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Voluntary turnover.Losing too many of your keepers?

Tim B. Sparks 

(For individual use only, not to be reproduced or used in any way without permission)

In today?s competitive labor market, many companies are faced with the challenging and expensive task of originating and hiring talented new employees to replace ones who have voluntarily left their company. The question is, why are some of our best employees choosing to leave and what is being done?

In businesses across the country, voluntary turnover is on the rise. Much of this turnover reflects the confluence of three important trends: industry consolidation; increased labor market transparency via the internet; and a growing free agent mentality among many employees. If this isn?t enough, heap on low unemployment and unfavorable demographics over the next decade or more and it becomes evident that the "war for talent" is just beginning.

Initially, the action taken by many companies who find themselves facing a talent shortage is to increase their capacity to originate, screen and hire employees. This may be satisfactory if demand for talent is from business growth. But what if the demand for talent begins to come more and more from profitable employees who voluntarily leave the company, not from the growth of the business?

Picture yourself beginning a white water rafting trip with five of your closest friends. Soon after you push off on your day long trip down river you discover your raft is taking on water. There?s no turning back and you risk capsizing if your raft continues to fill with water. You must act quickly, but what do you do? Instinctively, you start bailing but soon find out that you can hardly keep up. Others are enlisted to pitch in and help bail. Soon you engage enough of your friends in bailing that you get most of the water out of the raft. Unfortunately, once your friends stop bailing water begins filling the raft again. You realize it is senseless to look for bigger buckets with which to bail or to try and improve your bailing technique. You have only one option??repair the leak which is the source of the water. Only repairing the leak will allow you and your friends to resume your journey down river. In fact, it might be the only chance you have of successfully navigating the treacherous white waters ahead. You find the leak, successfully repair it and resume navigating the river.

Now, let?s consider for a moment what might have happened if you had not stopped to make the repair but instead decided to focus your party on being better bailers. With no one reading the river and providing guidance to others on how to effectively navigate the white waters, it is easy to imaging the raft eventually capsizing or sinking altogether. Everyone would be focused inside the boat versus outside. You would lose sight of the where you were headed and how best to get there. Your raft would drift aimlessly down the river, a victim of the currents.

Many times in business, when it comes to talent shortages, we jump to becoming "bigger, better, faster, bailers". Instead of taking a step back and understanding the problem at hand and how best to eliminate it, we instead feel compelled to begin feverishly working at filling new or unfilled positions.

We fall victim of our desire to show results. Eventually volume becomes the proxy for value.

Identifying new sources for originating talent, improving screening and interviewing techniques and building better, more efficient selection processes are improvements we devise to increase our capacity to hire. All of this is worthwhile but companies need to first pause long enough to understand what is causing the hiring demand. What if we found that a large percentage of our turnover was voluntary and made up primarily of employees we wished we had retained? If we could stop that flow or "patch the leak" we could vastly improve the ROI of selection dollars spent.

We might find we need to "bail and patch". If we don?t identify the root cause of voluntary turnover we potentially enlist ourselves in a never ending job of selection thereby wasting valuable resources in the process.

As more and more companies choose to join forces through mergers and acquisitions, many more employees are exposed to increased levels of ambiguity and uncertainty. Some of these employees are displaced but an alarming number simply up and leave seeking greener pastures. Big companies, small companies, growth companies, companies in mature industries all experience some level of voluntary turnover. The key is to manage voluntary turnover at a healthy level for your company. Only until we truly understand the drivers of turnover can we begin to eliminate the unprofitable dollars spent originating, selecting and relocating employees being hired to replace those we wished had never left in the first place.

Below are seven questions you may want to ask:

  1. Do I understand the difference between voluntary and involuntary turnover in my company?
  2. What level of voluntary turnover is acceptable and/or "healthy" for my company?
  3. How much does it cost my company to originate, screen, interview, close and hire an employee?
  4. How long does it take for that new employee to become profitable (effective in their job) for the company?
  5. Are the costs associated with voluntary turnover significant?
  6. What themes have evolved as the root cause for voluntary turnover?
  7. What steps have been taken to eliminate the root cause(s) of this turnover?

Additional resource:

Marcus Buckingham & Curt Coffman. First Break All The Rules: What the World?s Greatest Managers Do Differently. 1999, Simon & Shuster.  Click on the title for a detailed book review.

"Today more that ever before, if a company is bleeding people, it is bleeding value?What does all our research tell us?  It tells us that people leave managers, not companies?.It?s not the company that the employee quits?it?s the manager".

Contact Matt Starcevich at
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