The Return of Turnover—And How to Prevent It

By Joseph Folkman, Ph.D., President and Co-Founder, Zenger Folkman

Before the recession, Zenger Folkman had an effective metric that predicted turnover: intention to leave. We would ask employees if they were thinking about quitting. The percentage of those who answered “yes” or “neutral” was highly correlated to turnover. About 50 percent of employees who thought about quitting actually would do so.

When the economy slumped in 2009, we lost our ability to predict turnover. Organizational retention skyrocketed, not because of the change in the work environment or reward, but as a function of a terrible job market. Fascinatingly, even though turnover numbers in 2010 were very low, the intention to leave did not decrease. Our results of assessments from 220,000 employees before 2010 indicated that 29.4 percent were thinking about quitting. In 2010, the intention to leave remained approximately the same, 29.6 percent. As the job market recovers, we may be looking at the perfect storm. Pent-up frustrations, inability to fulfill career aspirations, boredom, and feeling stuck may send turnover back to previous levels.

Over the last few years, there has been a great deal of belt tightening. Many organizations have downsized, but the workload and responsibilities for employees who stayed have gone up substantially. Organizations were fortunate to have experienced people who were willing and capable to take on a bigger load. Most organizations are running very lean, and as the economy recovers, the disruption and lost capability of increased turnover will be even more difficult to manage. The negative impact of turnover will be even greater than in previous years.

Is there anything organizations can do to increase their ability to retain their best employees? We looked at our data and identified six immediately actionable prescriptions that consistently affect an employee’s intention to leave the organization.

1. Improve the Effectiveness of Leaders. There is an impressive correlation between the effectiveness of a leader and turnover. It often is said that people don’t quit organizations, they quit their manager. So the solution is to improve the poor leaders, right? Wrong. While poor leaders are part of the problem, the biggest issue with leadership is the good leaders. While they aren’t bad, they aren’t great either. Between good and great leaders, there is a huge difference in the impact and results they drive. Organizations need to set the bar for leadership high; they need extraordinary leaders. Building that kind of leader requires regular assessment, focused development, ongoing action plans, and follow-up.
2. Provide More Opportunities for Individual Growth and Development. Training and development budgets have been slashed to the bone in the last few years, and many rationalize that they have replaced training with on-the-job development. The reality is that doing the same job year after year offers few opportunities for development. Our data clearly show that people want additional development opportunities. Nothing says, “You are valued by the organization,” like an investment in developing the individual.
3. Reward, Recognize, and Praise. Several years ago we reviewed the results of a survey done with a consumer foods company. Overall, employees felt negatively about the organization’s rewards and recognition program. However, one region of the country had substantially more positive results. As we talked to the regional manager about the difference, he expressed that it’s not about the amount or frequency of rewards available, it’s all about how the program is delivered. He made the annual awards banquet a black-tie affair, and the salesperson of the year broke down in tears as he received his trophy. The process was fair, frequent, and flattering. Reward and recognition programs are by comparison inexpensive, but can provide substantial incentive.
4. Look for Ways to Increase Efficiency and Reduce Bureaucracy. Employees in an organization want to be productive, they want to accomplish their goal, they want to keep work moving forward. When the organization blocks, delays, and stops them, they feel angry, frustrated, and unhappy. Organizations need to find ways to make work simpler, quicker, and more efficient. Often, there is no real cost for increased efficiency because the return is increased productivity and employee engagement.
5. Clarify the Organizational Strategy and Priorities. Everybody wants to be on a winning team with a bright future. When employees don’t have a clear sense of how the organization can be more successful, they become discouraged and feel much like kids in the car saying, “Are we there yet?” One of the great frustrations in many organizations is changing priorities. Like the flavor of the month, employees are pointed in one direction and then another without ever being able to finish any priority completely. Can you imagine anything more frustrating? Leaders need to regularly talk about and discuss the strategy and direction of the business, then settle on one priority that will help the organization win.
6. Empower Employees. Employees want to be in the game. They want to be able to call an audible when they see a significant change in the environment. They want to do more, not less. They want to have a voice in making decisions that affect their work. When employees feel empowered, they are more likely to want to stay with an organization.

When people quit an organization, it usually isn’t the poor-performing employees. The people who quit are the talented, capable high performers; these are the people most organizations can’t afford to lose.

While improvements on the prescriptions listed above will have a substantial positive impact on an organization’s ability to retain talented employees, they also will have a positive impact on the success of the organization in general. Taking action on these issues will be beneficial whether an organization has a retention issue now or wants to avoid one in the future.

Joseph Folkman, Ph.D., is co-founder and president of Zenger Folkman. He is an authority on assessment and change, and a keynote speaker at conferences and seminars worldwide. Zenger Folkman employs evidence-based methods that improve organizations and the people within them. Its solutions include assessment instruments, development programs, certification services, and practical follow-up tools that improve bottom-line results. For more information, visit www.zengerfolkman.com.