Causes that Drive the Cost

Once we’ve worked through an employee turnover calculation and developed a turnover meaning that focuses on the part that’s killing our profitability, it’s time to get serious about identifying the causes! If we want to get a handle on the cost of high turnover, specifically the voluntary turnover that involves team members who could genuinely make our organizations better if they stayed, we have to take a hard look at the reasons behind this type of turnover…

An article from PeopleKeep.com called Employee Retention: The Real Cost of Losing an Employee shared this as “Some of the top reasons for employee turnover”:

• Lack of career development opportunities
• Lack of employee engagement
• Poor company culture
• Lack of or poor employee benefits and annual compensation
• Disagreements with co-workers or management
• No clear business goals or direction
• Employees feel like their honest feedback or thoughts aren't considered

I’ve shared what John Maxwell said in Leadership Gold as it relates to the profitability killers we’re looking at already but I believe this list calls for considering it again here… “Some sources estimate that as many as 65% of people leaving companies do so because of their managers… The ‘company’ doesn’t do anything negative to them. People do. Sometimes coworkers cause the problems that prompt people to leave. But often the people who alienate employees are their direct supervisors.” As I think about each of the seven items listed in the article, I believe they all tie back to how we lead our teams; YES, all of them! The other thing that grabbed me about this list was that benefits and compensation didn’t merit being listed separately AND they didn’t take the top spot on the list - not even together…

Let’s get incredibly honest with ourselves here, pay is definitely AN ISSUE in the overall turnover equation but it’s rarely THE ISSUE! To start, I believe if we were to consider any given individual on our team and ask ourselves if they would have ever become part of our organization if we paid half of what our competition does, the answer would be clear… We wouldn’t have to wonder why they left because they would never have been there if we weren’t at least in the same ballpark! That being said, it’s still our responsibility as leaders to provide the best opportunities for each individual in our organization that we possibly can, not look for ways to milk every ounce of energy from them so we can keep all the benefits for ourselves. (Just in case you’ve never seen it, there’s a pretty cool law of sowing and reaping in 2 Corinthians 9:6.)

I’ll challenge you to consider one more thing that I believe contradicts the idea that much turnover is tied to wage… If compensation were the only, or even the biggest factor motivating what folks did, how many volunteers would we see in civic organizations or fire & rescue? And how many people would enlist to serve in the military? In every one of those things, we raise our hands to be part of a cause or to serve a greater purpose, usually at our own expense. So as long as the total compensation we’re offering someone in our business is competitive, I can’t realistically consider it much of an issue in the big picture.

Now that the money part has been addressed, the real causes of employee turnover deserve our attention! As leaders, we impact each of the other six items on that list each and every day. The hard part can often be coming to terms with why each of those things deserve time out of our busy day. To make a case for that, we need to have a clear understanding of exactly who pays for the cost of high turnover and that’s where we’ll pick up next time…