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Putting the Brakes on Employee Turnover

9/18/2013-

by Clif Boutelle, SIOP PR

As the Economy Improves, Employers are Being Challenged to Retain a Restless Workforce

By Clif Boutelle

Although any gains in the business recovery are welcome to employers and the economy, there is one consequence that will not be as welcome: workplace turnover.

“Employees dissatisfied with their jobs, uncertain of their career within the organization, or distrustful of leaders are looking to leave—which, until now, has been somewhat difficult given the state of the labor market,” said Brenda Kowske, principle researcher at BI Worldwide and adjunct HR industry analyst at Bersin by Deloitte.

“As the recovery progresses and more jobs become available, there will be more churn in the employment marketplace, given the expected higher quit rate. This especially is true for those with marketable skills in growing fields with talent shortages, like health care,” she said.

In its May 2013 Job Openings and Labor Turnover Survey, the Bureau of Labor Statistics (BLS) showed a sharp increase in people voluntarily leaving their jobs—an increase of 37% (2.1 million) over the low point of 1.5 million in September 2009.

BI Worldwide, a Minneapolis-based firm that provides business improvement solutions, conducted a survey of 1,000 adult employees in midsized to large organizations, finding that 20% of them intend to leave their jobs within the next year.

And there is more distressing news. A recent Gallup survey of the American workplace revealed that only 30% of workers “were engaged or involved in, enthusiastic about, and committed to their workplace.” Disengaged workers are more likely to leave their jobs.
That’s borne out by BLS statistics about quits or worker turnover. Quits are generally voluntary separations initiated by employees and are procyclical, rising with an improving economy and falling when the economy falters, says the BLS.

The indicators are a sure sign of a formidable looming leadership and HR headache, said Kowske, who led a panel at the SIOP conference in Houston on ways to combat turnover. “In addition, employers are bracing for the impending retirements of older workers and will be scrambling to keep the right talent in the right jobs.”

There will be less scrambling if the organization’s employees are highly engaged said Kowske pointing to a 2010 Hay Group study that found turnover can be 40% lower for companies with highly engaged workers.

Engaged employees are those valued workers who invest themselves in their work and are committed to performing at a high level. Numerous studies have shown that an engaged workforce leads to greater productivity and profitability for an organization.
So, why the seeming disconnect between the desirability of engaged employees and the Gallup survey that found most workers are not engaged?

“The Gallup findings seem high but they do show that organizations need to respond to employees’ needs at both work and home while meeting organizational goals,” Kowske said. “Savvy organizations are acting to build engagement to mitigate the risk of talent turnover,” she added.

To do so, they need to know their employees and understand their values and what is meaningful to them and then plug them into assignments that best fit them.
Employees considering a change are asking questions like “Am I being paid fairly?” “Am I good at my job and is it important?” “Am I being challenged?” and “What is my future here?”

If they have been in the same job for 5 years or more, they are more likely to look elsewhere,” Kowske said.

In response to employees’ questions, organizations need to be more aware of what employees want, said Kowske. The most basic requirement is security, especially after the turmoil the job market has gone through the last 4 years. Management needs to be transparent and keep employees informed about how the company is doing and if it is growing. Transparency helps build employees’ faith in management—a belief that allows employees to trust the ability of their organization and envision a future for themselves in it, she said.

Other factors instrumental in creating an engaged workforce include:

  • • Fair pay. The data show a direct correlation between pay and engagement. “What’s important is the employees’ perception of fairness. They need to feel that the organization’s compensation package is fair and equitable,” said Kowske.
  • • Exciting work. “Employees want to know their work assignment is challenging and that they are contributing to the well-being of the company,” she pointed out. They want to know their job is worthwhile and includes a promising future.
  • • Recognition of employees. This cannot be understated. It shows appreciation and that is meaningful to people. Honoring employees, whether individually or by groups, for excellent work is reflective of an organization’s culture and can help boost engagement for employees.
  • • Ongoing learning and career growth are important to an engaged employee. Kowske noted the more sophisticated talent management systems will provide tools to explore options within the organization in a more targeted way. “Management needs to be aware of an employee’s combination of skills, values, and interests so that a pool of candidates can be developed for position openings,” she added.
  • At the same time it is important for employees to be clear about their own career paths. It is helpful to take self-awareness assessments to better understand their interests, skills, and how they may fit into other positions within the organization.

“Employees who are engaged in their work are more likely to stay with the organization,” said Kowske, adding that another benefit of low turnover is cost savings. “It is expensive to constantly hire and train new people.”

Although engagement has been found to lessen turnover, a Purdue University assistant professor of psychology, Sang Eun Woo, has conducted preliminary research that may help HR practitioners determine a person’s predisposition to leave a job.

It is based upon individuals’ propensity toward job mobility as measured in assessments, she said. She has identified two interrelated yet distinct constructs reflecting attitudes toward changing jobs.

One she calls Blue Bird Orientation, the other Hobo Orientation.

Blue Bird Orientation describes people who are not completely engaged in their current work and believe there is a better job for them elsewhere, though it may not necessarily exist. “These are people who believe the ‘grass is greener’ in a different job and are optimistic about their ability to switch jobs,” Woo said.

Hobo Orientation is descriptive of people who frequently quit their jobs in search of something new regardless of how they think about their current position. “They have a positive attitude toward job mobility itself and may or may not feel they can find another job that is equally good or better. Simply put, these are workplace nomads,” she said.
It is promising research and knowing these attitudes can help HR and hiring managers mediate employee turnover, she said.

She pointed out, though, these attitudes are not necessarily bad nor do they result in disengaged employees. “If the person is considered to be valuable, interventions can be done to keep that worker. Sometimes it may be better to keep high performers with these attitudes rather than let them go. The important thing is that HR will know about these tendencies in an employee,” she said.

She added, “As we learn more about this, measures can be worked into employment applications to capture these types of orientations.”