It is costly when employees voluntarily leave because they take their training, knowledge, talents and competencies with them. Analyzing turnover and exit data to develop effective retention strategies may reveal surprising root causes.
- By Simeone Summers
Most managers would say they know why people leave the company and then proceed to list reasons like “better pay” or “more opportunity.” They may or may not be the real reasons, but the employers continue doing business as usual, seeing little reason to change anything. It is remarkable that businesses seem to spend little time trying to uncover the truth about turnover, usually relying on exit interviews conducted by Human Resources (HR) personnel. The cost of turnover is high because employees take their knowledge, training, talents, competencies, experience and networks with them. For these reasons, a wealth of turnover and exit data needs to be collected, reported to management, and then leveraged to develop effective retention strategies.
Long before an employee leaves, there are usually signs of disengagement. An anonymous saying goes like this: Some people quit and leave, while others quit and stay. When people become disengaged, they almost always lower their productivity, costing the company much more than the expense of training a replacement. Disengaged employees use sick leave, have an increased likelihood of experiencing on-the-job injuries, complain more, make more mistakes, and may even be deliberately uncooperative or cause turmoil in the workplace. It can be particularly harmful to the business if the dissatisfaction with the company translates into giving poor customer service or producing low-quality products or services.
Making the Connections
In many companies, turnover and exit data tends to be fairly shallow because there is a tacit understanding that the employees will probably not tell the real reasons why they are leaving and employers should not be asking personal questions. The real reasons for leaving include lack of opportunity, poor management, inefficiency, lack of mentoring or development opportunities, no recognition earned for contributions to the business, a nonparticipative culture, lack of opportunity to use talents and creativity, or lack of opportunities to follow a desired career path. There may be more personal reasons too, like managers belittling employees or using a dictatorial, offensive style. In reality, most people have multiple reasons for searching for a new job, and it is an accumulation of events that lead to their terminating employment.
Using turnover and exit data to learn the real reasons employee leave requires connecting the data to the employee and/or company history. The HR exit interviews may be summarized and sent to the appropriate manager or supervisor, but the information is not very valuable unless it is linked to what occurred in the workplace. Was the employee a rising star who reached a certain level and found no more opportunities? Analyzing the person’s career path in the company can be very revealing. The departure of a talented employee who is promoted a couple of times, but eventually reaches a level where all efforts to advance are stymied, is an indication there is a problem. For example, there may be a history of women failing to reach management positions, despite excellent work performances. The only way that information is discovered is by analyzing the data for all women who have left the business over a period of time. If women are seldom promoted into management in a particular division, senior management knows it can expect to lose talented women in the future and corrective action can be taken before others leave. If the turnover rate for minorities is twice as high as the turnover rate for white employees, it is considered a dysfunctional voluntary turnover. Another good example of dysfunctional turnover is high turnover rates for talented staff members who complete in-house training. There is obviously a systemic issue that needs addressing or an undesirable corporate culture that does not support diversity and inclusion or up-and-coming professionals.
Understanding why people leave employment is one level of information gained from turnover and exit data. However, employers can also use the information to identify the risk of loss of critical employees. For example, if exit data indicates a particular employee profile is likely to leave after five years due to lack of engagement, retention strategies can target this group. Perhaps the company needs to offer challenging projects requiring teamwork so the employees are able to contribute more of their talents and have greater company-wide visibility.
Collecting a Wealth of Data
The data collected needs to include much more than just the turnover rate. Employers should track turnover by job title and job level, years of service, performance level, and so on. The reason people are leaving should be identified, but the reasons can also be correlated with other data. The breakout data on terminating employees can include information like skill level, gender or race, performance level, promotions, type of work, training and development completed, and so on. Once the data is collected, the costs of turnover by employee category, based on a pre-designated factor like skill level, are calculated and compared to the benefits of designing retention strategies. Benchmarking can provide guidance for evaluating the costs of turnover, while a needs assessment analyzes future workforce needs based on industry and marketplace conditions.
Data is collected in different ways. Exit interviews, post-exit interviews, linkage research and qualitative studies are just a few methods. The type of retention strategies designed depends on what the turnover and exit data reveals. They can include adding flexible work schedules or training and development opportunities, developing a new-hire orientation program that conveys realistic information about the job, revising the salary and benefits schedule, adding supervisor training, developing motivating performance based awards, and many others.
Ultimately, the goal is to use the turnover data in a way that improves retention of employees who bring the most value to the business. Highly trained and skilled workers, minorities and women, and critical positions that are difficult to fill are examples of high value employee groups. Developing and implementing a plan to reduce turnover rates is challenging, but the benefits accrued make it well worth the effort. Just do not be surprised if the data analysis reveals that management really did not have a firm understanding of what employees are thinking and experiencing.