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What Predicts Turnover?

What Predicts Turnover?

Employee turnover is a problem for many companies.  In most industries, the top 20% of people produce about 80% of the output (The Pareto Principle).  We all want to hire these top 20% (top performers). And when we do hire them, we want to retain them.  However, these talented people get lots of offers for new opportunities, which makes it harder for them to resist the temptation to change jobs.

Here a few insights into why turnover can be a problem for many companies.

  • More than 25% of employees are in a high-retention-risk category, and many of them are top performers with critical skills.

 

  • 44% of employees say they would consider taking a job with a different company for a raise of 20% or less.

 

  • More than 70% of high-retention-risk employees say to advance their careers they need to leave their company.

 

  • 15% of employees do not see themselves working at their company one year from now.

 

  • 51% of workers are looking to leave their current jobs.

 

When an employee leaves the organization loses a substantial amount of money. Every company needs to know their cost of turnover for each key position.

Hiring Is Expensive

Cost-per-hire tells you what it will cost to replace someone who quits or was terminated.  Hiring involves a lot of costs. Start by comparing your costs against available cost-per-hire benchmarks.

  • $4129: according to SHRM
  • $4000: according to Bersin
  • $3400: cost for an entry-level employee
  • 16% of annual salary: cost for a 30K or less job
  • 20% of annual salary: cost for a 75K or more job

Here is a partial list of things that predict turnover:

Low Pay Satisfaction

Pay satisfaction can be defined as the amount of overall positive or negative affect (or feelings) that individuals have toward their pay.  Low pay satisfaction predicts turnover.

Not Getting a Promotion

One of the main reasons top performers leave is because they feel that their career advancement isn’t going as planned.  Not getting a promotion predicts turnover.

Dissatisfaction with the Manager

People quit their bosses, not their jobs or companies. A critical evaluation of a supervisor or manager has a direct impact on the likelihood of people leaving.  A poor relationship with a manager predicts turnover.

Disengagement from work

Actively disengaged employees are defined as employees who aren’t just unhappy at work – they are busy acting out their unhappiness. Every day, these workers undermine what their engaged co-workers accomplish.  Dis- engaged employees are essentially checked out. They’re sleepwalking through their workday, putting time — but not energy or passion — into their work.  Employees who are highly engaged are 59% less likely to look for a job with a different organization in the next year. Disengagement predicts turnover.

Marital Status

People who are married are less likely to switch jobs compared to people who are not married. This is most likely due to extra responsibilities that marriage brings.

Children

Children bring a greater responsibility also. People with children are less likely to switch jobs.

Age

We have all read that Millennials are hard to please and engage and they switch jobs frequently. In general, age is negatively related to turnover.  Younger people tend to leave their jobs more frequently than older people.

Long Tenure

People are much more likely to leave their job in their fourth or fifth year, compared to their very first year. People simply do not want to be seen as job-hoppers, so they tend to work at least a few years at the company. When people work for a company a very, very long time, they are less likely to ever work for another company.  The single biggest predictor of turnover is tenure.

Stress Overload

Stress makes people leave their jobs. Highly stressful work environments usually involve more turnover than environments with less stress. Stress factors explain up to 9% of turnover. Clearly defined roles give people more support and lead to less stress.  Role conflicts add to stress.  A role conflict happens when a person is expected to fulfill the duties of two contradictory positions.  Role overload happens when the employee has insufficient resources and a demanding role. High levels of stress predict turnover.

Poor Job Design

Job design is the planning and specification of job tasks and the work environment involved in their accomplishment. It includes all the structural and social elements of the job, and their impacts on the employee and performance.  Nobody likes to do the same thing day after day. A high degree of routinization predicts an increase in turnover.

Poor Quality Work Environment

Work environment is used to describe the surrounding conditions in which an employee operates. The work environment can be composed of physical conditions, such as office temperature or equipment, such as personal computers. It can also be related to factors such as noise, air quality, work processes or work procedures. Here are few things employees want in their work environment:  Positive values, Relaxed atmosphere, Commitment to excellence, Open and honest communication, Cooperation, Support, and Empowerment, Sense of humor, Compassion, Respect, and Understanding, Flexibility, Positive reinforcement, Emphasis on Work-Life Balance.  A poor quality work environment predicts turnover.

Low Job Satisfaction

Job Satisfaction is the feeling of contentment or a sense of accomplishment, which an employee derives from his/her job.  Appreciation for your job.  Here are few components of job satisfaction:  Good relationships with co-workers, Good relationships with superiors, Company’s financial stability, Career growth satisfaction and Job security.  Low job satisfaction predicts turnover.

Frequent Lateness

When people consistently arrive late at work, it could be a result of demotivation and thus a predictor of turnover.

Frequent Absenteeism

People who are absent more often than others are also more likely to leave. Reason could be that they take a sick day to interview for a new job, or because of a decreased motivation. Absenteeism is a strong predictor of turnover.

Low Performance

People with low performance are more likely to leave. They are not experiencing success in the role.  Low performance predicts turnover.

 

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