Yesterday at lunch, I was having a great conversation with some amazing women about organizational culture and why people stay with their organizations––one of my favorite topics. We also talked a lot about why people leave. During the conversation, we discussed the high cost of turnover.
Through the years, I have worked with leaders of organizations that did not know their turnover rate. It is critically important to pay attention to this area, and I would argue this is one of the largest indicators of what is going on in your organization. I know as a CEO, President, or another senior leader, you don’t want to get in the weeds with day-to-day operations, but you should receive a turnover report once a month or quarterly from your HR department.
What should you be looking for in these reports?
The first thing to look for is whether there are trends in a department or area. If so, why? Is it bad management? (Probably.) But it may be job structure or schedule. There may be concerns within that department that can easily be fixed with some common sense HR practices or management training. At other times, you may need to get rid of the cancer in that work group. It is not always the boss. It may be someone in the group the boss allows to behave badly.
Next, you also want to look at who is leaving. Is it the functional turnover of people who were weighing the organization down? There are times that turnover is good because someone doesn’t fit your culture. Are you losing high performers? If so, look at the cost of losing those workers. The Society for Human Resource Management reports that the total cost of dysfunctional turnover can be 200% of that employee’s annual salary. That is not taking into account the hit on morale when good people leave.
The bottom line for leaders––look at the numbers. You don’t need to get down in the weeds, but you do need to know what is going on with the people in your organization. If you have a great culture, you can spot this easily. If your organization is struggling, it may take looking at the numbers to fully understand why. Bad managers will not always realize they are the problem, or they might not be able to see that someone in their group is causing turnover.
Talk to your people. Do exit interviews or, even better, ask your employees before they leave how you can fix the organization. You have to make it safe for them to share the real story but if you really listen to your people, you can save A LOT of money.
Dr. Katie Ervin is the founder and CEO of Catalyst Development. She has contributed to Brainz Magazine and the Forbes Business Council. She is currently writing her first book.