About half of all American workers plan on leaving their jobs and about one-third plan on doing so this year.
Considering that, on average, it costs between 30 and 50% of a worker’s annual compensation to recruit, hire and train a replacement and get them up to scratch, American businesses are blowing trillions of dollars – that could otherwise go to the bottom line – because of workers leaving and having to be replaced.
According to the US Census Bureau, the average cost of annual payroll for US business is 35%. To figure out the costs associated with employees leaving simply take the total annual compensation of the employees who leave in a calendar year, multiply it by 40% (an average of the 30-50% numbers cited in the previous paragraph) and imagine that it could all be additional profit moving to the bottom line if the business had zero churn.
Proving the adage that people would rather have a lousy job and a great boss than a great job and a lousy boss, the number one reason people cite as their reason for leaving is that they hate their boss. When probed to explain why they hate their boss people cite four primary reasons: poor communication, lack of recognition, a failure or refusal to listen and not providing help or training.
Some companies have been able to reduce their employee churn to as little as four percent by making certain that every manager asks each of their employees or direct report five questions twice annually. Those questions are:
- Has your manager talked to you about your career development in the past six months?
- Has your manager discussed future possibilities within the firm in the past six months?
- Has your manager talked to you about the future you see for yourself in the past six months?
- Has your manager discussed your long-term goals and ambitions in the past six months?
- Has your manager offered to help you achieve what you want to achieve in the past six months?
Can a few simple questions keep people from leaving? The answer is a resounding yes. At the legendary Kronos, their 5400 employees rate their bosses twice each year and the results were revealing. Of the 25% lowest ranked managers a hefty 24% of their direct reports said they’d be gone within a year. But, of the top 25% of ranked managers, only 4% of their direct reports has plans to leave.
Years ago, a wise mentor shared with some sage advice with me. “People respect what management inspects,” he said. It’s not enough to encourage bosses to allow their heads to meet their hearts and to care about the development of the company’s only real asset; it’s people. If top leadership considers employee retention and engagement to be of vital importance they must begin measuring it. The previous questions in the form of a short survey will get the ball rolling and the payoff will be a highly engaged workforce and a lot of money that’s currently being wasted moving straight to the bottom line.