Summary
Why Good People Leave: Top Causes of Employee Turnover
Plenty has been written about the phenomenon known by many terms such as The Great Resignation, The Great Attrition, or The Great Reshuffle that has been marked by an increase in the number of employees resigning from their jobs. While workers leaving jobs voluntarily is not something new, them doing so in such large numbers in recent times – 4 million workers in the US on average quitting every month in 2022 so far – was largely triggered by the COVID-19 pandemic.
So, why do good employees leave their jobs?
Some of the common reasons given by employees for quitting their jobs included poor compensation, shortage of opportunities to grow, lack of recognition for good work, uncaring managers, and unsupportive work environments.
It could be that employees are overworked or perhaps they are not being challenged enough in their jobs, or maybe they are not feeling like they are part of a team and therefore unable to find a sense of belonging.
According to a recent survey from Pew Research Center, the three biggest reasons cited by employees who left their positions last year were low compensation, lack of professional development and advancement opportunities, and feeling disrespected at work.
People often leave managers, not companies
It may be worth noting that many of these factors can arise as a result of poor management. In fact, manager behavior has been consistently cited as one of the main reason for employee turnover by multiple studies, including one large Gallup survey of US workers suggesting that up to a staggering 75% of workers leave their jobs due to manager-related reasons. Some such reasons include a lack of adequate support in the face of heavy workloads, poor communication, lack of mentorship or growth opportunities, and unwillingness on the manager’s part to advocate for their direct report or to emphasize their contributions to senior leadership or other members of the organization. These issues often feed into the common causes of employee turnover.
Whatever the reasons employees are leaving, it’s important to try to minimize turnover within one’s team or organization. To keep employees engaged and motivated, issues that are causing them to look for other jobs must be addressed. Organizations and managers who do not take action in this regard risk losing their best talent and end up spending considerable time and efforts hiring and training new employees instead. This can be disruptive for teams, costly for the organization, and will lead to a loss of productivity.
The High Cost and Organizational Impact Of Employee Turnover
The specific costs of turnover vary depending on a number of factors, such as the position a person was hired for, their salary and experience level, and their impact on the team or organization. According to the Society for Human Resource Management, employee turnover can cost the organization an estimated 6 to 9 months of the worker’s salary, while more conservative estimates still place the average cost of replacing a lost employee is approximately one-third of the employee’s annual earnings. And much of the costs are incurred in the form of lost knowledge and reduced productivity even before taking into account the time spent finding and recruiting new employees, training them, and integrating them into the company culture. These replacement costs can add up fast and become expensive for the organization. According to a Gallup study, employee turnover costs U.S. businesses a staggering $1 trillion annually. Overall, these statistics highlight how employee turnover can have a substantial impact on the bottom line and just how important it is to retain your best talent.
You lose more than money when your rock stars leave
The costs of turnover may be magnified when losing a high performer, because a high-performing employee can be up to 4 times more productive than an average employee. Losing high-performing knowledge workers can cost tens of thousands of dollars, and a lot more in replacement costs, lost business, For highly skilled employees, the costs of turnover to the organization can run up to 150%-200% of the employee’s annual salary.
In addition to the financial implications, there are many intangible benefits associated with retaining high performers. For instance, employee turnover also has a negative impact on the organization’s culture and productivity, since it takes time to recruit new talent whose personal values align with the core values held by the organization. It can also impact employee retention rates, because if your current employees are witnessing a high turnover rate and/or having to pick up the additional workload, they may be less likely to stay as well. According to multiple studies, organizations with low levels of retention had lower morale, employee motivation, productivity, and customer satisfaction. Such organizations also tend to experience higher rates of absenteeism, tardiness, job dissatisfaction, and disengagement among their workforce (*quiet quitting intensifies*).
The Importance and Advantages of Employee Retention
Effective employee retention strategies are an important part of keeping an organization running smoothly. Unfortunately, many organizations fail to realize the importance until it is too late. Retaining high-potential employees can help improve the organization’s overall performance by reducing turnover and increasing productivity. Plus, as mentioned above, the cost of replacing an employee is often substantially higher than the cost of keeping that employee happy in the first place. Even more important, retaining your top talent can help you create and maintain a healthy company culture.
The key to retaining high-potential employees is to understand what motivates them so that the organization and leaders can create an environment where they would want to stay. If you want to keep your best people around, you need to make sure that they feel valued and appreciated. Ensuring employee well-being and maintaining engagement levels may mean making changes in how you communicate with them, how you treat them, and how you reward them.
Work should be rewarding and challenging, but it should also be enjoyable. If an employee is not feeling satisfaction in their job, they will likely look for greener pastures elsewhere. A recent report by the McKinsey and Co. found that two in five employees surveyed were planning to leave their jobs and nearly half of those quitting were leaving their current jobs for a better position elsewhere.
Employee Retention Strategies for Attracting and Retaining High-Potential Talent
It is becoming increasingly challenging to identify and attract top performers due to a shift in employee perspectives and an ongoing demand for qualified workers as The Great Resignation rages (or smolders?) on. High performers are in strong demand and therefore, often have the opportunity to find roles that more closely match what they are looking for – whether it’s better pay and work-life balance, bigger challenges, or a greater sense of purpose and belonging.
While it’s important to recognize that no two organizations are alike, there are certain commonalities among those that enjoy high rates of employee retention. Below, let’s look at some strategies that successful organizations use to motivate high-performing employees to stick around.
1. Offer Competitive Pay
According to multiple studies, competitive compensation is the single most effective way to keep talented people from jumping ship. One of the biggest reasons why many people leave their jobs is because they believe they are not being paid fairly. During the era of Great Resignation and a competitive job market, the demand for high-potential employees in particular has remained strong. As a result, workers who leave their current roles are often able to gain better wages than those who stay put. According to a Pew Research Center survey, from April 2021 to March 2022, half of the workers who changed jobs experienced a real pay increase of 9.7% or more from a year earlier, while those who remained in the same job experienced a loss of 1.7% on average. This can be a hard pill to swallow for those who stay in their roles: if workers feel like they are being penalized for loyalty and believe they can earn better pay elsewhere, it can incentivize job hopping. Given the steep costs often associated with replacing a high-performing employee, it makes better business sense to sufficiently compensate that employee in the first place. Research shows that when companies offer competitive salaries and compensation packages, they see a significant increase in employee retention. Performance-based rewards and bonuses are other incentives that can help reduce turnover, especially in case of high performers.
2. Adopt Flexible Work Arrangements
Flexibility is another key factor in attracting and retaining top talent. Studies show that workers who have flexible schedules tend to be happier at work and more productive. When employees have flexibility – whether in terms of work hours, the ability to work remotely, or the opportunity to move across different subject areas or teams – they’re likely to be able to find work more fulfilling and achieve a healthy work-life balance. As a result they are likely to be more willing to take on additional responsibilities and go the extra mile.
3. Provide Professional Development Opportunities
High performers are often self-starters and enjoy directing their own learning and professional growth. They value ongoing career development and learning opportunities, receiving mentorship and constructive feedback from their managers and senior leaders, and access to resources that can help them grow in their roles.
Effective training initiatives and ongoing regular opportunities for professional development can help ensure that employees are not only up-to-date on their core competencies, industry trends and technology, but also prepared for future challenges. Such initiatives that allow employees to learn new skills, develop new abilities, prepare them for leadership roles, and achieve career goals can improve employee experience and retention rates. They can also provide the organization an edge over competitors who do not have robust employee training programs or ones that focus solely on technical skills.
4. Give People Ownership Of Their Work
The idea is deceptively simple: give people the freedom to decide the best way(s) to do their work. After all, you hired them because they are good at what they do, so why not trust them to do it?
It sounds like an obvious thing to do, but in practice, it’s not always easy. Letting go of control can sometimes be counterintuitive to managers who are routinely conditioned to monitor and measure performance metrics on a regular basis.
So, then, how can you empower people to take ownership of their work?
Communicate The Why to your people, show them The What, and then trust them to handle The How.
Let’s say your employee is working on a new project. As a leader, share your vision with them for the project, communicate the key goals you expect to accomplish by completing it, provide them the information and resources they need to perform their tasks, and work with them to remove obstacles by leaning on your prior experience and listening to the employee’s feedback. One of the key factors to keep in mind during this process is that there is no one-size-fits-all solution – depending on their experience and comfort levels, employees may need more or less guidance. Giving people ownership of their work does not mean an abdication of your responsibilities as a leader, but rather a recognition of your role as a coach and mentor.
This level of trust and communication is a wonderful thing – it empowers employees to see their roles in a different light and share ownership in your vision for the project, team, and organization.
As Simon Sinek once said, “When we tell people to do their jobs, we get workers. When we trust people to get the job done, we get leaders.”
Encourage ideas and foster an innovation-driven work environment
Providing opportunities to create and innovate are great strategies to retain high-performing employees and motivate them to work towards achieving organizational goals. Encourage employees to take calculated risks without having to worry about job security or fear of retribution upon failure. Between the endless barrage of emails, IMs, meetings, and flitting from one deliverable to the next to meet yet another deadline, it is easy to lose sight of the forest for the trees.
However, innovation – in a broad sense, any change that improves an organization’s performance through new products or services, or simply finding better ways to do things – is what ultimately enables an organization to adapt to changing circumstances and stay competitive in the long run. Allowing employees to explore ideas that interest them or learn new skills can to lead to greater innovation and creativity within the workplace and contribute to this competitive edge. Since feelings of lack of agency, sense of purpose, and belonging in their roles are often major causes of employee attrition, concerted efforts to give them ownership of their work and share in your vision can lead to more engaged employees and improve retention rates.
5. Lead With Empathy
I have previously written about the importance of compassionate leadership in the workplace and how leading by putting empathy in action benefits both employees and the organization. Compassionate leaders care about their team members and puts the needs of their team first. Managers who actively listen to the needs of those who work under them and do their best to help them succeed will be able to develop trust and rapport with their direct reports. Such relationships built on mutual trust and appreciation can improve employee engagement and job satisfaction, motivating them to go the extra mile rather than look for professional opportunities elsewhere.
6. Create A Positive Workplace Culture of Recognition That Fosters Collaboration and Curiosity
A strong organizational culture plays a critical role in attracting and retaining top talent. Multiple studies have shown that having a strong organizational culture can reduce employee turnover rates. Organizations with cultures focused on shared values of curiosity, creativity, and collaboration are known for having high levels of employee satisfaction and morale than those with cultures focused on hierarchy, compliance, and control. Creating a workplace culture of recognition and shared values will empower employees and improve employee productivity.
It’s the Little (and Big) Things: The Value of Employee Recognition in the Workplace
Promoting a culture of recognition in the workplace can help boost employee morale and help keep your employees engaged. Employee recognition can be a great way to show people that they are important and valued members of your organization. It can also be a powerful tool to help reduce employee burnout and retain your best talent. Research shows that employee recognition has a positive effect on employee engagement, motivation, and performance. According to multiple studies, employees who receive regular, specific praise from their managers are more productive and satisfied with their jobs. Formal employee recognition programs are also associated with improved staff retention, engagement, and productivity. Companies that engage their staff by recognizing and rewarding them for a job well done can boost their bottom line by increasing employee loyalty and satisfaction. Moreover, employee recognition is a simple way to show your team that you care – it’s something that can have a significant impact on workplace morale. When employees feel appreciated and recognized for their hard work, they are more likely to engage in positive behaviors and taking initiative.
To Retain Top Talent, Lead Compassionately, Recognize Good Work, and Provide Them the Support They Need
Note that the success of employee retention strategies discussed above depends on buy-in from leaders at all levels in the organization. While organizations try to find ways to motivate and inspire their employees to perform at peak levels, at the end of the day, people want to work for leaders and organizations that value, respect, and care about them. They want to feel appreciated, challenged, and rewarded. They want to know that their contributions matter, that their ideas and opinions are heard, and to be offered adequate opportunities to grow.
Optimal engagement coupled with adequate organizational support is crucial in ensuring a positive employee experience. Such support may include offering flexible work arrangements, providing them the resources for ongoing professional development and giving them more ownership of their work, making sure that they feel valued and appreciated, and acting on employee feedback to build a more desirable workplace. It is important that this message about leading with compassion is instilled in all levels of leadership, from the C-suite to middle managers. This will not only help retain top talent and nurture future leaders, but also ensure that your employees also become your biggest advocates.
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Hi there! I’m Aaram, the founder of Sciencera. I grew up in the beautiful city of Thiruvananthapuram in the Southern part of India, famous for its pristine beaches. Now, I am a scientific writer based in Indianapolis. When I am not busy procrastinating on my writing, poring through research articles, or coming up with grand ideas to save the planet, I love playing soccer and chess. I read a bit and write sporadically when caffeinated to the right amount. I am passionate about scientific research, writing, and outreach activities.
