Turnover is a symptom of a deeper disease in most companies. A consistent turnover level typically speaks to one of two problems – poor management skills or hiring the wrong employees. Corporate culture, compensation and other topics can come in to play, but I want to focus on the former topics.

One of our placements resigned this week after only 6 weeks in the role. This is not a sales position so it is somewhat outside of our expertise. Nonetheless, I contacted the former employee and discussed with her what went sideways. She laid most of the blame at the feet of one of the co-owners of the company and the fact that she was being asked to work on projects that were not the main focus of her job (for this co-owner).

I pursued the topics in detail and heard some real angst in her voice as she relayed the issues that led to her walking in and resigning at 8:00am. She painted a dark picture of her experience.

At the end of this discussion, I purposely stammered through one last question, “What did the other co-owner say when you approached her about these topics?”

The former employee tripped all over herself trying to answer and ended the call shortly after my question. She didn’t discuss it, she simply quit. The issue here is that she was doing well in the role and both owners were pleased with her performance up until this point.

I’ve come to learn since then that there are many personal issues occurring in the former employee’s life right now. My point here is that even though the employee characterized this situation as a management issue, the weak link was actually the employee. She was not the right fit for this position based on outside issues in her life.

The exit interview that I was afforded from her was the impetus for determining the root of the turnover. If you have an employee that leaves the company, especially in a sudden manner, it is imperative that you locate them to walk through an exit interview. Secondly, stay pragmatic through the entire discussion. Look for the gaps in the situation and ask an assumptive question. Sometimes you will be surprised by the answer.

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Does ‘Thank You’ Help Keep Associates? from CareerJournal.com takes a look at turnover/retention issues at a major law firm. Scary, I know. However, there is a good lesson in here in regards to retaining top employees.

First the setup from the article:

Faced with a surge in turnover of its associates, the prestigious law firm Sullivan & Cromwell LLP has been putting on a charm offensive to hold onto junior lawyers.

The presentation showed that the New York firm, now with about 625 lawyers, lost 31% of its associates in 2004 and 30% in 2005. The average associate attrition rate for law firms of about that size or bigger for 2004 was 21%, up from 16% in 2002, according to a study by the National Association for Law Placement.

30% turnover! That is a staggering number when you think of the highly-skilled legal profession. Now, since they are lawyers they needed consulting help on something that probably seems trivial to you and me.

To deal with low associate morale and high attrition, a confidential slide presentation reviewed by The Wall Street Journal urged partners to say things like “thank you” and “good work” to associates they supervise.

Yes, it would seem the lawyers needed a high-powered slide presentation to explain good managerial etiquette. This caught my eye:

What else should partners do? “Return associates’ phone calls as quickly as you would a partner’s or client’s,” said one bullet. “Be sensitive to not canceling associates’ vacations,” said another.

Canceling vacations? Ah, yeah, don’t do that. In all seriousness, it is fun to make light of lawyers but I have encountered this behavior in sales roles too.

I once worked for a difficult sales manager who rarely gave out compliments and when he did, it was little more than a throw-away line – “Good job.” That was the extent of it. Of course, he was often enthused to offer criticism. In those instances I would usually receive a dissertation from him.

That behavior establishes the culture of the department and defines the morale. I realize managing is difficult and being a friend is not necessarily in the best interest of the company. But a manager does need to respect the employee’s effort, be fair in their management decisions and make sure their empathetically aware of the employee’s perspective. I believe that approach will have the greatest impact on improving employee retention.

Even in a law firm.

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I’m a little late to the party on this post from Spherion’s The Big Time blog. The post covers many interesting topics. To start (emphasis mine):

• 23 percent of companies are already dissatisfied with the talent available.
• One-third of HR managers mention turnover/retention as a key concern.
• On average, employers expect 14 percent of their workforce to leave within the next year.
• 31 percent of workers believe there is a turnover or retention problem at their company, and 39 percent of workers themselves expect to leave in the next year.
• Less than half (44 percent) of workers believe their company is taking steps to retain its employees.

You can see where these survey results are leading – there is a disconnect between the employer’s perception and the employee’s perception of the same company. That disconnect is illustrated in the next section of the post involving the drivers of retention. The summary from the post:

Employers and employees wholeheartedly disagree on what drives retention. In fact, employers and employees ranked every factor of retention differently in terms of priority. The most concerning of which relates to time and flexibility. Work/life balance was the most important career priority for 86 percent of workers surveyed. It is ranked first on the employees list of retention drivers after standard priorities salary and benefits. Employers on the other hand ranked time & flexibility last among all factors relating to retention of employees.

A key point to all of these stats is simple – if you have a retention problem, you have a recruiting problem. Strong companies hire the right people that are rewarded by the culture. Any misalignment in the retention factors leads to a turnover problem.

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A couple of months ago we posted on an article from the Pioneer Press titled Speaking Up Helps Keep Star Workers. One of the surprising findings was that 47% of the 16,273 stellar workers surveyed are mailing out resumes, going on job interviews, even contemplating other offers.

I just recently caught up to an article from a WorkForce Management newsletter of a survey Yahoo HotJobs conducted on 5,300 people. They found that nearly two-thirds are open to switching jobs, with an improving job market cited as the chief cause for such optimism. Here are some interesting points they found:

• 39% cited unhappiness with wages as the chief issue
• 75% cited 2006 raises or bonuses were below their expectations

So where is retention on your list of priorities? You may want to put some thought into it because it is a safe bet that more than half of your employees are looking for new opportunities.

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There is a security blanket in hiring salespeople and it is this – experience. Experience is the balm to bad sales hiring. Companies start with a desire to hire primarily from their industry. If someone has multiple years selling in the industry, skill and talent are assumed to be sufficient and transferrable.

But this approach works far less often than you think. We see it play out almost on a weekly basis.

There is no truer example than one of our customers who sells in a distribution market. They sell electronic parts that are integrated into larger machines. These parts can be purchased at numerous other companies in the Twin Cities, let alone the rest of the US. Their value proposition is far different than their competitor’s even though the product is the same.

This company has hired salespeople from their industry in the past and have not found one who has lasted more than 12 months. Now they are ready to forego the experience security blanket at look at skills and talent first. The critical shift here is to understand that skills and talent are far more transferrable than experience in terms of selling.

This approach is a complete paradigm shift for many companies. Most managers believe that hiring someone from the industry is the safest move. If the salesperson fails, the hiring manager can be surprised by the failure since “on their resume they had a ton of experience.”

Safe doesn’t always equal success. Reward always comes at a risk.

Our process lowers the risk.

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We met this morning with a sales manager from one of our clients and had an interesting discussion about turnover. This company is in an “old-line” industry and has an established salesforce. In fact, the newest salesperson has been with the company for more than 5 years. Most have a 10 to 20 year tenure – retention is not a problem since this is a good employer.

The problem is this – their business has had to change over the past year to match the marketplace. There has been no layoffs, but some restructuring and new management has been added. These changes, according to our sales manager, have caused much angst amongst the team.

The team consists of some strong performers, but there is much dead weight. The company has offered sales training and many of the established salespeople have openly resisted. These same salespeople have declining performance.

One significant issue in this culture is the fact that there has been little turnover. 5 years ago they did have some targeted layoffs, but no new blood has been brought into the team. As strange as it sounds, turnover often has some benefits. Much like properly pruning a plant, sales turnover can eliminate the under-performers and bring in stronger, fresher talent.

I’m no fan of the Jack Welch approach to eliminate your bottom 10% of performers every year (especially with the current market). But his approach is not without some merit. Our customer would benefit greatly from the energy that will come from new salespeople taking over old territories.

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CNNMoney.com offers this quick story – Planned job cuts take big Dec. dip. The phrase “planned job cuts” is a poor construction, but it essentially means expected layoffs.

Planned job cuts for all of 2006 fell below 1 million for the first time since 2000, according to Challenger, Gray & Christmas Inc., an employment consulting firm.

Be wary of the naysayers spouting an impending doom for our economy. The economy is robust and it truly is an employee’s market right now. The reason why you should be aware of this fact:

“With the American economy at full employment for the first time since Sept. 11, 2001, the latest job-cut data provide strong evidence that employers turned their energy toward retention in 2006,” Challenger said.

There is a perfect storm brewing right now (or perhaps already raging). We have historically low unemployment, almost automated job search agents and a new generation of workers who monitor new opportunities . . . all the time.

Retention will be a top priority for 2007. It should be a top priority every year. Salespeople are on the look out for something better. If turnover is trampling your sales staff, perhaps it is time to provide some assistance to your sales management team?

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Thomas Register has a blog. If you have worked in the industrial market, you probably are familiar with their encyclopedia-like register. I used to be a sales manager for a high precision sheet metal fabricator and was quite familiar with researching the Thomas Register. The fact that they have a blog today speaks volumes.

ThomasNet.com (online name) has a post that plays off of the CareerBuilder.com 2007 Job Forecast that was released earlier this week. Their 7 tips are all excellent including number 7:

7) Better training
In light of a seeming shortage of skilled workers within their own industries, employers are looking for transferable skills from other industries. Seventy-eight percent report they are willing to recruit workers who don’t have experience in their particular industry or field and provide training/certifications needed.

Hallelujah. This issue is one of the most assiduous obstacles we face in teaching our customers to look at transferrable skills and talent. Many hiring managers feel safer hiring a retread from their industry than a neophyte with clearly transferrable skills.

Point number 5 warrants close attention when dealing with Generations X and Y:

5) More promotions
As the perceived lack of upper mobility within an organization is a major driver for employee turnover, 35 percent of employers plan to provide more promotions and career advancement opportunities to their existing staff in 2007.

We’ve touched on this topic numerous times including this excerpt from our article Hiring Adjustments for Generations X and Y:

Gen X and Y candidates are looking for a skills path. They desire to understand what skills are needed to be successful in the position today. The long-term incentive is to understand what skills they will personally develop or acquire within the company. They prefer a horizontal management structure and respond to personal skill development. Titles are out. Responsibilities are in. It is imperative to share with the candidates the responsibilities they will inherit as their skills become more advanced over their tenure with the company.

Larger companies tend to have a path for employees to grow in responsibilities. Smaller companies face a bit of a challenge in that area if they are not conscious of it.

I worked as a regional sales manager for a 200 employee company when I was in my late 20’s. I enjoyed my job immensely but my boss at the time was in his early 30’s and I was aware of the fact that I did not have any upward mobility within that company. I could have switched departments, but that would have led to a step backwards initially – a step I was unwilling to take. Financially I was doing quite well but the days started to all look the same. I wasn’t growing at the level I wanted to so I left the company for another opportunity with more responsibility.

As a manager, it is important to keep expanding your employees’ responsibilities. Expect them to do more, learn new skills and move into a larger position within the company. This doesn’t mean titles necessarily. Keep them growing in their skills and prevent their positions from becoming routine. This approach is one of the best methods for stemming the tide of turnover amongst younger workers.

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From Rasmussen Reports – Younger Workers Want More, Connection That Is. Not really a surprise here, but a reinforcement:

On top of everything else, Generation Y employees also prefer more frequent social interaction with their managers. One-quarter (26 percent) would like to socialize with their boss at least monthly. This is compared to 21 percent for Generation X, 16 percent for Baby Boomers and 17 percent for Traditionalists.

That seems to be a strong trend towards socializing amongst the younger workers. If you have a retention problem at your company, this survey provides a good place to start correcting it.

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A quote from my post on Tuesday:

And don’t assume its about money. When someone quits her job, 89 percent of managers assume it was over money, whereas 91 percent of the workers who quit say it was anything but, Murphy said.

From a CareerJournal article titled Opportunity Knocks, And It Pays a Lot Better:

Managers like to say employees leave companies because of bad bosses or lack of career growth. A new report suggests a more straightforward reason: money.In a survey of about 1,100 U.S. employees, 71% of top performers listed pay among the top three reasons they would consider leaving their employer. Yet in a sister survey of 262 large employers, 45% of employers cited pay as a top-three reason workers leave.

Dueling surveys. So which survey is accurate? I’m not sure. One thing is certain, turnover is an issue in today’s market:

Nationally, the annual rate at which workers quit their jobs was the highest last year since 2001, according to the Bureau of Labor Statistics.

Here is the stat that I think drives the pay discussion:

The average employee is forecast to pay $3,305 next year in premiums and out-of-pocket costs for health care, a 7.8% increase over this year and more than double the $1,640 paid in 2002, according to human-resources consultant Hewitt Associates Inc.

Benefits are becoming a much larger piece of the compensation puzzle and if not properly managed (see General Motors), they can become an anchor around a company’s neck. Some where in the past, employees forgot that businesses to not have to offer insurance and retirement – it is simply a “benefit.”

I think this person has the best grip on the rationale behind the responses:

Some career experts question whether pay is pre-eminent. They assert that pay often isn’t the root of employee dissatisfaction, even when employees say it is. Meg Montford, an executive-career coach in Kansas City, Mo., says clients who blame pay often have a deeper problem such as career stagnation, boredom, or feeling unappreciated. “They may come to me with the idea that it’s pay, but usually that’s a camouflage for something else,” she says.

My experience is heavily slanted towards sales positions where compensation is king. Salespeople will leave if they are battling against an unreachable commission goal. Yet, that situation is rarely the reason. Most of the candidates we talk to are actually looking for a different challenge to their skills. Often this challenge involves more responsibility within the company, especially the opportunity to substantially contribute to the overall direction of the company.

I believe “feeling unappreciated” is probably the top reason for an employee to leave their current employee.

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