Employee retention has been a burning topic recently, as attrition rates keep rising and businesses struggle to keep their best talent.
But why do great employees quit even when they're in good jobs?
The truth is, there are many complex and varied factors that can contribute to an employee's decision to move on from a job.
In this article, we'll look at some of the most common reasons employees quit their jobs, and what businesses can do to tackle them.
The Cost of Employee Turnover
Employee turnover is a costly business. It's estimated that it costs employers up to 250% of a worker's annual salary to replace them.
But it's not only the direct financial cost that affects businesses. Employees leaving can have a domino effect on staff morale, as well as business output, and ultimately on profits.
When employees leave, especially the good ones, they leave a vacuum that must be filled quickly to keep operations running smoothly. So their colleagues are either expected to take on extra work, or a new hire has to be found and trained quickly.
That will then trigger another chain reaction of events, from taking time out to interview potential hires, to onboarding and training them so they can hit the ground running. It's an expensive process that takes its toll on everyone involved.
And not to mention all the institutional knowledge that the employee was carrying, which is now lost to the business.
It's therefore easy to see why retention rates are important and why employers need to be vigilant about why employees are leaving.
Common Reasons Employees Quit Their Jobs
A common misconception is that employees quit their jobs solely for financial reasons. While this can be a factor, it's rarely the sole one.
In fact, according to a survey done by McKinsey, only 36% of employees stated inadequate total compensation as a reason for leaving their previous job.
Another often-stated misconception is "employees don't quit bad jobs, they quit bad managers". And it's true that a lack of leadership or managerial support can be one of the reasons employees choose to leave (34% according to the survey).
But management is also just one piece of the puzzle. In fact, employees leave good bosses nearly as often as bad ones.
This study suggests that employees who had great managers, that supported them, allowed them to grow, and empowered them to o take on challenging assignments with greater responsibilities, actually set them up to be strong external candidates.
These are often the employees who leave to take on more senior roles with more responsibility in new companies.
So even though having great management is a key part of having a healthy workplace, it's not really a guarantee that employees won't leave.
Other factors, such as a lack of career growth opportunities and meaningful work, and an unsupportive environment and culture will cause people to look elsewhere.
Herzberg's Motivation Two-Factor Theory
Influenced by Maslow's hierarchy of needs, Herzberg's two-factor motivation theory argues that there are two sets of factors that either cause job satisfaction or dissatisfaction, and rather than working in tandem, they work separately.
The first set are the so-called hygiene factors, which are related to the workplace environment and job design. These are things like salary, job security, and working conditions, but also relationships with supervisors and colleagues, policies, and rules.
The second set are the motivators that make employees actually feel satisfied with their work. These are things like recognition, responsibility, achievement, personal growth, and advancement opportunities.
The theory states that when it comes to job satisfaction, hygiene factors are just that - they help "clean up" job dissatisfaction but won't result in any job satisfaction beyond the bare minimum.
The motivators are what really employees stay and be engaged in the work they do.
This motivation theory has become one of the most commonly used theoretical frameworks in job satisfaction research, as it provides an in-depth understanding of what makes employees leave and how to increase engagement and retention.
What Companies Can Do To Improve Retention Rates
Understanding this distinction between hygiene factors and motivators is key to improving retention rates, as focusing on the wrong areas won't have the desired effect.
Putting "golden handcuffs" on your employees by offering them high salaries and generous benefits packages won't keep them from leaving if they don't feel heard and valued, or lack career growth opportunities.
But how can you know which areas need attention?
You've probably heard about exit interviews. You might even conduct them in your company, and although they are a good way to feel the pulse of your workforce and get an understanding of why people are leaving, they are reactive rather than proactive.
Stay interviews, on the other hand, are a more proactive approach and aim to identify employee needs before they decide to leave.
As the name suggests, these are interviews, or even informal conversations, with your employees that focus on understanding what it is that makes them choose to stay in your organization.
This helps you to identify the areas that need improvement and make changes before employees start feeling dissatisfied and leave.
And depending on your company's size, you could either conduct them regularly with all employees or, if that seems a bit challenging, focus on departments or teams where people are more likely to leave.
How Stay Interviews Help with Retention
Stay interviews are by far not a new concept and have helped some of the biggest companies in the world understand their employees and improve retention rates.
But the way they are conducted plays a significant role in whether they will be effective.
To ensure the results are useful, stay interviews need to be conducted with a genuine interest in understanding employee needs and finding ways to improve the company, and not just as a part of a check-the-box exercise.
Linkedin's Love Bus Tour
Back in 2015, LinkedIn was not the tech giant it is today and was struggling to hold on to its tech talent, as competitors such as Facebook and Google were aggressively poaching talent.
And leadership would often learn about their engineer's aspirations when they were leaving. So what they did was work on understanding the flight risk of those engineers and on plans to make them stay.
They called it "the love bus tour".
The point of this was to make these engineers "feel the love" through one-on-one conversations with top management and by giving them more visibility into the big picture of what they were working on, and how it was helping the company reach its goals, making them more excited about staying at the company.
These facilitated conversations between top-performing engineers and senior leaders, to cover 5 main points:
- You are on our radar: Letting them know that their contributions have not gone unnoticed.
- Show gratitude: Acknowledging their hard work and making them feel appreciated.
- Convey their importance: Making them understand the impact their work has had in the success of the business.
- My door is open: Showing they are ready to discuss any issues and concerns the engineer may have.
- Why did you choose LinkedIn: Understanding why the employee chose to join in the first place and what motivated them.
The talent analytics team and the leadership then analyzed the information, aggregated common themes, and created talent plans around them. They also invested in leadership training, in order to ensure their leaders were better equipped for these conversations, and more prepared to address the issues revealed.
By the end of the year, the engineers that participated in that action had an attrition rate of 8%, whereas the rest of the company was at 13%.
How Nestle Took a Direct Approach
Stay interviews can be tricky if the employees that are being asked are not willing to open up or feel like they will be judged for whatever they say.
Nestle decided to tackle that issue by assuming that their digital talent was about to leave in the next 12 months. So they started the interviews with: we expect that you will be thinking about leaving in the upcoming year, can you tell us why that will be?
By setting that tone and assuming that their employees were surely leaving, it made it easier for the employees to talk about why, and what could have been done in order for them to stay, without feeling judged.
It turned out that most of them wanted their own startup, and more autonomy to do their own thing on the side and managers have been very restrictive of that up until then.
By implementing a more flexible schedule, that would allow their teams more autonomy and freedom to pursue their own side hustles, the attrition rate decreased significantly.
How Does Whirlpool Know Whom to Target?
As mentioned before, conducting these types of interviews with the whole company can be a time-consuming and expensive process.
Both Nestle and LinkedIn had a good idea of which teams were more likely to leave, so they decided to target those teams first.
But what if there's no specific team that is more likely to leave? How would you determine with whom you should start the interviews?
Whirlpool had a great solution to this problem.
Periodically they would send out surveys to their managers, in which they were asked to assess the impact of an employee from their team leaving.
- Would we lose intellectual capital?
- Was there a weak or non-existent contingency plan if the role was vacant?
- Would it be hard to fill that role internally or externally?
If any answered yes, then they were asked 25 more questions about that employee related to the job, the role and its alignment with the goals of the employee, the manager-employee relationship, and the external support system.
This allowed the company to not only understand the retention risk but also whether the manager had a handle on what would encourage the employee to stay.
The employees that they felt were very likely to leave and that would create a problem for the company if they left, were then interviewed.
By doing this, Whirlpool was able to target the right employees and address the right issues, in order to reduce attrition.
When it comes to attrition rates, it's important to understand that employees don't really work for you, nor do they work for the paycheck. They have their own reasons and if you want them to be engaged, you need to understand and play into these reasons.
More often than not, simply celebrating your collective achievements and showing a genuine interest in the well-being of your team can be even better incentives than money.
As Christie Lindor put it: People do not quit companies, managers, or leaders – they quit organizational cultures. And if you don't address that, no amount of money or incentives will keep them around.