There are many contributing factors to why a person chooses to stay at or resign from their job. It could be because of pay, location of the job, benefits, or a number of reasons. Take a look into your own job history, what made you decide to move on to the next opportunity? With research suggesting direct replacement costs as high as 50%-60% of an employee’s annual salary and a total cost of turnover ranging from 90% to 200%, turnover can be very costly for companies. In this economy it is crucial for organizations to develop an effective retention management plan.
Understanding what makes an employee stay and what makes them leave a job is the first step in preventing a high rate of turnover. In a survey conducted by Right Management, a consultant of Manpower, 84% of those surveyed planning to search for a new job in 2012. If this is true, as an employer you have to ask yourself, what can we do to make them stay?
If you’ve ever taken a business or psychology course you are probably familiar with Maslow’s Hierarchy of Needs. In 1943, Abraham Maslow first introduced his hierarchy of needs in a paper called A Theory of Human Motivation and later in the book, Motivation and Personality. Maslow suggests that there are five fundamental human needs and that before advanced needs can be realized, basic needs must be fulfilled. The hierarchy is most often shown as a pyramid with physiological needs like food, water, and sleep at the bottom and self-actualization needs like morality, creativity, and acceptance at the top.
Another theory, The Theory of Organizational Equilibrium suggests that employees will stay with a company as long as the incentives, such as good pay, pleasant work environment, and developmental opportunities match or exceed their contribution to the job. Although some people might quit a job on impulse, most take considerable time in deciding whether to leave or to stay.
So what is most important to an employee? Is it pay? Is it health benefits? Is it vacation time? According to SHRM’s 2011 Employee Job Satisfaction and Engagement Survey the factors that contribute most to job satisfaction are job security, opportunity to use skills and abilities, organization’s financial stability, relationship with immediate supervisor, and compensation/pay. Employers often under estimate the importance of job security when assessing employee satisfaction but with the economy as it is, knowing you will have a job tomorrow is very important.
And according to Towers Watson, in their Talent Management and Rewards 2011/2012 Study, employees rank work-related stress as the number one reason for changing their job while employers rank work-related stress as number five. This just shows that there is a disconnect between what employees find and what employers think is imperative to job satisfaction.
What’s The Plan
So now that you are aware of the importance of retaining top talent, you need to develop a retention management plan. The SHRM Guide entitled Retaining Talent: A Guide to Analyzing and Managing Employee Turnover offers great advice on how to construct your plan. Author, David G. Allen says that to get the most of your retention plan you will need to do the following:
- Analyze the nature of turnover in your organization and the extent to which it is a problem. How many employees are leaving? Who is leaving, bottom performers or top performers? And what is the cost and benefit of your current turnover?
- Understand research findings on the drivers of employee turnover and the ways in which workers make turnover decisions. Are there any best practices that you can follow that would be beneficial?
- Diagnose the most important and manageable drivers of turnover in your company? What initiatives can you implement that would be of the most benefit? And be sure to use data from exit interviews, post exit surveys, current employee focus groups, linkage research, predictive turnover studies, and qualitative studies to construct a targeted strategy for your company.
- Design, implement, and evaluate strategies to improve retention in ways that meet your organization’s unique needs. Make sure your strategy meets your company’s retention goals.
For more in-depth information on these tips, please read Retaining Talent: A Guide to Analyzing and Managing Employee Turnover.
Knowing how to effectively manage retention within your organization isn’t an easy task but if you put in the effort to understand what your employees find important you will be well on your way to decreasing your employee turnover.
Retaining Talent: A Guide to Analyzing and Managing Employee Turnover
SHRM: 2011 Employee Job Satisfaction and Engagement
The Talent Management and Rewards Imperative for 2012: Leading Through Uncertain Times
Hierarchy of Needs: The Five Levels of Maslow’s Hierarchy of Needs
CBS News: 84 Percent of Workers Looking to Leave Their Job