A certain amount of turnover is to be expected in every business. It’s a cost of doing business. Even in small, family-run operations, there will eventually come a time when someone doesn’t feel they fit in anymore and they will move on. Forward-thinking organizations develop plans for both hiring and retaining the best people for each position within their companies.
In larger organizations, hiring and turnover will be addressed within the human resources department. In smaller businesses, it may be up to the owner or manager to handle the details related to both the exiting employee and hiring their replacement. This takes time and effort away from the business of running the business. It is often disruptive and can be costly.
Taking action to minimize turnover is critical as it directly impacts overhead. Smart companies conduct exit interviews, when possible, to determine why employees leave. This is an important strategy to employ with all who are leaving the company, but especially when those choosing to leave are hard working and have skills or talents of particular benefit to the company. You want to learn why they’re leaving; if you can entice them to stay; and if there’s something inherently wrong within the company than needs to be changed. Sadly, undercurrents of dissatisfaction are not recognized until it’s too late, and change is inevitable.
What companies discover during exit interviews is that there tend to be common threads among those leaving—many of which could and should be addressed by leadership if they want to get and keep top talent. Below are seven reasons people leave and how companies might address them.
- Feeling underappreciated. People who have worked long and hard to gain knowledge and develop their skills have a strong need to feel appreciated for their efforts. This is especially true of millennial workers. They may have invested four or five years of their lives and hundreds of thousands of dollars in gaining an education. Receiving a paycheck isn’t enough for them to be happy. Acknowledgement of their contribution to the positive growth of the team, department or company will go a long way toward their job satisfaction. Recognizing them as important to the overall success of the company will go a long way toward keeping them performing at a high level.
- Lacking opportunity for growth. Not many people are satisfied doing the same job over and over, year after year. When there is no opportunity for growth—laterally or vertically—stagnation sets in. New opportunities elsewhere become bright and shiny objects that team members will gravitate toward unless there are opportunities to learn new things or have new experiences within your organization. Creating these opportunities can be as simple as asking employees what they’re interested in. For example, someone in sales might have an interest in working more closely with research and development because of feedback received from clients. Even if they’re you’re top revenue generator, giving them that opportunity could produce an even more attractive product for your end users and generate even greater revenue.
- Allowing poor management practices. Companies that allow managers autonomy in running their teams or departments set themselves up for high turnover. Having authority is vital to manager’s being able to get their jobs done. However, this should be done with oversight. Everyone in an organization is accountable to everyone else they influence or work with. Lack of accountability leads to poor management practicesand high turnover. A survey by SPANA polled 2,000 British workers about their feelings when it comes to their higher ups. Forty percent didn’t think their bosses were good at their jobs.
- Putting forth unrealistic expectations or quotas. Most people enjoy a good challenge. Most people will also work to the best of their efforts—within their skillsets. However, when the leadership of a company sets goals or quotas without considering the realities of the marketplace, the resources available, and the abilities of everyone on the team, that “good challenge” can become an unrealistic nightmare. Instead of motivating individuals to step up their games, they’ve demoralized them by setting goals that people cannot wrap their heads around. No one wants to feel defeated at work. So, they start looking for work that will allow them to feel accomplished.
- Lacking proper resources. This is another area in which there are unrealistic expectations. In manufacturing this is likened to asking a plant manager to produce a high-quality end product with low quality source materials or faulty equipment. In sales, so much time may be required for reporting within an antiquated CRM system that there is little time left for actually selling products.
- Allowing a toxic environment. No one wants to work in an environment that is physically, mentally or emotionally uncomfortable. When co-workers do not get along, management needs to take charge of the situation, either getting those involved to agree to work together for the benefit of the company, or possibly separating them. Internal drama is disruptive not only to those directly involved but to everyone around them.
- Being underpaid. Of course, there will be those who are constantly seeking greater monetary rewards. Leaders of organizations need to stay up to date on the pay scales for various positions. You can bet the workers are keeping current with what the going rate is for their skills and experience. Becoming lax in this area is like sending an invitation to your employees to seek better employment elsewhere.
Any one of these reasons is enough to generate stress and anxiety in employees. Having poor experiences in the working environment is one of the reasons so many millennials frequently change jobs. Rather than allowing your organization’s environment to cause high turnover, be proactive about creating a business with opportunities for growth in a positive environment. Encourage engagement throughout the ranks and the long-term benefits to the company will not be just a reduction in turnover but an increase in revenue and that’s something everyone can get behind.
Louis Lehot is the founder of L2 Counsel, P.C. He is a corporate, securities and M&A lawyer, and he helps his clients, whether they be public or private companies, financial sponsors, venture capitalists, investors or investment banks, in forming, financing, governing, buying and selling companies. Helping a business get big, go public or get acquired is what he does. Louis Lehot is well-known by his clients for his blend of Wall Street expertise and Silicon Valley experience, as well has his ability to offer strategic counseling that is always practical, commercial, cost-effective and tailored to each client’s specific circumstances.