Top 4 Reasons why People Really Quit Their Jobs

According to the “2019 Work Institute Retention Report,” U.S. voluntary turnover has increased by 88% since 2010 and is expected to hit 35% by 2023. Turnover is an enormous problem that costs U.S. companies 600 billion dollars annually. If nothing changes in the immediate future, costs could top 800 billion by 2023.

 If the projected increase in turnover was not bad enough, it gets worse. According to the president of the Society for Human Resource Management (SHRM), Johnny C. Taylor Jr., we now have more jobs than people to do them, which means our labor shortages are going to get worse. According to a study conducted by the Manpower Group, a job placement firm, 7 in 10 employers reported talent shortages in 2019. This is the worst level ever and an increase of 17% from 2018. The current shortage is three times higher than a decade ago. A study conducted by Centers for Disease Control found that birth rates dropped in 2019, for the fifth year in a row, reaching the lowest point in 35 years. With more baby boomers retiring, low birth rates, and insufficient levels of legal immigration to pick up the slack, shortages are at hand and are projected to increase. One can only conclude that when you find good employees, you better retain them! To accomplish that, we must first acknowledge and understand the top reasons for voluntary turnover. They are as follows: 

1.     Bad Management

According to DDI, a global leadership consulting firm, 57% of employees quit because of bad managers. The Work Institute Retention Report lists manager behavior as third. However, when you factor in work environment, well-being, and job characteristics, all of which are largely controlled by managers, manager behavior aligns more closely with the statistic from DDI.

Frontline managers oversee 80% of the workforce and are largely responsible for executing organizational strategy and building culture. Unfortunately, they often lack the skills needed for effective people management. Gallup reports that only 1 in 10 managers naturally possess the talent and skill to manage others and another 2 have basic managerial talent. Many more managers are endowed with some of the necessary traits, although few have the unique combination of talent needed to help a team achieve excellence in a way that improves a company's performance significantly. That means roughly 30% are effectively managing their teams while 70% are flying blindly and, in many cases, wreaking havoc in the workplace. Not surprisingly, research conducted by the (CEB) Corporate Executive Board shows that 60 percent of managers fail within the first 24 months of their new position. And the main reason managers fail is that they were never trained properly on how to manage other people and be an effective leader in the first place. There is a lot riding on managers. They can either make leaders and companies or break them, especially when it comes to talent retention. What exactly constitutes bad management, though? According to the Work Institute, the following types of manager behavior cause turnover:  

Poor Employee Treatment

Lack of Support

Poor Communication

Unprofessionalism

Lack of Manager Competence

Manager Fairness 

At the beginning, middle, and end of the day, words matter. How managers communicate with employees and treat them is everything. Get it wrong and people will line up at the door. Get it right and you will turn underperforming, job-hopping employees into high-performing, lifelong, loyal employees. While bad management is, by far, the largest, cause of turnover, there is some good news here. According to Gallup, at least 75% of the reasons for voluntary turnover can be influenced by managers. What if your managers reduced voluntary turnover by 50 -75? What would that do for you and the company? The cost savings would be enormous.

2.     Opportunity/Career Development

Opportunity/career development ranks a distant second on the list of turnover causes. Contrary to common belief, however, lack of advancement or promotional opportunity is not always the reason for resignation. In fact, research shows that demand for advancement or promotional opportunity has decreased 45.8% since 2010. On the other hand, demand for growth & development opportunity has increased by 170% since 2010. As you can see, it is not always about advancement. Nonetheless, leaders can address both aspects in most cases. To accommodate those who seek advancement, leaders can construct and install a ladder. Implementing such a program will increase tenure and build a pipeline of team leads, supervisors, and managers. To satisfy the growth and development aspect, well-trained and highly skilled managers can deliver on coaching, mentoring, technical skills enhancement, cross-training etc.  

3.     Inadequate Work-Life Balance

While work-life balance is a moving target and at times rather elusive, employee satisfaction is not that difficult. When you analyze the data, it basically boils down to three factors. Two that are highlighted most often are schedule and flexibility. Are you affording employees a reasonable amount of time for family and leisure? Are you flexible and accommodating when it comes to family obligations and personal interests? Or are you insensitive to them. To reduce turnover, you must balance both the needs of the company and employees. Consider this; if your managers are well-trained and highly skilled, you can err on the side of accommodation, yet, surprisingly, increase your productivity by 20%, 30%, or more. 

When it comes to work-life balance, the factor that is often overlooked is employee experience. What type of experience are you providing? Are you offering a takeout experience (you do the work, and you get to take out a check)? Are your waiters and chefs (managers and leaders) poor servers who are disengaged or rude? When employees are ignored, unappreciated, and employment is transactional rather than relational, people are unfulfilled professionally. If you think that does not spill over into one’s personal life, I will ask you to recalibrate your perspective. When employees are controlled and/or micromanaged, and work in a toxic environment and culture, they get stressed out. Once again, this impacts work-life balance. In my opinion, employee experience carries more weight than schedule or flexibility. Well-trained and highly skilled managers can positively impact work-life balance by creating a 5-star experience. 

Following the advice of many consultants over the past several decades, companies invested heavily in perks and amenities such as wellness centers, free laundry service, catered lunches etc. Very few employees will turn these perks down, however, they do extraordinarily little, if anything at all, to increase talent retention. You would be well advised to invest your money where it counts.  

4.     Compensation 

Of course, compensation is important. But not in the way you might think. Yes, both acquisition and retention will be challenging if you fail to offer competitive compensation. Beyond that, it's about much more than just the money. Think about competitive compensation as a baseline. Once a baseline of fair compensation is established, manager behavior, work-life balance, and opportunity/advancement are weighed against it. If you are satisfying the first three deliverables, not only will employee retention skyrocket, but research shows that employees will also accept less compensation. Employees want a great workplace experience, and they will pay through the nose for it in terms of engagement, commitment, productivity, performance, and loyalty. Once again, while compensation is important, it’s not always about the money. Bottom line, you cannot buy your way out of turnover! 

To further that point, sign-on bonuses have become common over the past decade. While this may increase talent acquisition slightly, it will also increase turnover in the long run because candidates were attracted with the wrong bait. If you make it all about the money, you will attract candidates who are all about the money! When fishing for new employees, it helps to use the right bait. A job posting filled with chum attracts sharks, barracudas, and crabs. A job posting that emits team sonar attracts dolphins that swim in groups, work well together, and care for one another. Demonstrate that you offer what the best candidates are seeking – a positive workplace culture, managers who care, work-life balance, and growth/development, and you are more likely to hire loyal employees. Sure, you can add stipulations to sign-on bonuses, but you cannot force or buy loyalty. Loyalty is an act of reciprocation in response to the caring and support an employee receives from managers and leaders. A successful retention strategy is based on attention rather than detention. 

As for existing employees, rewards and bonuses do not retain them. Remember, you cannot buy loyalty. Reward is merely icing on a motivational and loyal cake that has already been baked. If you want to reward employees for their high-performance, then that is great! If your intent is to boost retention, I recommend saving your money. There is no need to throw good money out the corporate window! 

Are your managers struggling to motivate employees? Is your turnover ratio rising? Are your new recruits exiting stage left, faster than you can train them? What is that costing you? 

Would you like to learn more about how to reduce employee turnover by 50%, or more, without increasing compensation or offering costly incentives and ineffective perks? I outline the details in my free white paper: 

 “How to Reduce Employee Turnover by 50%.”

Regards, 

David Roppo

Coach & Consultant

#leadership #management #talentretention