Employees Quit Management, Not the Company

May 04, 2014

inShare3,167

I have the opportunity to do a lot of Consulting for Companies - Big and Small Companies, Companies in several different industries, Newer Companies and Established "Dinosaur" Companies, etc. The point is, I have had the privilege of Consulting for just about every type of business there is out on the market. And there is almost always the same problem - companies are experiencing higher turnover than they should - generally speaking of course.

Cost of Turnover

The obvious immediate problem is the cost of replacing an employee. Dun & Bradstreet have a great article where they reference a study done by Institute for Research on Labor and Employment at UC, Berkley. The average cost of replacing an employee is about 1.5 times their Salary. For instance, if you are filling a $60,000.00 position, with all costs incurred, it will cost your company around $90,000.00.

Instability for Customers and other Employees
When you have employees rotating in and out, and customers dealing with new people on a semi-regular basis, regardless of the viability of the company it gives the appearance of instability and a company that employees don't even like. Turnover can be a huge cancer to your employees as well, as employees have to unexpectedly take on extra responsibilities or duties that they do not have the skill set for, yet are held accountable for their errors.
Cause of Abnormal Turnover
In almost every case, when an employee leaves a company voluntarily, it is Managements fault. Yes, there are the proverbial "nails in the coffin" which Management loves to deflect to - such as "they got offered more money", "their work load is easier over there", and on and on. But if Management was doing their job correctly, in almost every case none of these reasons would be enough to make them want to move to a different company.
How to Keep Low Retention
Every company is different, but these principles stay the same. Use these ideas and suggestions, but also build off of them and create custom policies that fit your company, your employees, and your companies "personality".

1. ALWAYS DO EXIT INTERVIEWS!!! Unless the employee is extremely hostile, make sure an immediate exit interview is done with employees that tender resignations to understand why they are leaving. And listen - do not try and persuade them that they are wrong. Just listen. For instance, even though you may know that a particular action is not happening, there may be an issue somewhere in the company where there is a "perception" problem which are making employees unhappy that needs addressed.
2. Work Atmosphere - Work Hard, Play Hard. Create a fun atmosphere at work. Never before, especially in the US, have we demanded more productivity out our employees since we are competing in a Global Economy now. And guess what, it is tough on everyone and will run you into the ground if you let it. This is a great time to get ideas from employees - game room, relaxation room, fun "brainstorming" sessions (I will do a separate article on this at another time), daily competitions for particular KPI's (Key Performance Indicators - Sales, Revenue, Net Profit, Calls, etc). I am a big believer in spiff's for winning a competition or if an employee does something particularly outstanding) - whether it is a small gift card, cash, company gear - use your imagination.
3. Knock Down The Wall Between Mid-Management and the "C" Level - One of the biggest problems are C Level Executives not knowing about problems. I am not letting C Level Exec's off of the hook, as even though they have Managers to handle the day to day Operations, C Level Exec's need to be "keyed" in on what is going on, and make sure that employees can confidentially come to you with an issue to be addressed before it becomes a bigger problem. But it is amazing how good some Mid-Management get at putting up a wall where if there is an issue, that employees find it difficult, if not impossible, to voice a concern that may need to be addressed.

This is just a start, and meant to keep you aware of the high cost of turnover and to be constantly improving the company to make people want to stay. No companies have zero turnover, but I have Consulted for companies with both high turnover and low turnover. For companies with a high turnover problem, if it is handled aggressively and correctly, you can turn around extremely fast.