It’s not the money
Nearly 75 percent of today’s work force is either planning to change jobs or is willing to talk if the right opportunity presents itself. Technology has dramatically changed the job search process. Anyone with access to the Internet can search job openings and apply for jobs with the touch of a button. Browsing jobs is like window shopping at the mall, except it usually takes place on the clock during the workday. Even people who are not looking for a new job like to check out the job boards to see what is new. Job boards help people feel connected to changes within their community and provide a sense of security by reassuring people that jobs are available just in case they find themselves suddenly unemployed. Employee loyalty is at an all-time low as a result of years of business downsizing, right-sizing and restructuring to meet an ever-changing business climate.
So how does an employer hold onto top performers? When talented and knowledgeable employees are the primary source of competitive advantage for businesses, it is important to closely monitor and understand the reasons behind employee turnover. When asked why they are leaving, most employees will reply that they have found a position with “more money” or “a better opportunity.” These are the answers employees commonly give to their managers to avoid creating conflict or burning bridges as they walk out the door. Unfortunately, these explanations do not accurately reflect the real reasons people quit their jobs. Well-intentioned but misinformed employers are left feeling frustrated because they are unable or unwilling to compete in a wage war. Nor should business leaders offer a salary increase to entice an employee to stay. Since money is rarely the key reason behind resignations, counter offers to encourage departing employees to stay are generally ineffective. Furthermore, this practice can backfire, as employees will come to realize they simply need to resign in order to receive an offer of increased salary. Other employers may choose to increase salaries or improve financial incentives, but don’t experience any substantial change in their turnover problems.
A study of 20,000 workers conducted by the Saratoga Institute found that just 12 percent of employees actually quit for more money. In most cases, people resign as a result of the cumulative effect of several disappointing events. These events build upon each other until the employee reaches a breaking point and decides to look for another job. The subsequent job search may result in finding a position offering more money, but understand that money was not the primary reason for initiating the job search. It’s the proverbial iceberg model, where the smaller, more visible part of the iceberg represents financial gain and the larger part under water represents the many other reasons or combinations of reasons that cause employees to leave their jobs.
The Gallup Organization surveyed more than a million employees to find out what they want from their jobs. The findings revealed people want to work with great managers. Thus, it is not surprising that a key reason individuals stay in their jobs is the quality of the relationship they enjoy with their immediate supervisor. Other important factors for retention include sensitivity to balancing life responsibilities with work responsibilities, fair treatment and opportunities to learn new skills. In this context, opportunity to learn new skills is not tied to a promise of a future promotion, but rather the chance to take on different responsibilities and experience new challenges with the goal of developing oneself to become a better employee and contribute more.
It is well worth the time and effort for business leaders to understand the real reasons people leave. Turnover can cost upwards of 150 percent of the employee’s annual salary, not to mention it is disruptive, affects morale and can impact both quality and customer satisfaction. In a tight labor market it is difficult to find good people to replace those leaving, and costly to train them only to have them resign and start the process all over again. The longer a position remains vacant, the higher the stress, cost and impact to business operations and productivity. Multiply that for businesses experiencing greater-than-average turnover, and the pain of attrition courses throughout an entire organization.
To understand why people are really leaving their jobs, employers need to change the question. Asking, “Why are you leaving?” will provoke a much different response than asking, “Why did you start looking for another job?” Business leaders can immediately start to ask better questions leading to more insightful planning and better retention efforts. Because many people are reluctant to disclose the actual reasons they left a job, some organizations use a neutral party to protect confidentiality while contacting past employees to find out why they left. This data becomes the starting point for developing an effective retention plan. In the meantime, businesses can survey their current workforce to learn answers to other important questions about retention, such as: “What do you enjoy most about your job?” or “What is the best part of working here?” or even “If you could change or improve one thing about your job, what would that be?”
For businesses to be successful, it is critical to hire and retain the best talent available. Asking the right questions, combined with openness to really listening to the answers and acting upon that feedback will provide business leaders with the information they need to keep their investment in talent providing higher returns over the long term.
Connie Johnson is managing director of Talent Framework in Reno. Contact her through http://www.talentframework or (775) 322-6836.
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