High turnover of staff spells trouble – just ask Donald Trump and Theresa May
Turnover seems pervasive. It’s most visible in Donald Trump’s White House where staff departures rose to a record 43% by March 2018. In comparison, the turnover rate for the same period of Barack Obama’s tenure was just 24%.
Yes, a new administration must put its own stamp on things, but governments need qualified experts with situational knowledge to manage effectively. Familiar with havoc, Trump recognises in Theresa May’s turbulent cabinet “a hotspot with lots of resignations”. The Brexit turmoil has included many an exit of British politicians from the front bench, which undermines the smooth order of government stability.
While companies should not seek zero change, this level of turnover disrupts the important continuity of business as usual. It’s an issue that many businesses are increasingly facing. Insurance company Willis Towers Watson, in a global workforce study of 32,000 employees, found that 70% of top performers, across industry sectors, felt compelled to quit for career advance. Talent seeks challenging opportunities and skilled workers have greater confidence they’ll find another position.
Easy come, easy go
Staff turnover is natural. Employees leave for family reasons, poor health or new opportunities. By contrast, many staff prefer to stay with a known employer; the longer people have worked with one company, the more likely they are to stay. In short, length of service is a common predictor of intention to remain. But lethargic or frustrated employees are of low value to an organisation. So zero turnover is not a pragmatic goal, as new blood can invigorate an organisation.
When experts resign, a company can lose firm-specific knowledge, suffer damage to productivity and workforce morale. Curiously, few employers attempt to limit the rate at which people leave the organisation. More than half of UK employers, 56% surveyed by the Chartered Institute of Personnel and Development, don’t even measure the cost of labour turnover.
Perhaps, “good riddance” is an employer’s first reaction or an instinct the leaver wasn’t right for the job. Both these sentiments echoed around the resignations of Brexit secretary, David Davis, and the foreign secretary, Boris Johnson, who quit the UK Cabinet in the same week.
Paying the price
But high turnover has repercussions. The messy drain of talent can affect team morale as skill gaps surface with shaky transitions in knowledge. The cost of replacing a uniquely skilled worker is roughly one and a half to two times the employee’s annual salary. A turnover myth is that specialists only leave to earn more money elsewhere. Many cases show that poor management, adverse work conditions or restricted career opportunities inform decisions to quit.
And certain staff can be hard to replace. Low-cost airline Ryanair, for example, had 700 pilots leave in one financial year, according to the Irish Air Line Pilots’ Association (Ialpa). A qualified pilot is hard to replace, as training is costly and requires a large amount of flying experience.
Keeping key people
Lady Bracknell, Oscar Wilde’s character, would perhaps declare: to lose one executive may be regarded as a misfortune; to lose several seems like carelessness. A growth in unwanted turnover suggests poor leadership and obtuse management. Still, there are ways to effectively manage staff turnover and retain key people, which I outline in my book Talent Retention: Strategies to Keep the Best People.
Skilled workers stay with a stimulating job, a supportive boss and a conducive working environment. Research shows that a measure of job satisfaction, rather than reward, helps to predict the likelihood of employee intentions to stay. Retention bonuses, for example, generally postpone, rather than remove, an individual’s decision to leave. And bonuses paid to retain key staff can distort existing agreements on fair pay. A lack of equity in a reward system then increases disgruntlement and turnover as a result.
A company is like a ship that needs a qualified captain and crew to steer it into the future. Specialists enjoy autonomy and are motivated by intrinsic qualities of work such as mastery, shared purpose and growth. Some employers talk of hiring buccaneers to lead innovation, yet, in practice, research shows that managers want recruits with business know-how to navigate the basic rules of an organisation.
To retain key staff, it is important to improve existing managers’ people skills to support, coach and develop talent. Keeping the best employees who share the company’s values and vision can avoid trouble at sea and prevent a skilled crew from jumping ship.