Managers Will Not Hear What Workers Will Not Speak

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As we know, when exiting employees are asked, ‘‘Why are you leaving?’’

most are not inclined to tell the whole truth. Rather than risk burning a

bridge with the former manager whose references they might need, they’ll

just write down ‘‘better opportunity’’ or ‘‘higher pay.’’ Why would they

want to go into the unpleasant truth about how they never got any feedback

or recognition from the boss, or how they were passed over for promotion?

So, it is no wonder that, according to one survey, 89 percent of managers

said they believe that employees leave and stay mostly for the money.1

Yet, my own research, along with Saratoga Institute’s surveys of almost

20,000 workers from eighteen industries,2 and the research of dozens of

other studies, reveal that actually 80 to 90 percent of employees leave for

reasons related NOT to money, but to the job, the manager, the culture,

or the work environment (Figure 1-1). These internal reasons (also known

as ‘‘push’’ factors, as opposed to ‘‘pull’’ factors, such as a better-paying

outside opportunity) are issues within the power of the organization and

the manager to control and change.

It is a simple case of ‘‘when you don’t know what’s causing the problem,

you can’t expect to fix it.’’ This dismaying disconnect between what

managers believe and the reality—the true root causes of employee disengagement

and turnover—is costing businesses billions of dollars a year.

Saratoga Institute estimates the average cost of losing an employee to

be one times annual salary.3 This means that a company with 300 employees,

an average employee salary of $35,000, and a voluntary turnover rate

of 15 percent a year, is losing $1,575,000 per year in turnover costs alone.

If, for the sake of illustration, 70 percent of this company’s forty-five yearly

Figure 1-1.

Why people leave: what managers believe vs. the reality. Source:

Unpublished Saratoga Institute research, 2003.

12% of

employees leave

for more money. 88%

of employees leave for reasons other than money.

89%

of managers believe employees leave for more money.

11% of

managers believe

employees leave

for other reasons.

TLFeBOOK

4 The 7 Hidden Reasons Employees Leave

voluntary turnovers—thirty-one employees—is avoidable, then the company,

by correcting the root causes, could be saving $1,102,500 per year.

This should be enough to raise the eyebrows of most CEOs and propel

them to take action.

Just looking at turnover costs doesn’t tell the whole story, however.

Long before many employees leave, they become disengaged. Disengaged

employees are uncommitted, marginally productive, frequently absent, or

in some cases, working actively against the interests of the company. The

Gallup Organization reports that 75 percent of the American workforce is

either disengaged or actively disengaged (Figure 1-2).4

The 15 percent of actively disengaged workers can be particularly destructive

to morale and revenues, for these are the workers who disrupt,

complain, have accidents, steal from the company, and occupy the time

and attention of managers that would be better spent dealing with other

workers. As we know, some turnover is good turnover, and rather than

struggle to re-engage actively disengaged workers, it is usually wiser,

kinder, and more courageous to let them go.

The cost to the U.S. economy of disengaged employees is estimated to

be somewhere between $254 billion and $363 billion annually.5 The cost

of absenteeism alone, a signal symptom of disengagement, is estimated to

be $40 billion per year.6

Most of this mind-boggling cost accumulates from the loss of sales

revenue caused by customers’ disappointing interactions with disengaged

employees, many of whom are turnovers waiting to happen. Simply put,

employee disengagement leads to customer disengagement, and employee

defections eventually lead to customer defections.

Figure 1-2.

Engaged vs. disengaged workers in U.S. workforce. Source: The Gallup

Organization, 2002.

Disengaged

60%

Engaged

25%

Actively

Disengaged

15%

So, the best reason to be concerned about understanding the root

causes of voluntary employee turnover and disengagement is an economic

one. It’s not just about being nice to employees just to be nice, although

civility is a standard of behavior to be prized in itself. It’s about taking care

of employees so they will then feel good about taking care of customers.7

Hundreds of Gallup studies reveal that, on average, businesses units

with employee engagement scores in the top half compared to those in the

bottom half, have:

86 percent higher customer ratings

70 percent more success in lowering turnover

70 percent higher profitability

44 percent higher profitability

78 percent better safety records8

If we can commit to correctly identifying the root causes of employee

disengagement, and if we can address these root causes with on-target solutions

that increase the engagement of our workers, we will see tangible

results in the form of reduced turnover costs and increased revenues.

Many managers will never get it. As Brad, another departed employee,

told me during an exit interview, ‘‘It seems like most managers just don’t

care enough to go to any effort to retain good people.’’ But many managers

do get it, and do care. Now what we need are more organizations that

make heroes of these managers, not just in terms of praising them, but also

in terms of measuring and rewarding their contributions.

This book is for the managers, executives, business owners, and human

resource professionals who care.

Turnover: Just a ‘‘Cost of Doing Business?’’

To review, almost 90 percent of managers believe their employees are

pulled out of the organization by better opportunities or more money,

while almost 90 percent of employees say they were pushed down the

slippery slope toward leaving by nonmonetary factors. Where lies the truth?

As with many things in organizational life, it’s all about differing perceptions.

The question is, ‘‘whose truth?’’

Many of today’s managers still believe that turnover is an acceptable

cost of doing business. Perhaps even you have said one or all of the following:

‘‘People come and people go’’ or ‘‘You can’t expect to hold on to

everyone forever’’ or ‘‘Good people get better offers and move on.’’ There

is a healthy realism in all these statements.

Let’s also not forget that many of today’s managers joined the managerial

ranks in the 1980s and early 1990s, when there was a surplus of baby

boomers in the workforce to take the place of employees who quit. Ever

since the first boomers entered the workforce in 1968, the labor supply had

always exceeded the demand. Then, around 1995, there came a tipping

point. For the first time in recent memory, the number of jobs started to

exceed the supply of workers. The end-of-the-century ‘‘war for talent’’

had begun.

For the next six years the war raged—companies made liberal use of

signing bonuses and stock options to attract new employees. Some organizations

vied to become ‘‘employers of choice’’ by offering everything from

concierge services, to massages, to take-home meals, even letting their employees

bring their pets to work. Employees had moved into the driver’s

seat.

Yet, a 1998 survey reported that although 75 percent of executives said

that employee retention was one of their top three business priorities, only

15 percent had any plan in place to reduce turnover.9 It was apparent, by

their failure to act, that the majority of managers and executives were stubbornly

hanging on to the mindset that had served them so well in their

formative years: ‘‘Turnover is acceptable as a cost of doing business.’’ Those

who held on to this mindset soon found themselves competing for talent

and losing to a minority of companies whose mindset—‘‘Every turnover is

a disappointing loss to be analyzed’’—was very different, reflecting the

same attitude about losing a valued employee as about losing a valued customer.

Many of these companies were located in the Silicon Valley, where

the war for talent was fiercest.

These companies formed the vanguard of employers across America

who believed their people came first, built cultures of mutual commitment,

lowered their tolerance for bad managers, and came up with clever and

innovative best practices for keeping and engaging talent.10 They were

companies like Sun Microsystems, Cisco Systems, Southwest Airlines, SAS

Institute, MBNA, Edward Jones, Rosenbluth Travel, Synovus Financial,

Harley-Davidson, and many others. They were in the minority, as the best

always are.

Then came the economic slowdown of 2001, when employees began

‘‘tree-hugging’’ their jobs and when replacements for those who quit were

plentiful again, at least in most industries. CEOs began ‘‘high-fiving’’ one

another in celebration of the fact that the war for talent was over. Employ-

ers had moved back into the driver’s seat. One Fortune column featured the

headline, ‘‘The war for talent is over . . . talent lost.’’11 Once again it

seemed entirely appropriate that managers and executives would re-adopt

that comfortable old belief: ‘‘Turnover is acceptable as a cost of doing business.’’

It is understandable that managers’ attitudes toward employees change

as the employment market changes. It is also easy to see why managers

would be less worried about employee turnover when there are plenty of

unemployed or underemployed job seekers from which to choose. And

when managers are not as worried about employees leaving, they are also

not as likely to be concerned about why they are leaving.