Solving Employee Retention & Turnover: A Leadership Perspective
The Breakthrough Co
Leadership training that creates skilled people leaders in just 2 hours a month.
Executive Summary?
Hiring great people will always be a challenge. It’s expensive and time-consuming, and when we finally recruit DO recruit them, the next challenge is keeping them. The most cost-effective way to solve recruiting and retention issues cuts out the painful hunt for skilled employees and improves employee retention: workforce development and training. Companies often seek to hire someone who already has all the desired skills instead of developing them internally, yet typically settle for someone who still doesn’t have everything they wanted. Proactively investing in your people is the only effective long- and short-term solution to skills gaps, and those who are invested in are far more likely to stay with the company. By approaching recruitment and retention as one single piece of work – workforce development – both jobs are made easier. In this article, I’ll share how to significantly reduce time and money spent on recruiting skilled people and replacing top talent by shaping high performance teams of internally promoted people. ?
The Breakthrough Co has been in leadership development over 20+ years, and The Active Manager Program develops managers’ soft skills in leadership?
The Significance of Talent Retention?
Excessive employee turnover is overly expensive and mostly avoidable. A Gallup poll reveals that when companies replace an employee, they forfeit 1.5 to 2 times the employee's annual salary due to recruitment and training costs. People leave for several reasons. While better pay is a factor, 75% of people who leave their job cite their manager as the reason[1]. There are also numerous other factors involved that support better retention.??
Organizations see better retention and spend less on turnover when the manager has the soft skills required to cultivate an environment where employees are rewarded and recognised their contributions, have a clear growth path ahead of them[2], and feel integral to the company’s success.?
Here’s a quick example on why it’s not all about pay: Take a moment and think about a hobby or a passion project of yours. You don't need to get paid to do it because the simple act of doing it satisfies your soul and creates a sense the purpose. Now imagine a workplace where people feel that way about their job. They would be far less likely to leave, and they contribute to their teams with a higher level of commitment.[3] The result is less time and money wasted on replacing employees.?
Understanding the Core Problem?
At the core of the problem is the cost of employee turnover. Employers often hesitate to increase wages. And for good reason if they’re spending more for the same quality of work and rate of productivity. At the same time, it’s the most common remedy for retaining employees. This thinking is a slightly flawed, with an overly simplistic fix to a nuanced challenge.?
Avoiding raises creates dissatisfaction that result in turnover. Fair compensation is crucial but higher pay alone doesn't lead to long-term engagement and loyalty.?
There is another core issue here. Amidst the employee turnover, the team has a significant gap which causes issues that don’t show up on a spreadsheet:?
Solving retention with better pay is like treating a fracture with painkillers. It’s short term and you’re going to need more painkillers soon. In other words, you’re going to get caught pumping money into people while the core problem doesn’t get any better.?
A significant factor in employee turnover is the lack of growth opportunities within the organization Employees need a clear pathway for advancement; without it, even the most motivated individuals will seek opportunities elsewhere.[4]??
The opportunity cost of losing good people goes beyond the monetary cost of replacement. Keeping these employees includes intangible expectations that aren’t measurable on a spreadsheet, such as:?
One of the best ways to address employee retention is effective leadership development. In the next section we’ll elaborate on what effective leadership development looks like.?
Key Insights and Solutions from the Active Manager Program?
Drawing from our Active Manager Program, a practical proven leadership development program that transforms technical managers into skilled people leaders, here are targeted strategies to improve retention.?
Managers who have been trained in the soft skill of people leadership check in with their team.?
Middle and operational managers are often overlooked when it comes to leadership development. According to a CMI study, 82% of workers entering management positions have not had any formal training in the soft skills of people leadership.[5]?
Combine that with this survey conducted by Gallup: 52% of voluntarily exiting employees say their manager could have done something to prevent them from leaving, and yet 51% say that in the 3 months before they left, their manager did not speak to them about job satisfaction or their future with the company.[6]?
Effective leadership development gives your managers and leaders with the soft skills they need to address employee concerns proactively and effectively before they become a retention issue.?
When organizations invest in a robust leadership development program across the business, the people on those programs feel valued, see a clear path for growth, and know their work is meaningful.?
The flow-on effect is that they create a common language and culture that ripples across their team to increase connection, engagement, and productive working relationships.?
This significantly improves satisfaction for managers and their teams, fostering loyalty and reducing the likelihood of turnover.?
It’s far more efficient and effective to invest time and budget into developing your current employees than spend on hiring replacements who would have the same or greater needs.?
Effective leadership development gives your team purpose and confidence in the future. Keep them, grow them, make them want to stay. The time and money that you invest in your people is time and money you don’t have to spend in hiring replacements who would end up having the same needs.?
The Outcomes of Effective Leadership Development?
1. Active Engagement:?
Shift from a reactive to an active management style. By adopting a proactive approach, managers develop the leadership skills to anticipate issues before they escalate and can create a more satisfying work environment.?
Leaders need to engage deeply and regularly with their teams. Regular meaningful check-ins help build a sense of belonging and appreciation in the team. When they feel valued and understood, they are less likely to leave.?
Understand individual motivations and find opportunities to foster self-awareness for managers and team members. Personalized development goals based on individual motivations enhances performance and makes employees feel heard and supported.?
2. Capacity Management:??
Help employees manage their workloads effectively. Proper workload management ensures that your people are not overwhelmed and maintain a satisfying balance between their work and personal life.?
This prevents stress and burnout but also brings about greater job satisfaction because they only focus on what matters. When the team isn't stretched too thin, they can invest more energy and creativity into the activities that create the greatest results. ?
Developing the skill of prioritization also makes employees more effective and productive with their time, allowing them to get the important tasks done. This creates a sense of accomplishment which is vital for keeping the team motivated.?
While this directly benefits the organization, it indirectly affects retention by creating an environment where employees can see the impact of their contributions.?
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3. Development and Training:?
Continuous learning is key. Offer regular soft skills training that includes digital content, 1:1 coaching, peer group earning, and consistent practice to create true behavior change.?
A comprehensive training approach creates learning experiences that cater to different learning styles and promotes deeper engagement and understanding.?
By enhancing their abilities, employees can take on new challenges and opportunities within the company, instead of seeking them elsewhere.?
The Active Manager program reinforces the skill of learning how to learn and practice in daily work, creating a feedback loop that results in transformational change. It fosters a proactive learning culture that boosts retention by helping people make a bigger and better contribution professionally and personally.?
?4. Recognition and Reward:?
Regularly acknowledge and reward efforts and achievements that align with company goals. It motivates high performance but also aligns them with the company’s vision.?
As we’ve mentioned, pay comes into it but it’s more nuanced than that. Recognition goes beyond financial rewards by fulfilling the human need for appreciation and validation.?
Give people steps to grow into bigger responsibilities and bigger jobs. Providing opportunities for advancement is crucial as it creates a clear path of growth.?
Acknowledge not just the results, but also effort and learning from failures that have led to success with shoutouts and team events. Celebrate the journey not just the outcome. It helps employees feel seen and appreciated for their hard work and resilience, further enhancing job satisfaction and retention.?
5. Cultivating Leadership:??
Develop leadership from within. This is crucial. It fills leadership positions with familiar and committed individuals but also strengthens the organizational culture and loyalty among staff?
By providing leadership training and opportunities to lead projects, employees feel valued because you’re investing in them. It shows belief, trust and confidence in their potential.?
This helps them see that they’re integral to the organization's future. Because they are, but far too often it goes unacknowledged. When employees are made to feel they’re essential to the company's long-term vision, it significantly boosts their motivation to stay and grow with the company, and to grow the people they lead.?
The Role of Leadership in Talent Retention?
Leadership is not just about setting a vision and keeping their team on track. Effective leadership balances big picture objectives while maintaining a stable and supportive environment for the team.?
A leader's ability to actively listen, adapt and respond to employee needs makes or breaks a loyal and productive workforce. The Active Leadership approach fosters a culture of trust and respect.?
What is Your Role in Making a Change??
Investing in an effective leadership development program will give your people the soft skills that you want to hire for. And often fall short due to skilled worker shortages rife across so many industry sectors.?
To revisit an earlier metaphor, it’s preventative medicine. Instead of treating a fracture with painkillers, you’re preventing a fracture in the first place.?
If you’re looking to solve employee retention and employee turnover, the most critical next step you can take is to identify the managers and team members who have the biggest influence and highest potential and immerse them on an effective leadership development program.?
A Practical Step?
Book a free consultation to analyze employee turnover costs and develop a workforce development plan.?
During our consultation, we'll help you measure your organization's turnover cost and the knock-on non-monetary impacts that it has. We can discuss strategies for investment into leadership development for your managers and their team, enhancing their growth and adding value to your organization.? Quite simply, reduce the non-value add costs of recruitment and retention and invest into increased capability and productivity of your whole organization.?
Book a Consultation?
If you're ready to improve retention and turnover, start by evaluating your current leadership development investments. Consider integrating the Active Manager program’s principles into your leadership training strategy, starting with managers and team leaders who have the biggest impact. Remember, the goal is to create a workplace where every employee feels they are contributing to a meaningful purpose, not just showing up to do a job.?
By adopting these strategies, you can ensure that your people not only stay but thrive.?
What are your thoughts or challenges in talent retention? Let’s discuss further and share best practices for nurturing a robust, committed workforce.?
Book a free consultation. We'll reveal the number one lever you must change your retention right now.?
No sales pitch, simply a discussion with a seasoned professional that has helped numerous organizations resolve their retention issues.?
[1] Gallup, (2015), State of the American Manager, https://www.gallup.com/services/182138/state-american-manager.aspx?
[2] S. Morris, (2018), Lack of Career Development Drives Employee Attrition, https://www.gartner.com/smarterwithgartner/lack-of-career-development-drives-employee-attrition?
[3] James K. Harter, Ph.D., Gallup; Frank L. Schmidt, Ph.D., University of Iowa Sangeeta Agrawal, M.S., Gallup; Anthony Blue, M.A., Gallup; Stephanie K. Plowman, M.A., Gallup Patrick Josh, M.A., Gallup; Jim Asplund, M.A., Gallup; (2020), The Relationship Between Engagement at Work and Organizational Outcomes, https://www.gallup.com/workplace/321725/gallup-q12-meta-analysis-report.aspx?thank-you-report-form=1?
[4] American Psychological Association, (2023), 2023 Work in America Survey, https://www.apa.org/pubs/reports/work-in-america/2023-workplace-health-well-being?
[5] Chartered Management Institute, (2023), New study: Bad managers and toxic work culture causing one in three staff to walk, https://www.managers.org.uk/about-cmi/media-centre/press-releases/bad-managers-and-toxic-work-culture-causing-one-in-three-staff-to-walk/?
[6] S. McFeely; B. Wigert, (2019), This Fixable Problem Costs U.S. Businesses $1 Trillion, https://www.gallup.com/workplace/247391/fixable-problem-costs-businesses-trillion.aspx?
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