3 minute read
Last month, the Gallup organization published an eye-opening article estimating that turnover costs American businesses a trillion dollars a year. That’s specifically voluntary turnover. The article states the average annual turnover rate in American businesses for 2017 (the most recent year available) was 26.3%, and because it generally costs anywhere from one-half to two times an employee’s annual salary to replace them, those costs when extrapolated yield up to a trillion dollars a year in lost earnings.
Gallup went on to say that in the course of exit surveys they conduct for hundreds of client companies, they discovered “52% of voluntarily exiting employees say their manager or organization could have done something to prevent them from leaving their job,” and “51% of exiting employees say that in the three months before they left, nobody spoke to them about their job satisfaction or their future with the organization.”
If you’ve been reading with us for any length of time, you probably know we strongly encourage the leaders we coach to check in with their direct reports quarterly about the congruency (or lack thereof) between the company’s direction and the individual employee’s direction and satisfaction. If you’re just getting to know us, you can read more about that here, here, and here. One of the cornerstones of our approach to 21st Century Leadership is this recurring dialogue between would-be leaders and their would-be followers, because it establishes trust, builds loyalty, and encourages emotionally intelligent working relationships.
The turnover findings from Gallup are particularly important in light of forthcoming changes in the corporate and economic landscape of Nashville. In what has been the talk of the town for months now, Amazon recently announced they are going to locate their 5,000-job Operations Center of Excellence here. Nashville is currently experiencing negative unemployment, and recruitment and retention efforts are already mission-critical; the addition of 5,000 new jobs puts things under an even more powerful microscope. Furthermore, Amazon’s intention is to fill all 5,000 jobs locally, including filling a multitude of information technology roles from Nashville’s already stretched IT workforce, making matters all the more urgent.
As the city continues to process the implications of this major development, a recent issue of the Nashville Business Journal boasted a cover story entitled, “Back off, Bezos: These Nashville CEOs are ready to fend off Amazon.” Nashville CEOs are already gearing up to retain their best people, who are at risk to Amazon (and other recruiting efforts that will surely follow in Amazon’s wake), and yet these efforts are doomed to fail absent the fundamental practice of having ongoing, personalized, and meaningful conversations with staff members.
Markets that have already endured this crucible of smaller talent pool compared with larger employer appetite have figured this out. In fact, the NBJ article included comments from Seattle CEOs who have competed with Amazon for years and are working harder than ever to retain their people. A managing partner of a large law firm says in an effort to become more transparent, their firm meets quarterly with the entire staff, sharing the company’s financial successes and areas for improvement. “People want to contribute; they want to be heard,” she says, “so we try to be really intentional about nurturing that kind of workplace for our employees and the people we hope to recruit.”
Sadly, Gallup reports in their article that, for many employees who are voluntarily separating, “in their last 3 months at that company, nobody asked them how they felt about their job. Nobody talked about their future. So it makes sense that they decided they didn’t have one there.”
It just goes to show, nobody wants to be a passive cog in the machine. Leaders commonly say that human capital is by far the most valuable asset in a company. We agree…and so do competitors! That being said, get to know your staff as the talented, multi-dimensional people they are, or someone else will, and will make them an offer they can’t refuse.