What happens when key talent leaves?
Beyond the knee-jerk misery of the replacement work, a lot happens:
- Critical knowledge and intellectual capital goes out the door
- Customer relationships can suffer due to disruptions in customer (or internal stakeholder) relationships
- Inefficiencies occur due to process disruptions or knowledge gaps
- Company resources are redirected from growth to replacing productivity
When key people leave, all their ideas for improvement, growth and development leave with them. This is an enormous opportunity cost. Work is typically interrupted while new people are brought in, trained, and brought up to speed. Quality is put at risk. What’s worse, many of the replacements often fail to regain the performance levels of "A" players, and many need to be replaced again — some estimates as high as 50%!
Costs higher than realized. The costs of losing key talent are typically much higher than internal estimates. When we have been called in to do a true cost analysis, the costs of replacing talent is typically three to ten times what had been assumed. While many organizations estimate the obvious costs — recruiting, selection, training — most underestimate the productivity, customer, and re-replacement costs. Every dollar spent replacing an employee is a dollar taken away from investing in the growth of the company.
Retention or Turnover? While many organizations calculate gross turnover rates for various jobs or locations, focusing on retention — especially for "A" players in pivotal jobs — will often add important decision making information. While some factors drive employees out the door, others are important for retaining the best. Only a custom analysis of your workforce and culture will answer what those are. There are rarely one-size-fits-all factors that can be applied from organization to organization.
THE SOLUTION
Get the Facts. In order to address retention or turnover concerns, it is important to understand the real numbers and real issues. Several steps have proven valuable:
- Understand the real rates for important subgroups. Overall turnover rates are not much help. But being able to understand the retention rates for pivotal strategic roles, or the rates of your "A" talent is far more helpful in making decisions.
- Identify the ‘right’ target rate for retention (or turnover in some cases). Many studies have shown the negative impact of zero turnover: loss of fresh ideas and innovation, retention of "dead wood," and failure to adapt to changing market needs.
- Calculate the real cost of such turnover to be able to make cost-benefit calculations
What Drives Retention or Turnover? Many of the factors that influence retention or turnover also affect other important outcomes: performance, customer satisfaction, quality and cost. These drivers typically fall into three categories: Alignment, Capabilities, and Engagement. Examples include:
- Alignment drivers of turnover might include disagreements over values, interdepartment conflict, a fuzzy strategy, weak goal setting, and rewards that are mis-aligned with performance.
- Capabilities drivers might include insufficient training, selecting the wrong people, poorly designed jobs or insufficient information or resources to succeed.
- Engagement drivers include supervisory behaviors that push people out the door: respectful and fair treatment, inappropriate communications, lack of recognition among others; also, learning and growth opportunities are often an important factor
What’s Your Root Cause? An important key to solving retention and turnover gaps is identifying the critical few actionable causes — those that are controllable, meaningful, and account for the largest amount of the gap. To do so, Metrus has found that you need the right data from the right people:
- Forget exit interviews! They are typically less than 50% accurate in identifying the right causes. Who will say their boss was an ogre or there were ethical problems?
- Assess former employees. Metrus has developed techniques for obtaining the input of your regrettable losses after they have experienced "greener or not so greener grass."
- Assess current employees — before they leave! There is a great deal of useful information among your current employees-especially the "A" performers.
- Examine who you bring in. Metrus Institute has found that the problem often begins in hiring employees who are not capable of being Aligned or Engaged in your culture.
These approaches will help to quickly identify the critical few drivers of top talent retention or key job turnover. The next decision is what to do about it?
Identify Workable Solutions. While knowing the drivers is essential, know what to do about them is even more important. Over time Metrus has identified three key steps to implementing solutions that make a difference.
- Get great ideas from current and former employees
- Metrus and its consultants have identified scores of solutions that have worked in similar situations in other organizations. These cannot be applied carte blanche; they must be tailored to the unique strategy and culture of a particular organization or unit.
- Conduct an impact analysis. Is it worth fixing? Not all turnover is bad or worth fixing. For example, some outflow of employees is inevitable, but is it the right kind? For example, accelerating the loss of poor performers has a positive effect for the organization (and for high performers). And some rates of turnover may not be worth the investments to fix.
Build Action Plans with Accountabilities. Knowing the gap and the solution is one thing; implementing the fixes is another. This requires sound action plans, assigned accountabilities, and good tracking metrics.
METRUS RESOURCES
INFORMATION
The following article is available at our Recommended Reading page:
- Strategic Surveys: Linking People to Business Strategies, by Brian S. Morgan and William A. Schiemann, in Getting
Action from Organizational Surveys: New Concepts, Technologies and Applications
EDUCATION
- Executive coaching and workshops to help supervisors and managers change behaviors and styles that drive talent out.
- Executive onboarding, to ensure that senior executives start with the tools they need to succeed.
PRODUCTS & SERVICES
Our Solutions Design is based on years of experience. Metrus Group's custom solutions address:
- Supervision: Employees need and want managers and leaders who can help them achieve performance goals, provide feedback, and channel their energy in productive directions.
- Career Growth: Employees often leave an organization because of unclear career paths or skill development opportunities.
- Alignment of Values: Surprisingly, many departures are related to values that are not in sync between employee, manager, and senior leadership.
- Communications are often a key culprit as we learn in interviews and focus groups. Too often, misunderstandings that were easily fixed send employees packing.
Contact Us for more information.
