Employee Retention is an ongoing challenge in every business faced with retiring Boomers, managing and motivating GenX and GenY, and attracting qualified Millenials to fill empty seats. Most companies lose half of their employees within five years, however Fortune magazine’s ‘Best Companies to Work For,’ experience annual turnover of just five percent – a huge difference, a huge competitive advantage. And a huge boost to your ability to earn above-average profits and growth.
I see clients making flawed “retain at all costs” decisions all the time that are hurting their business instead of helping it. Are these myths harming your business too?
Employee Retention Myth #1: All turnover is bad
FACT: Not when the turnover impacts the walking indifferent – those who suffering from presenteeism and are not pulling their weight or those who are not living your culture. Nobody wants a revolving door with talent walking out and the associated high costs of recruitment, training and the loss of institutional knowledge. And nobody likes spending the time or money to recruit, interview, and onboard new employees as long as they’re convinced that their existing team is “not that bad”. Putting up with “not that bad” is one of the greatest errors I see leaders make all the time.
Some turnover is highly positive and worth the effort when you need to strengthen what I call your Stable of Talent. You want more racehorses and fewer donkeys. You need some dependable plow horses who will never set the world on fire yet always put their shoulder to the wheel. You need some high-potential colts for succession planning. And you need to deal with those show horses who technically perform at a high level but are absolutely toxic to everyone around them. I have an ebook that expands on the Stable of Talent – just drop me a note if you’d like a copy.
As your organization evolves and grows, lack of turnover can be a sign that managers are hanging on to too many marginal players. I see managers all the time who are consumed by their troublesome employees to the extent that they’re burned out and neglecting more crucial tasks. Sound familiar?
It’s time to welcome “good” turnover and nip “bad turnover” in the bud. Employees join companies but leave managers, usually after a slow, steady process of disappointment, disillusionment, disengagement, and presenteeism that can last for weeks or years prior to their eventual departure. Rarely does a truly engaged employee just up and leave.
Employee Retention Myth #2: It will cost me more to get rid of them than to keep them
FACT: Yes, the cost of replacing an employee can often run two to three times their annual salary, when direct and indirect costs are factored in. However, research repeatedly shows that the most expensive option is to keep non-performers, especially at managerial and executive levels. The challenge is that unlike the more visible costs of separation pay and recruitment expenses, all that prodding and low productivity incurs hidden costs that are every bit as expensive, or more.
It’s expensive to keep donkeys and showhorses because:
- You spend your valuable time and energy coaxing them instead of coaching them
- Sub-standard employees amplify the hidden costs due to the snowball effect of their poor hiring choices, business decisions, or low productivity that can cost many times their salary.
- The toxic impact they have on those around them slowly but subtly undermines your credibility as employees start to question why you don’t take action on the obvious..
Instead, your time should be spent coaching high-potentials – your racehorses, colts, and even your plow horses.
Employee Retention Myth #3: Gen X, Y, and Millenials lack the work ethic of the boomers
FACT: Motivators most often cited by employees of all generations are clear goals, clear roles and appreciation for a job well done. Money and perks are well down the list of factors in employee retention, despite their common use by managers and the perception that boomers are all about the money and subsequent generations are all about the perks.
FACT: The post-boomer generations simply want to find satisfying and meaningful work rather than laboring for a distant pension as the boomers did. They want the freedom to contribute their talents collaboratively rather than succumbing to the ‘command and control’ approach experienced by the post-war boomers.
Showing up is not the same as being engaged
Are they working hard or hardly working? If it’s the latter, it doesn’t mean they’re lazy. It just means that they are substituting presenteeism for impactful effort because they’re simply not engaged. Signs of presenteeism are lots of sick days, coming into work late or meticulously punching the clock, failure to participate in team meetings, company initiatives or events, and a general sense of apathy when asked to do anything. How many faces are popping into your head as you read this? Many managers default to cajoling, coaxing and even threatening, trying to light a spark. It won’t happen until you give them something meaningful to set their sights on… or be willing to let them go and strengthen your Stable of Talent.