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80% of employee turnover within organisation’s control

By 4 December 2012No Comments
Around 80 per cent of all employee resignations are, at least, due mainly to factors that the organisation has control over, according to a recent large survey.
Job satisfaction and the job itself are the main reasons for leaving. With a turnover rate of 18 per cent a year considered to be average, turnover is costing organisations about $1 million per year for every 100 people they employ, according to estimates from the survey.
Reducing the turnover rate to 13 per cent would save around $280,000 a year per 100 employees.
Another significant finding is that the reasons for leaving are virtually unchanged since the end of the global financial downturn late last decade.
The survey also found that work–life balance is an important issue for both men and women, that the drivers of turnover vary significantly between industry sectors, and that Generation Y employees are more motivated to leave by career opportunities and better job offers. Overall, around one-third of all employees received better job offers.
The survey was conducted by Insync Surveys and covered exit interviews of more than 11,000 employees from 40 organisations over a 4.5 year period.
Five reasons for leaving

The survey describes job satisfaction as poor job fit — either the job didn’t suit the employee or vice versa. Even if the employee enjoyed good relations with his/her manager and peers, was paid fairly and employment conditions were okay, the employee would still be tempted to leave if the job were not fulfilling or did not offer career or professional development opportunities. This finding applies to both full-time and part-time employees.
The survey placed reasons for leaving into 5 categories:

  1. Job enrichment — job satisfaction, level of challenge, career and professional development opportunities
  2. Structural — job security, pay/conditions, incentives, work stress, equipment/resources/infrastructure
  3. Interpersonal — relationships with manager/supervisor and work team, fit with organisation culture
  4. Home-life — job location, work–life balance, personal reasons
  5. Environmental — approached with better job offer.

Just over one-half (51%) of employees listed job enrichment as a reason for leaving, followed by home life (46%), structural (41%), environmental (34%) and interpersonal (25%). The survey describes job enrichment, structural and interpersonal factors as being within the organisation’s control, and the other two factors as external. However, it can be argued that the employer also has some influence on the external factors. For example, working hours and work overload can affect work–life balance, and the survey suggests that employer influences were significant in two-thirds of cases where home life factors were a reason for leaving.
Improving job enrichment

The survey offers the following advice:

  • Measure and benchmark employee engagement levels.
  • Ensure managers understand and leverage employees’ individual passions in order to foster personal growth.
  • Provide meaningful work and show the link between each job and organisational success.
  • Provide challenges and development opportunities that are relevant to employees’ knowledge, skills, ability and potential.
  • Provide transparent career roadmaps that encourage and empower employees to strive beyond their basic job requirements.
  • Ensure the organisation culture openly encourages knowledge sharing.
  • Provide flexible work options that meet employees’ needs.

Gender and generational differences
The three main reasons for leaving (job satisfaction, career opportunity, offered a better job) were the same (and similar percentages) for both men and women, although the rank order was different. Significantly, home-life circumstances influenced the decisions of men and women to a similar extent (40% and 47% respectively). This indicates that they have issues in common (transport problems, lifestyle preferences and carer’s responsibilities) and implies that flexible work arrangements should be available to and designed to suit both men and women.
While job satisfaction was the main reason for leaving for both Generation X and baby boomer employees, career and development opportunities and being offered better jobs were the two main reasons why Generation Y employees left. Baby boomers were significantly less likely to receive offers of better jobs and were also less interested in development opportunities. Generation X employees were most likely to face work–life balance issues.
The implications of these findings for employers include the need to provide:

  • meaningful work and challenging roles
  • flexible work arrangements that retain the knowledge and skills of employees nearing retirement
  • flexible work arrangements that are diverse enough to suit employees in different life stages
  • payroll and remuneration systems that are transparent enough for employees to be able to calculate their future earnings potential within the organisation.

Full-time versus
part-time employees

Over one-half of the part-time employees left because of home-life reasons, either personal reasons or work–life balance.
However, job satisfaction and career opportunities were still important issues for them, which means employers need to be mindful of this and not overlook the needs of part-time employees.
For example, they should devise a specific employment value proposition for part-timers, ensure an inclusive organisation culture, and ensure part-time work is meaningful, challenging and provides opportunities.
Single versus multiple reasons for leaving

Only 20 per cent of employees said that home-life and environmental factors were the only reasons for leaving; hence, the claim that 80 per cent of turnover can be influenced by employers.
Almost one-half of the 80 per cent listed multiple internal factors as reasons for leaving.
As noted above, job enrichment was the most common reason for leaving, whether or not combined with other reasons.

It is important to identify the factors that are outside the employer’s control and to focus on those 80 per cent that the organisation is in a position to influence. Some employee turnover is inevitable, and necessary to avoid stagnation. The challenge is to avoid it happening with employees you really want to keep.
The survey report makes the following recommendations.

  • Measure and analyse turnover. This analysis allows you to understand the causes that are unique to your organisation and industry.
  • Calculate the true cost of employee turnover. Use this information to present a business case for investing in a retention strategy.
  • Then monitor the progress of that strategy and calculate its return on investment to ensure management remains focused on retention issues.
  • Create enriching and meaningful jobs. This requirement involves aligning with the mission, enabling employees to make an obvious difference and matching jobs with skills and interests.
  • Accommodate changing life circumstances. Achieve this step by matching job requirements with personal interests and circumstances, and by effectively using flexible work arrangements.
  • Nurture an inclusive and positive culture. This recommendation requires building a strong employment value proposition and keeping managers focused on building good relationships with employees.
  • Enable and recognise good performance. Use remuneration, incentives, rewards and recognition to show employees that good contributions are valued. Also, ensure employees always have the necessary resources and support to perform their jobs.

Further information

The 2012 Insync Surveys Retention Review was published by Insync Surveys.

Purnima Kabra