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5 Reasons Your Best Employees Quit

Rumor has it that one of Federal Reserve board chair Janet Yellen’s favorite reports is JOLTS, the Job Openings and Labor Turnover Survey report published monthly by the Bureau of Labor Statistics. Reputedly, she uses it as a macroeconomic barometer to inform the Federal Reserve’s next steps.
5_Reasons_Your_Best_Employees_QuitThere is a lot of great information in the JOLTS reports, but especially important is the “quits” number—the number of employees voluntarily leaving their jobs. In 2016, the quits number is up: in February there were 5.1 million total separations—instances of people leaving a job for any reason—and 3 million of those were quits, up some 107,000 from January. That increase is good news for the economy, because it suggests that employees have more confidence that they will be able to find a new job.
But a higher quits number is bad news for employers, because it means that it is more difficult to keep employees who (at last) have attractive options! Top performers are especially hard to hang onto in this kind of environment.
Managers often complain about losing their best employees, and rightfully so. Few things in business are as expensive and disruptive as losing good employees: turnover creates big financial burdens—the cost to hire an employee is 25 to 100 percent of annual salary—and harms customer relationships, sales cycles, and employee morale. Research shows that when a top performer leaves, other employees begin to eye the exit sign, too.
But if managers understand what is driving their employees out the door, they can make the changes necessary to reduce turnover. Here are five things companies do that make employees quit—along with strategies for mitigating them.
  1. Companies hire the wrong people. When managers don’t do the hard work of selecting the right new employees, the whole team suffers. Good employees don’t like to be dragged down by poor performers—they want to work with other top performers. But most managers continue to use hiring processes that don’t work: résumé reviews and interviews (correlation coefficients of .10 to .18, for those who like that sort of thing).
    There are managers who use the wrong hiring methods, and then there are managers who are just wrong for the job. Companies need managers who are good at teaching employees how to be more successful. But not everyone is cut out to be a manager, and putting a star performer into a manager role is not always a good idea. Take college basketball: Count the number of head coaches who were star players—get the picture? There is a reason one coach warns against hiring retired NBA stars as assistant basketball coaches. Why? He says the stars are lazy—they are so used to being catered to that they don’t know how to cater to someone else. It isn’t enough to be a great player; a coach (like a manager) has to know how to make someone else a great player.
    The Fix: Use good data for hiring. Stop hiring based on résumés and interviews. Use valid pre-hire assessments, highly structured interviews, and work samples to get valid hiring-decision data. Select managers based on their cognitive ability and personality match for the job.
  2. Companies don’t recognize and reward great work. Managers often believe they should recognize employees equally—they see that as fair. But why should hard-working top performers continue to give their all when others are getting similar financial rewards? Despite some companies’ rules prohibiting the sharing of pay information, just about everyone knows what everyone else is making. High performers like to see accountability for everyone. If they don’t see the rewards for their results, they will find a company that understands how to compensate stars.
    The Fix: Play favorites. Differentiate top performers and reward them based on their results. Research shows that employees value competitive compensation. To capitalize on that, managers should clearly explain the difference between top performance, average performance, and poor performance. Tie financial rewards directly to performance and make sure top performers reap the rewards of their work. Clarify and enforce both rewards and consequences.
  3. Companies don’t show they care about employees or teams. Managers who feel too busy to pay attention to individual employees—especially their top performers, who may seem to need little help from their managers—will have high turnover. Absence of management helps employees think about their next job. Some managers go beyond exhibiting their lack of caring to holding employees accountable for management’s mistakes or failures. Others take credit for their employees’ work. And managers too often fail to recognize when an employee is going through a hard time.
    The Fix: Help employees feel they are part of your team. Relationships at work matter, so managers must balance being professional and being human. Teams get better results when there is a bond among the employees and with the manager. Foster collaboration by setting goals that can be accomplished only through team cooperation. Schedule team gatherings. Bring lunch for everyone occasionally, bring cookies to the team meeting, and take time for employees to share best practices when they get together. A caring manager gets in the boat and rows with employees instead of standing on the shore yelling encouragement.
  4. Companies don’t value or develop employee knowledge and skills. People are born wanting to learn about and make sense of the world, and this drive extends to their jobs. When employees don’t understand how their work contributes to the organization’s success or feel like they are at a learning dead-end, they begin to eye the exit signs. Too many managers send employees to training but then ignore their learning rather than helping them apply it on the job. Some explain their lack of attention to employee development by saying they want their employees to be “self-directed” or “empowered.” That is nonsense! Employees are energized by the challenge of working out solutions for problems and are motivated by intellectual growth. Ignoring the desire to understand and learn pushes star employees toward the door.
    The Fix: Get involved in employee learning and knowledge. Effective managers make sure each employee understands the role of her job in the team and in the organization. They make sure every job is designed to make a meaningful contribution to the success of the company, and they tell employees about the importance of their work. Make sure that job descriptions are accurate so employees know what the job is—and what it isn’t; this avoids duplication, overlap, and gaps. Good managers make sure employees apply their new knowledge when they return from training; the best managers help employees share their learning with others on the team.
  5. Managers don’t respect or trust employees. Most managers will say their most important assets are their people, but often they treat employees like the furniture, believing that people are fungible, too. When decisions seem arbitrary and goals are unclear, employees feel at the mercy of an unpredictable manager, and trust evaporates. Failing to keep commitments teaches employees that trust is not important, which leads to lower productivity and resistance to change.
    Managers don’t manage employee trust very well, but they don’t trust their peers in other departments either. A 2015 survey of 11,000 senior managers found that managers trusted their colleagues to deliver on their commitments only about 10 percent of the time. Trust affects leader retention, too: a 2010 study of 1,000 leaders found that 59 percent of them had left an organization due to trust issues.
    The Fix: Get clear on what matters, and be transparent and trustworthy. Begin by clearly stating company priorities and what each business unit needs to focus on. (Tip: the message won’t be clear if it is in the middle of 87 other PowerPoint slides.) Next, let employees know how decisions are made, being transparent about the processes and their fairness. Be transparent and fair about work assignments and rewards.
    To get the best employees to stay, think carefully about how to treat them. Good employees have options, more now than at any time during the last eight years. Hiring, rewarding, supporting, developing, and respecting good employees will help them decide to stay with you.