Human resource professionals know turnover creates problems. It’s expensive and time-consuming to recruit, hire, and train new employees. And it’s often damaging to the organization when institutional knowledge walks out the door. Sometimes the reasons are clear why employees leave, sometimes not so much, but new research from job rating and recruiting marketplace Glassdoor may shed some light.
The Glassdoor study, which examined more than 5,000 real-world job transitions from resumes on the Glassdoor website, identified factors that predict whether an employee will leave or stay with an organization when moving to a new position. The study’s executive summary identifies company culture, pay, and job title stagnation as major factors affecting turnover.
The Glassdoor study found that employers with better overall company ratings, career opportunities ratings, and culture and values ratings are more likely to retain employees moving up in their careers.
Brad Federman, chief operating officer and an employee engagement and performance management expert for F&H Solutions Group in Memphis, Tennessee, cautions employers looking at research to remember that the new Glassdoor study, as well as any other study “represents a moment in time based on one group’s data.” As the economy and other factors change, numbers change. Also, different methodologies produce different answers.
Nevertheless, Federman agrees that culture and the other factors identified in the study have an effect on turnover, but “culture is an interesting nut to crack.” A lot of people believe an organization’s culture needs to be positive to be effective, but that’s “not the whole story,” he says. Some employers have a “rough culture,” but they manage to attract and retain employees.
Federman points out two aspects of tough, negative cultures that manage to keep employees on board: “They have clarity, and they have an incredible leader everyone wants to follow.” He cites Apple under Steve Jobs as an example.
Jobs micromanaged people and created a difficult culture, but many employees stayed because they wanted to work for him. It was a great place to learn and be connected to a strong leader. “Most organizations can’t rely on that, and I would even argue they shouldn’t rely on that,” Federman says.
The Glassdoor study found that when changing jobs, employees earned a 5.2 percent pay increase on average in making the transition. The study’s executive summary says that a 10 percent increase in base pay raises the likelihood by 1.5 percent that the average employee will stay inside the company when moving to a new role, even after statistically controlling for factors like job title, industry, company size, and location.
But using pay as a tool to boost retention takes a lot of thought, Federman says. “When pay is too low and companies are not rewarding their people well, people leave,” he says, but employers that are competitive in terms of pay may not be able to retain employees who have already decided to leave by offering them more money. A high percentage of those employees will leave anyway in six months to a year, he says.
The Glassdoor study found that job title stagnation is another major factor in turnover. It found that every additional 10 months employees stagnate in a role makes them 1 percent more likely to leave the company when they move to their next position. Federman agrees that stagnation plays a role, but “people need to rethink the concept of stagnation.”
Employers not in a position to hand out promotions still have a way to fight stagnation because most employees nowadays realize they need 30- to 50-year careers. “They know they need to be competitive, sharp, and marketable for a long time,” Federman says. So an organization that focuses less on titles and more on factors like providing opportunities for employees to learn and work on new and unique projects can stave off turnover related to stagnation.
Giving employees “ownership and control” over their career development—allowing them a way to “sharpen the saw” as Stephen Covey said – can encourage workers to stay with an organization, Federman says.
Tips for HR
In looking at turnover, Federman encourages employers to consider the positive aspects as well as the negative. Not all turnover is bad. “It’s about wanting to control the turnover and having the right kind of turnover,” he says, and he has some suggestions for employers:
- Listen and gather feedback. Employee engagement surveys and exit interviews are helpful, as well as future thinking interviews. Setting up interviews with small groups of employees to ask what makes them want to come to work, what makes them frustrated, what should the employer keep doing or stop doing, etc. can be helpful.
- Give people multiple reasons for staying. If pay raises and promotions aren’t feasible, focusing on connection can help. People want to be challenged, and if an employer can’t change someone’s role, maybe that employee can be given a challenging project. “Give them a mission they can buy into and be excited about.”
- Removing politics in the workplace can make people want to stay.
- Involving employees in decision making and creating a future they want helps overcome many of the challenges that can cause employees to decide to leave.
Tammy Binford writes and edits news alerts and newsletter articles on labor and employment law topics for BLR Web and print publications. In addition, she writes for HR Hero Line and Diversity Insight, two of the ezines and blogs found on HRHero.com.