Employee Turnover: Why Good People Leave

August 21, 2018
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Executive Development

As a leader, it is particularly painful when top talent chooses to leave the company. The loss of these employees can be perceived as a misplaced investment of your time and energy. If you are not careful, your frustration and competitive fire can result in broken relationships. Companies will spend money and effort in exit interviews and counteroffers, only to find that it is too late to reengage. Often, individuals will point to compensation as a reason for leaving, but money is usually just a smokescreen for the real reason.

So why do good people leave? Here are some possible reasons:

  • The boss—The manager is a powerful force in retaining key talent. If the employee does not perceive that their leader is committed to their ongoing success, they will quickly look for greener pastures.
  • Lack of development—The relationship between loyalty and security in corporate life is broken. The only real security that employees have is knowing that they have skills to compete in the job market. Employers who fail to develop their talent can expect them to leave as soon as a better learning opportunity comes along.
  • Sense of self-efficacy—Top performers need to know that their efforts make a difference in the businesses that they work in. If there is a disconnect between what they do and business results, it leads to disengagement. In these times of full employment, it is not difficult for workers to find better opportunities elsewhere.
  • Peer relationships—Work is fundamental to formation of adult identity. People spend a lot of time at work, and the relationships that they develop with their coworkers help give their life meaning. As companies sever those relationships through remote worksites and hoteling strategies to save money, they risk weakening the interpersonal bonds that keep people in place.
  • Lack of a career path—Most people will look for opportunities to move up in the corporate food chain. To the extent that their path is unclear or nonexistent, top talent will quickly look to move to a new employer that offers them opportunity to grow and improve their status. This factor can be particularly important in retaining key individual contributors who choose not to enter management tracks.

How to retain key staff:

To hang onto your top performers, the manager needs to show them how important they are to the company’s success. Providing a line of sight between individual achievement and company results is a powerful way to remind employees of their worth. For example, working in accounts receivable can be a daunting task, but having an effective collections department is fundamental to company success. If that job is not performed well, it will be difficult to balance the budget. Successful completion of these tasks is critical to overall company growth. Reminding people just how important they are is a small but essential part of leadership.

Managers also need to use praise liberally to reinforce employee self-worth. Psychological research shows that positive reinforcement is a much more powerful determinant of behavior than punishment is. Catching your people doing something right and commenting on it in a public forum will encourage long-term retention of key talent. Use criticism sparingly and always in a private setting.

Employees need continual reminders of how the work environment enables their achievement of their personal life goals. Toward that end, development and coaching of staff needs to be an ongoing process, not an annual event. To start, managers should talk with their employees to understand what motivates them. Once the manager knows what is important to their direct reports, they can arrange for support vehicles to enable employee success. That may involve removing organizational obstacles, providing resources, and arranging for on-the-job work experiences that enable individual growth and development.

Creating a winning culture is another way that management can encourage retention. To do so requires not just the right strategy, but alignment around a fundamental set of values of how to work together. Paying attention not just to business results but also the way that the goals are achieved can send a powerful message that will engage employees’ hearts and minds.

Even if managers do all of these suggested activities, people will still leave companies. Some level of employee turnover is not only inevitable, but should be encouraged, as it will ensure a fresh supply of new ideas in your organization. The key to employee retention is to provide the best learning and development environment that you can muster, and recognize that the talent that you develop is truly your legacy.

Jeff Kirschner
Jeff Kirschner has over 35 years of leadership development experience. Jeff delivers CEO succession, board effectiveness, senior executive coaching, assessment, and executive team development services to multibillion dollar and Fortune 500 companies.