Do You Know Why Turnover is Not a Problem?

That's right. I said that turnover is not a problem. Oh, it's a problem in one sense: in the same way that a fever is a problem. If your child has a temperature of 101 degrees, you're going to work quickly to reduce the fever. And then you're going to work to find out what's causing the fever. Same with turnover. Turnover is the fever. But what's causing the fever? That's the issue. In fact, turnover is not a problem because it's only a symptom of a bigger problem.

According to a Louis Harris company poll, 40% of employees say they would leave their current employers for similar jobs with only slightly higher pay. In the same poll, Harris learned that 53% of employees expect to quit their jobs within five years. What's wrong with this picture?

In the fast-food industry, where many of the employees are young, relatively unskilled, and the wages are fairly low, turnover is commonly over 100% annually. Similar rates of turnover occur in the hotel/motel trade. On the surface, you'd think the problem was simply one of poor wages or possibly unpleasant working conditions. But you'd be wrong. Almost completely wrong.

I've heard some managers say that they don't worry too much about turnover because their applicant pool is both shallow and wide. They get poor applicants, but at least there are plenty of them. When one doesn't work out there's another right behind him. Sooner or later one makes it and everyone's happy. What's wrong with this picture?

Cost estimates vary, but they tend to indicate that the cost of one front-line or hourly employee turning over is equal to about one third of that employee's annual earnings. So if you lose three mechanics in a year, the cost of turnover at that position is the same as the annual earnings of one mechanic. But it doesn't come from their pockets; it comes from your bottom line. The cost of losing a manager, by the way, is higher. Turnover among managers tends to cost 100% (or more, if the manager is exceptionally effective) of a manager's annual earnings. So if you lose three managers in a yearÉ you do the math.

Turnover is an issue because it's costly. It's also an issue because it detracts from the working environment. And it can become contagious. Isn't that a dangerous and vicious cycle worth avoiding?

So what causes turnover? See if you can spot the common factors from the several reasons listed below.

• The boss did not establish performance expectations.
• The boss did not do any coaching or give any positive feedback.
• The boss did not interact with the employees in a fair and considerate manner.
• Communication from management was poor or non-existent.
• Employees were dissatisfied with the possibilities for advancement.
• Employees couldn't express their feelings openly.
• Employees didn't feel that their ideas counted. Suggestions were ignored or ridiculed.
• The manager used unfair promotion practices.
• There was no training.
• The job was tedious and lacked variety.
• Employees had little say in how they performed their work.
• Employees were not held accountable for their work, only for showing up and putting in their time.
• Employees were frustrated with internal systems such as expense reimbursement.
• Employees were unable to increase their income because they weren't trained in how to maximize tips or commissions.
• Employees felt the available benefits were not attractive or did not suit their needs.
• Employees had unrealistic expectations about the job.
• New-hire orientation was weak or non-existent.
• The employee didn't have any talent for the job.
• Selection interview did not uncover employees' lack of ability.
• Selection interview did not uncover employees' inability to work well under pressure.
• Interviewer sold the position to the candidate, who later determined the job was not what he wanted in the first place.

 The common threads are these:

• Problems with management
• Problems with the job itself
• Poor selection practices

 According to several recent studies, about half of employee satisfaction is due to the employees' relationships with their managers. The other half comes from the work itself. Other surveys tend to show that about half of all turnover involves employees who have been on the job less than six months. Poor management and poor hiring are the root causes of most turnover.

What can we conclude from these facts? The primary causes of turnover are in the hands of management. Lousy bosses account for half of all turnover. Problems with the job that account for a significant amount of turnover are clearly the result of inattentive management. And then there's the problem of poor hiring. Whose fault is that? We're not really going to blame the victim and say that it's the new hire's fault that the job isn't a good fit are we?

Given what we now know about the causes and origins of turnover, it's clear that turnover is just a symptom of a deeper problem. When turnover is excessive, changes in how the company is managed must happen or the turnover will continue. And, like a fever, if left unchecked it will eventually kill the company.

So what do you do to reduce or eliminate turnover? Ah, that's the $64,000 (or more) question. The simple answer is: improve management and improve your selection process. But, of course, the devil is in the details.

Which details you focus on are up to you. But do focus. That part's important.

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