Note: your team’s current nonscientific effort likely has a zero chance for complete retention.
Yes, you read it right, a zero chance of keeping all of your teammates through the end of the year. And this retention travesty continues at almost every company, despite these five startling facts that should contribute to your anger.
- The actual cost of turnover can reach 10 times the departing employee’s salary. The actual costs escalate dramatically when you cope beyond simple replacement costs (most estimates don’t). Also include team disruption, lost productivity, lost intellectual property, and customer/sales impacts (source). More details on the actual high cost of turnover can be found here.
- CEOs list key employee retention as their #1 management issue. Yes,
79 % of them cite it as their top problem. Because their turnover is skyrocketing, replacements are impossible to find, and no one in HR has any new but proven solutions.
And the saddest part of the entire debacle is that…
- 95% of upcoming turnover is predictable (source).
- A whopping 78% of turnover is preventable (source) without significant spending.
- And unfortunately, the U.S. voluntary turnover rate is projected by Gartner to jump nearly 20% this year, and the average turnover rate will rise to 35% by 2023 (source).
So in my view, this situation perfectly meets the definition of “a preventable outrage!”
And even if you aren’t directly responsible for any element of your team’s retention effort, you should still be deeply concerned and even outraged. Low team retention negatively impacts your team’s productivity and innovation, reducing your job security. Your intervention is also required because low retention rates will also hurt your team’s product, its customers, every single employee on the team, and your shareholders.
And as the founder of “data-driven retention” in the 90’s. I can tell you precisely why it is failing in your team/company in less than five minutes (even without actually examining your retention effort). Every effort that is not data-driven makes the same painful and avoidable mistakes. So in the remainder of this article, I’ll highlight the six major causes of team-level retention failure.
Why Your Retention Effort Continually Produces Disappointing Results – The Top 6 Reasons
During my nearly 25 years of retention practice, I have discovered that most team-level retention efforts are painfully inadequate. I describe them as “ad hoc retention efforts” because they operate without hard data and with almost no leadership, coordination, and accountability. Unfortunately, these unscientific “ad hoc retention efforts” are by far the most commonly used retention approach at both the team and the company level. My research has revealed six common reasons why a team manager almost always struggles to develop a successful retention effort. The 6 reasons for this abysmal failure are listed below, with the highest impact failure causes appearing first.
Error #1 – Each Segment Of Your Effort Is Not Data-Driven (The #1 Failure Factor)
There’s no getting around it. A data-driven effort is the #1 essential factor that drives retention success. And unfortunately, with only a handful of exceptions. Nearly all corporate and team retention efforts fail because they don’t make every important retention decision based on data. Instead, they rely on intuition, emotion, antiquated past practices, guesswork, and inaccurate stereotyping about the real causes of turnover for essential “keeper employees” (they are also labeled as “regrettable” turnover).
- Without a strong data-supported business case, your managers don’t focus on retention – unfortunately, managers routinely underestimate the real cost of individual employee turnover. So, in order to get their attention and to raise their excitement level on retention. You must provide them with a data-driven business case. That reveals the actual dollar cost to managers of losing a single mission-critical employee. Those actual costs can exceed 10 times their salary. And that value literally walks out the door, even though 78% of turnover is preventable.
- Without data, managers can’t accurately prioritize the most impactful employees – the first step in retention success is the accurate early identification and prioritization of the most valuable “regrettable employees,” who are the most desirable employees and the most likely to quit in the near future. This prioritization and targeting are both critical because managers simply don’t have enough time or resources to proactively act to retain every employee.
- Without data, managers are not able to predict which employees are likely to leave – work at IBM has demonstrated that with data, you can predict with 95% accuracy which employees will leave within the next six months. So in one more case, data is a much superior alternative to guessing and intuition on who might leave. Knowing who is likely to leave gives the team leader enough time to focus his/her retention effort on these prioritized employees. And it also assures that there will be sufficient time to first learn and then mitigate their individual turnover causes.
- Without data, managers often guess wrong about actual turnover causes of a targeted employee – in order to dramatically improve retention, managers must act in one or both of these areas. Those impact areas include increasing the employee’s excitement and impacting their likely frustration factors that cause the most turnover. Unfortunately, without actual data, managers are forced to guess what those factors are (and managers almost always get them wrong). Because when you ask individual employees and their managers to rank their motivators and frustration factors separately and anonymously, the resulting lists provided by the manager almost never even come close to matching the lists provided by the employee. So without individualized data in these two areas, managers end up flailing and taking retention actions that will literally have no impact on this individual employee.
- Without data, managers frequently take the wrong retention actions – for each primary turnover cause that a manager must try to mitigate. Fortunately, there are one or more specific retention actions (I call them retention tools) that have been proven to effectively reduce or eliminate each specific turnover cause. Unfortunately, almost no managers (and few in HR) are even aware of these proven retention actions and tools that managers can use. So without access to this retention toolkit, most managers instead rely on common tools that only have a slight short-term impact, including pay raises and retention bonuses. A list of these effective retention tools can be found in section 5 towards the end of this article.
- Without data, managers often make the damaging error of assuming employee loyalty – managers frequently make the damaging assumption that all of their employees are loyal (they all love me). And that is an especially bad assumption during a time when turnover is at record levels. In most cases, one in three (some, one in five) employees will quit each year. And as a result, managers are all too often shocked when someone they assumed was 100% loyal announces their departure. Avoid being shocked, and instead, educate every manager on the actual likelihood of any employee leaving. In this instance, they start with the assumption that each of their very best “regrettable employees” is likely being actively targeted by outside recruiters (because they are so good and it’s hard to keep a top employee hidden from recruiters).
Error #2 – The Real Turnover Causes Of Each Departing Employee Are Seldom Accurately Identified And Mitigated
The second primary error that is almost universally made by both HR and managers is to attempt to generalize retention causes across all employees. This often happens because managers rely on all employee dissatisfaction surveys, which is a disastrous mistake. The specific causes of turnover for each prioritized recruiting target are literally never the same as the stated turnover causes for the average employee.
- You get highly inaccurate turnover causes when you rely on standard exit interviews – knowing precisely why other top employees have left will give your manager insight into why some of their current employees may leave. So you must accurately know “the real causes” of why your regrettable employees have left. Unfortunately, this is problematic because the standard exit interview approach is used by almost everyone. It routinely produces highly inaccurate information on turnover causes. On their final day, when they still need a positive reference, they don’t see the value of burning bridges behind them. The departing employee will (almost without exception) be less than candid.
Instead, managers must shift to a far superior option, which is delayed post-exit interviews. The Work Institute found that waiting as little as 2 weeks will change a departed employee’s exit interview answers by a significant 40%. For example, most say compensation is their primary turnover cause, whereas in delayed interviews, the cause is usually a work environment factor under the manager’s control. So if managers are to prevent future turnover, they need to supplement exit interviews with post-exit interviews. This would provide the most accurate information on what caused each targeted employee to leave.
- Because a career-damaging event is a final trigger, managers must have a process for identifying career–damaging events – it’s a fact that having a dull job or even a bad manager is not enough to trigger someone to quit. Instead, before they actually decide to leave, it takes an additional “career-damaging event” or trauma to actually push them over the edge. These traumas might include having their project canceled, a project proposal rejected, being rejected for a promotion, being assigned a new manager, or a major resource reduction/staff cut in their job area. In other cases, they only decided to leave because a favored colleague recently departed and urged them to follow. This information career damaging information won’t come from HR. So it is the responsibility of each manager to use informal sources and “super knowers” within the organization to identify when a targeted employee feels that their career has been damaged.
Error #3 – Employee Excitement And Motivation Won’t Be Increased – Unless The Manager Has An Accurate Motivation Profile For Each Individual
As I mentioned previously, the primary two avenues for reducing turnover are to increase the employee’s excitement level, or to mitigate their frustration factors. In the last error section, we covered how to identify the real causes of turnover. So in this section, I am focusing on increasing the target employee’s excitement and motivation levels. So it’s important that managers must realize that only a data-driven approach will reveal to them which specific actions will excite/motivate each of their individual employees.
- Failing to improve an employee’s excitement factors will increase turnover – increasing an employee’s excitement and motivation levels will increase the positive factors that cause them to want to stay. Unfortunately, few managers actually know (or can even closely guess) what specifically motivates and excites each employee. So a manager needs to develop a “what motivates/excites you profile.” This can be developed during new hire orientation. Or later during a one-on-one informal interview with the manager or with a survey. And then, the individual’s retention plan must include specific steps for increasing both levels.
- Failing to make their job content compelling will decrease their excitement – since a great deal of employee excitement comes from the content of their job. Managers should use the “more of/less of list” job duty assignment tool to add more exciting elements to their job. While simultaneously minimizing or eliminating a few of their responsibilities that they would love to stop doing. In order to maintain this high job excitement level, job duty reassignment may need to occur as often as twice a year.
- Failing to improve an employee’s “why do you stay factors” will hurt retention – every targeted employee has specific factors that contribute to keeping them here. These “sticky factors” are important, so managers should strive to increase their existing ones. “Why do you stay factors” can best be identified using the most effective retention tool, which is the “stay interview.” It is a one-on-one discussion with the targeted employee that occurs as often as every six months. Its goal is to identify and then strengthen the employee’s reasons for staying. I recommend that during this interview, you focus only on the positive factors (and avoid their frustrators) because that will help make the stay interview less emotional. Obviously, their personalized retention plan must include actions that directly strengthen as many of their “sticky factors” as possible.
Error #4 – A Personalized Retention Plan – Without It, Managers Won’t Actually Implement The Actions Specifically Designed For This Targeted Employee
The most successful actions for both exciting an employee and mitigating their frustration factors must be local and targeted to the individual employee. Unfortunately, most corporate actions for improving retention (like pay increases and better benefits) are broad in nature, so they are designed to literally impact the retention of every employee. Unfortunately, these broad actions may have little or no impact on the retention of your targeted employee. So instead, what is needed is a targeted individual retention approach that is designed by the manager, specifically to increase the excitement or reduce possible turnover causes for this employee. So managers should develop a narrow-personalized retention plan that is customized for each targeted employee on the team. It is significantly more effective because it covers the specific actions necessary to keep this specifically targeted employee.
- A Personalized Retention Plan should have these elements – all personalized retention plans should be informally negotiated between the manager and the targeted employee. Its primary goal should be to excite the employee about their future with the company and to minimize any of their frustrators. A typical personalized retention plan would highlight some of their potential future projects, opportunities to be mentored, opportunities to interact with executives, and several of this employee’s likely future career paths. The resources, target dates, and the release time that will be made available to them should also be specified. The employee should be encouraged to work with their manager in order to ensure that the expectations in the plan are being met. In the end, those employees with a personalized retention plan should have a 50% higher retention rate than those without one.
Error #5 – “It’s the tools, stupid” – Managers Won’t Use The Most Practical And Effective Retention Tools Without A Toolkit
Another critical finding that I have had during my 25 years of research and practice in retention is that almost any manager can be successful at retention. Provided that they use a data-driven approach and they also have access to a retention toolkit. The toolkit is essential because with the right tools and prescribed actions, literally, every manager can significantly improve their retention rates, rather than specifying the specific tools that they must use. The toolkit approach offers them the option of selecting and using only the retention actions or tools that make the most sense to them. The selected tools fit their team’s culture and current situation. Below you will find a descriptive list of the most-effective top retention tools that I have seen successfully implemented. More details on each of these tools can be found here. On this list, the most effective and the easiest to implement tools are listed first.
- Stay interviews – identifying and building on the sticky factors that keep them here.
- Walk them down the stream –show them the real impact of their work on others.
- Ask them to warn you – the courtesy of this warning notice will provide time to act.
- Post-exit interviews – delay exit interviews for 2 months to increase honesty.
- An employee motivation profile – rank the factors that motivate each employee.
- More of/less of lists – shift their job duties so that they are doing “what they do best.”
- Overdue list – track areas where they are overdue for something important to them.
- Re-recruit your current employees – start from scratch and redesign their job.
- A personalized retention plan – customize your retention effort for this individual.
- How to manage me profile – educate your manager on how to best manage you.
- ID productivity barriers – factors that limit productivity frustrate the best workers.
- An employee learning plan – excite those that love to learn.
- Show appreciation – recognize them and show that they are appreciated/needed.
- Just ask them to stay – this simple personal request may be enough.
- Boomerang rehiring – specifically recruit the best employees that recently left.
- Part-time job rotations – provide one day a week or virtual rotations that excite.
- An employee challenge plan – excite those employees that want more challenges.
- Reward managers for productivity and retention – because it gets their attention.
- 20% time – give them free time to work on their favorite projects (like Google).
- Involve every employee – make it everyone’s job to help retain each other.
Error #6 – Weak Retention Metrics – Without The Right Retention Metrics, There Will Be Little Improvement In Your Retention Results
An integral part of data-driven retention is the effective use of performance metrics. First, because they help you to improve continually, also, if you widely report individual retention metrics, they will help to drive competitive individual managers to improve their ranking on this retention list. I have found the following 8 retention-related metrics to be the most impactful turnover and retention metrics that are guaranteed to get the attention of your executives.
- Retention ROI – the dollar cost of your turnover effort compared to the dollar value added as a result of your successful retention effort.
- Performance turnover – the turnover percentage among your innovators, game changers, and top-performing employees.
- Regrettable turnover – the turnover percentage among your best employees that were designated as regrettable turnover.
- Preventable turnover – the percentage of actual turnover that was judged to be preventable.
- Where did they go – what percentage of your turnover went directly to your talent competitors (find out on LinkedIn).
- Diversity turnover – the percentage of diverse employees that left, compared to the overall employee turnover percentage.
- The % of employees at risk – the percentage of your employees that are currently judged as being “at risk” of leaving.
- Couldn’t be replaced – the percentage and the cost of departing employees in critical positions that couldn’t be successfully replaced within six months.
Things To Avoid In Your Team’s Retention Effort
In addition to the many positive actions that I have recommended in this article, there are several retention areas that managers should treat with an extremely high level of skepticism. Those “beware of” areas include any emotional “love them or lose them” advice. Automatically assuming without data that improving soft factors like engagement, belonging, or happiness will directly improve retention. The worry of offering retention bonuses before you have first fixed the job. Putting equal effort into retaining every team number is also on my avoid list. Finally, proactively avoid even listening to any advice on retention and turnover that is not based on hard data.
|If you can only do one thing – first read my e-book on “stay interviews” (I am proud to say that I created them in the 90’s). Then, make a pitch to your team’s manager to institute them and other highlighted retention tools on a handful of your most critical team employees who may be at risk of leaving. Don’t be surprised with how much your manager learns after using this simple but highly effective practice.|
In my over five decades of experience in HR, it’s hard to think of a talent management program with such a high business impact (retention is ranked number two in business impact by the BCG). But, at the same time, it is also so poorly managed. Executives are clearly anxious about this problem because a survey of CEOs recently ranked retention as their top management concern. Employee retention now deserves even more attention because employee retention rates are now at record-low levels. Yet most organizations, for some reason, continue to put individuals in charge of retention that seem to be averse to shifting to a 100% data-driven approach. I find this resistance to be utterly discouraging, and you should too!
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Dr. John Sullivan 9/26/22 for the DJS Aggressive Recruiting Newsletter