By Nick Hutchinson
There is no doubt that staff turnover can be costly. Whether it is the lost investment in company knowledge and capability that the exiting staff member has, the actual funds it takes to hire and retrain a new staff member, or the emotional and mental strain as other staff members carry the load while a replacement is found and developed – staff turnover has significant cost for any business. It is important then that business owners and managers understand their turnover. Every business should ask themselves why employees leave and what/if anything should be done about it. Read on below for a simple approach on assessing staff turnover.
1. Categorise
Firstly, I find it helpful to categorise any staff exits from the company into 4 basic categories. Doing so helps to identify how we respond. These areas are outlined in the table below:
Wrong Person: These staff are the people that have exited but it would have been better for the business and the employee to retain these staff.
Right Person: These staff are the “right people” to exit as it will be in their best interests and yours. Perhaps they are not a great fit for the company’s culture and trajectory, or they are simply an underperforming employee.
The key areas to review are both the reason for the exit the and also the person themselves. Did they leave for the right reasons or wrong reasons? Were they the right person to have leave the business or were they the wrong person?
Perhaps surprisingly, having the same people stay with the business for their whole lives is not always best. Some people provide the best value to businesses over a short period, such as a growth or expansion. After that time, they may not be the best person in the business. This is often the case when hiring a CEO to manage an organisation wide change. Not all staff exits are negative.
2. Understand
As suggested above, we need to understand why that particular person left and was it good for the company. To understand if it was the right or wrong reason, conducting a thorough exit interview is important. This might include an interview before the employee left, conducted by the company, and then an additional interview after the employee has left, conducted by a neutral third party. The goal of these interviews is to understand the ‘why’ the person left. What was their motivation? What impact did/could the business have regarding the motivation? We can compare this to whether it is something that our company is aspiring to or not. You might also consider reviewing any employee engagement data to look for sentiments that are echoed in the exit interviews. Are there patterns developing?
In considering whether it was the right or wrong person, conducting some internal reflection is worthwhile. Firstly, start with the immediate manager, what is their view on the staff exit? In some instances, it may also be worth consulting other managers, peers and subordinates. It may also be valuable to review business planning. Had the company planned the staff exit? Does it fit with future plans of restructure or redistribution of work?
We highly suggest developing some templates for exit interviews that cover both the exiting employee and the organisation internally. Templates should provide valuable data for comparison and decision making.
Another area to review is the rate of turnover, both in terms of the percentage of the organisation, the standard length of service and the number of those leaving during probation or at other specific points in the employee lifecycle.
3. Respond
Referring to our 4 categories, if our staff exit falls into the green box (right person right reason) then things are going according to the business planning and objectives. The right staff are exiting the business at the right time.
If staff exits are falling into the blue box (right person, wrong reason) the right person has left but for the wrong reason(s). This means we need to respond to the reasons. It could be a result of poor culture, pay and conditions, lack of business planning etc.
If the staff exit falls into the yellow box (wrong person, right reason) then perhaps our business planning is going on target, but the outworking of that needs some attention. It could be that a restructure is in progress but the wrong people have exited the organisation as a result. Perhaps there is downsizing, but because of the uncertainty around job security, the high performing employees have already found other opportunities.
If the staff exit falls into the red box (wrong person, wrong reason) we need to take a review of the feedback we received from the turnover data, exit interviews and any internal reviews. The business has lost a good employee and for the wrong reasons.
Whilst you might not spend too much time on each individual staff exit it is important to gather meaningful data on staff exits. If you begin to see a trend of losing the wrong people, or people leaving for the wrong reasons, or both, it is definitely time to take a comprehensive review and develop a strategy to manage the issues.
For assistance identifying patterns and trends around staff turnover, and developing strategies to rectify these issues, give Hutchinson Resources a call.
Comments