Employee turnover is a slippery slope. Beyond lost productivity and institutional knowledge walking out the door, there are significant expenses related to interviewing, hiring and training new employees.
Turnover also affects the remaining employees, who often have to do additional work and can become overextended, which results in additional costs and lost revenues that are often underestimated. Companies will never be able to prevent all employees from seeking work elsewhere, but it helps to understand the main motivations for leaving in order to create an environment that reduces turnover.
Calling It Quits
The 2014 Mercer Turnover Survey found that the top four reasons Canadians quit are a promotion opportunity with a new employer, lack of career and training opportunities, a higher base salary at a new company and career change.
However, there are generational differences. Millennials are the group most likely to voluntarily leave an organization, accounting for an average of 42% of departures. While it’s not surprising that employees might move around at the beginning of their career as they look for the right fit, the survey shows that the prospect of a higher base salary elsewhere is the top reason millennials quit. In contrast, the top reason gen X employees leave is a promotion opportunity. The most common reason for departures of baby boomers and traditionalists is retirement.
So what can employers do to prevent turnover?
Employers should review their compensation and benefits plan annually, in light of the company’s sector and workforce, and clearly communicate to employees their entire compensation and benefits. Employees are often unaware of the full value of their compensation and benefits package and may discover that they are financially better off in their current job than they would be in a new one.
But, as the gen X survey results show, it isn’t just about the money. Motivated employees want to be engaged, build their career, be challenged and move up the corporate ladder. The 2013 Mercer Talent Barometer Survey examined 1,260 organizations around the globe. It found that Canada is ahead of the pack in terms of conducting regular (annual or biannual) talent reviews, where companies review their entire talent pool to identify roles they need to fill as well as individuals they can’t afford to lose. Ninety percent of the Canadian organizations surveyed conduct such a review—the highest of any of the developed regions surveyed.
Talent reviews can help companies not only with succession planning for executive roles but also with career paths for all employees. Career path programs may help to prevent departures due to a real or perceived lack of career progression. According to Mercer’s 2014/15 Compensation Planning Survey, about 38% of Canadian organizations have a career path program, and another 32% plan to introduce one. When a career path is communicated effectively, employees can better understand the opportunities available to them with their current employer, as well as the measurable goals they need to meet to move ahead.
Communicating a career path during a performance review can be particularly effective. Mercer’s 2010 What’s Working survey of workers in 17 countries—including more than 2,000 Canadians—found that, among those in Canada who received a performance review in the last year, 62% see opportunity for growth with their company, compared with 42% among those who did not receive a performance review.
Understanding employees’ reasons for quitting is the first step in creating the right environment to retain them for the long term. Turnover will always exist, but the less it occurs, the more resources can be dedicated to engaging current employees.
Chrisy Wilson is a survey lead in Mercer’s information solutions business.
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