likely fielding calls from recruiters at other firms. When employees have these recruiting conversations, they may discover they’re underpaid.
The second possibility is that you’re not adequately differentiating pay for high performers versus average performers. For example, if you’re giving high performers a 3.5 percent raise and giving the average performer a 3.0 percent raise, it sends the message that your firm doesn’t really value achievement and results. Giving your high performers a 10 percent increase is much more meaningful.
How you can fix it:
The best way to avoid underpaying to the market is to regularly benchmark your positions to the market and set aside a fund for making market-based adjustments for all positions. Depending on the nature of your jobs and your talent markets, you may want to evaluate your jobs every six months to make sure your pay ranges are in sync.
To set pay based on performance or results, you’ll need to create clear criteria on what it means to meet and exceed expectations in each job. To perform, employees must know what they’re measured against and have control over those metrics. To accurately gauge performance, it’s important to keep track of goals and results and make sure that feedback is delivered in a timely manner.
Then, develop a plan on how you can shift more money towards rewarding high performers. This might be done by raising your total budget, or it might mean giving non-top performers a smaller raise.
4. When pay disparity exists
Pay disparity describes the phenomenon when two people hold the same job or very similar jobs but there is a large variance in their salary (think a 20 percent difference or greater).
How this happens:
Pay disparity can become a problem when you hire candidates and do not stick with established salary ranges. For example, let’s say you hired two people for the account executive role. One person negotiated hard, so you raised their starting salary by $15,000 from the initial offer. Meanwhile, the second person eagerly accepted the initial offer because they were just thrilled to join your organization.
Fast-forward six months. These two employees have become comfortable enough with each other to discuss salary. Now, the second account executive knows that she is paid $15,000 less than her colleague. She is no longer happy with her pay.
Pay disparity could also occur because two employees who hold the same title are in fact not doing the same job (one is doing a higher-level job than the other one).
How you can fix it:
When you see significant pay variance between employees in the same job, start investigating why. Is the pay variable tied to performance, tenure, or other justifiable factors? Or, is it possible the two employees are not actually doing the same job, despite their titles? Is one more senior than the other? Is one in a newly created role that needs to be more clearly defined and benchmarked?
If you find two employees are in the same role and one is underpaid, try to close the pay gap as soon as you can.
5. When someone is overworked or close to burnout
If you notice certain employees are working during all hours, not taking vacations, or even working during vacations, it’s likely they’ll soon become exhausted and quit. Research shows many workers characterize their jobs as stressful, and this stress costs U.S. businesses 30 million a year in lost work days. Without downtime, it’s impossible to get the best results from any employee.
How this happens:
At the surface, burnout happens because people carry heavy or overwhelming workloads. But overwhelming workloads are a symptom of a deeper issue. Organizational culture can either promote or prevent burnout: leaders and managers can send the message that work trumps everything else in life, or they can show that it’s healthy to have a life outside of work.
How you can fix it:
Shifting your culture is the only way to truly solve this problem, and it won’t be an overnight fix. Creating a culture that values work-life balance has to start from the top. Business leaders need to believe employee well being—physical, mental, emotional, spiritual—matters to the success of the business.
One way to send this message is to lead by example. If you are a leader, don’t send emails after work hours or while on vacation, and make sure you actually use your time off so you can encourage others to do the same.
Additionally, consider creating an unlimited paid-time-off policy (PayScale has one). This shows that your organization values rest and trusts employees to be responsible. You may also want to create policies that give employees the option to work from home or work flexible hours, so they can take care of other parts of their lives.
Conclusion
By identifying issues and making changes today, you can prevent losing your best people in the future. Turnover will always exist within your organization, but it doesn’t have to be a threat to the company’s growth and success. Take a look at your own turnover rate, and see if you can improve on any of these factors going forward.
About the Author
Jingcong (“JC”) Zhao is a Content Marketing Manager at PayScale. She enjoys sharing ideas and stories on how compensation professionals, HR leaders, and business leaders can build winning organizations. JC spent the last five years in communications, content strategy, and demand generation roles in B2B software companies as well as agency settings. Prior to PayScale, she led Content Marketing for Socedo—a company that helps B2B marketers automate lead generation through social media.
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