Employees come and go—this is one of the many facts of life when it comes to business. Some positions and industries are more prone to employee changes, but are you paying enough attention as to why your employees leave?
From June 2018 up until May 2019, the rate at which employees have left their job voluntarily is at 2.3% in the U.S. This percentage is a record high during the 19 years of monitoring by the U.S. government, which started back in 2000.
What is Employee Turnover?
When we say employee turnover, we refer to all instances of employees leaving and being replaced.
We can classify employee turnovers into four types: voluntary turnover, involuntary turnover, retirement, and internal transfers.
Involuntary turnover refers to instances when an employee is fired or terminated. Retirement is when an employee leaves a company due to old age. An internal transfer is when an employee moves to a different department.
Voluntary turnover is when an employee leaves a company of their own volition. Employees may voluntarily leave a company to move to a different firm, make a career change, or pursue personal goals.
How Do Employees Decide to Leave?
Understanding the processes and reasons behind an employee leaving can help a company find points of improvement. There are four exit paths that employees take when they quit a job.
1. Dissatisfaction, Job Search, Quit
On this exit path, an employee starts looking for a job while still employed. Job dissatisfaction due to various reasons may motivate employees to take this exit path.
2. Dissatisfaction, Quit, Job Search
Employees who take this exit path resign before looking for a new job. People may quit without a prospect because they want to focus on looking for a job or because working conditions at the company are horrible. Some people may also quit due to impulse.
3. No Job Search, Job Offer, Quit
Some employees may not be actively seeking a new job but receive a job offer. Employees who leave through this exit path may be relatively satisfied with their job but may leave due to better compensation and benefits or career development.
4. Quit, No Job Search, No Job Offer
Finally, some employees leave without pursuing another job at all. Although there may be some dissatisfaction, a leaving employee’s primary reason for quitting via this exit path is often family-related, such as pregnancy.
What Do Exit Paths Say About a Company?
Knowing how and why employees decide to leave can help a company hone in on areas that need improvement.
If many employees leave via exit paths 1 and 2, then the company should put effort into improving employee job satisfaction.
There are two types of job satisfaction: intrinsic and extrinsic.
Intrinsic job satisfaction covers an employee’s perception of their job and how they feel about their day-to-day tasks and responsibilities. On the other hand, factors such as compensation, work safety, management, and work-life balance influence and affect extrinsic job satisfaction.
Measuring both intrinsic and extrinsic job satisfaction is important to an organization. Companies may use surveys or interviews to do this.
Conducting surveys is a popular way of measuring employees’ happiness at work. Surveys may use the Unidimensional model and the Bidimensional model.
The Unidimensional model is easy and simple to use, but it offers little insight into the specific aspects of the work with which the employee is unsatisfied. Although a bit more sophisticated, the Bidimensional model measures intrinsic and extrinsic job satisfaction but still lumps different facets of the work into these two categories.
Companies may also use the Inputs and Outputs Model. Through this model, we measure job satisfaction by comparing the effort and resources that the employee commits to the job with the benefits that they receive in return.
Compensation and Opportunity
However, if employees leave a company via exit path 3, then employers should review compensations and opportunities that they offer to employees.
Companies should keep compensation packages competitive. Employers should do research every year and check how much other companies in the industry pay employees at similar levels and positions.
An employer should also have the initiative to give out raises when they are due. This is a great way to show positive recognition to employees who are performing well.
Positive recognition can also take the form of recognition programs such as giving out Employee of the Month awards. And if an employee is not doing too well, make sure that opportunities to improve are available to them.
Managers should work with employees in developing plans for career development.
Establishing an employee development plan is a great way to retain employees. Not only are employees motivated to stay in a company that offers programs for personal development, skilled and competent employees also bring better output to the table.
Companies that offer good opportunities for skill development also tend to attract talented employees.
When creating an employee development plan, consider an employee’s background and previous accomplishments. You should also be transparent about the present needs of the business and establish realistic expectations when it comes to their career path in the company.
If employees at a company take exit path 4, then employers may need to consider implementing unique benefits that are more “employee-friendly.”
Employees leaving the workforce may need working conditions that are less severe. If a company can provide some flexibility, then not only can they retain this kind of employee but also improve overall job satisfaction.
Flexible work hours can greatly help employees feel happier at work. Netflix, for one, does not track work hours and pays employees based on the amount of work that they do instead.
You do not have to go this far—some simple ways would be to offer flexitime, in which employees can come work within a specific range of time then leave after a full shift.
Another good benefit to offer is remote work. You can allow employees to work outside of the office from time to time. Companies may also offer compressed work shifts, in which employees receive an extra day off and extend work hours during the remaining workdays instead.
Employees who take exit path 4 may also consider staying due to good health and wellness programs at your company. At finance firm Capital One, employees and their dependents, which include spouses, children, and parents, are eligible to take physical and mental health services.
Take the opportunity
Always conduct exit interviews. These are a great way to learn about your company.
Glassdoor lists essential exit interview questions that can help you gain insight into why employees are leaving.
Good exit interview questions should cover topics such as the employee’s reason for looking for a new job, their reason for joining the new company, and barriers that may have kept them from doing their job.
Companies can also take this time to do a culture assessment by asking leaving employees about their opinions on the company culture and work environment.
High employee turnover rates may be scary, but companies only need to look at the bright side and take simple initiatives to turn these dreadful numbers into good ones.