In my last Insight, I discussed some of the different types of information employers can pull from their turnover data. As I mentioned previously, turnover data, when combined with exit interview data, can give you a wealth of information. It can also help you determine where improvement can occur at your company.
For example, if you review the data and discover that you have people voluntarily leaving who have worked for your company for five or six years, you will definitely want to determine why this occurs.
Maybe these employees were just tapped out. Maybe they’ve earned all the vacation they can possibly earn, but they want more. Maybe they weren’t being challenged any longer and they were ready for something new. Whatever the issue, use your data to figure out how to improve your organization so you don’t keep losing tenured employees.
Provide your employees avenues to expand their skills and abilities and allow them to grow within their careers. If you don’t, you’ll never be able to retain them for long. For example, let’s say your company offers vacation time on a scale: If you’ve worked at the company for one year, you get a week of vacation. If you’ve worked there for two to three years, you get two weeks of vacation. If you’ve worked there for four to five years, you get three weeks of vacation. But if your scale stops there, that could be a reason for tenured employees to leave.
If an employee knows there’s a cap; that unless they’re at an executive level, three weeks of vacation is all they can earn at your company, they may well leave to work at another company where they can do the same job and make the same amount of money, but be eligible to earn up to six weeks of vacation time. That’s why it’s important to delve deeper into your data.
One mistake that employers make when it comes to analyzing turnover and exit interview data is that they rely too heavily on industry trends and not enough on the numbers. For example, I once worked with a company to create a human capital plan. One of the things I asked the company’s leadership about was if they knew what their turnover data looked like. The answer was very high. Red flags went up in my world, but he simply stated that it was common for the industry he was in and it was just one of those things to be expected.
Now, I do understand that there are industries out there with high turnover rates, such as the hospitality industry or the restaurant industry, but this company’s turnover was high, even in those industries (which this company was not in). I analyzed their turnover data and broke it down into voluntary and involuntary turnover, as well as several other categories. Then I put a dollar amount on it for them. It turned out that they were spending more than $4 million each year. Just in turnover!
The $4 million only covered hiring, on-boarding, and exiting the employees. The leader I had spoken to was amazed when they learned how much they were spending on turnover. They had no idea it was that high because they never ran the calculation.
They ended up implementing some plans over the next year, which included:
- A rewards and recognition program;
- A communication plan; and
- Formal exit interviews.
A year or so after implementing the above-mentioned plans, this company’s turnover rate dropped more than 50 percent! What this company found was by implementing some very simple, cost-effective programs, they were able to retain more employees.
This is a great example of why it’s so important to not only know what your turnover numbers are, but to also garner information from current and exiting employees and to put a dollar amount to your turnover. The turnover data will usually speak for itself when it comes to how your company is doing.