Randstad recently announced the results of its most recent Employer Branding Survey, citing four key factors impacting employee attraction and retention.
- A lack of career path, not salary, is the number one reason employees leave their jobs
- Facebook, not LinkedIn, is the number one social media tool used for job searches
- A strong work/life balance is the leading factor for employee retention
- More than any other generation, millennials are likely to look for a new opportunity if they do not feel engaged in their current positions
The survey triggered some thoughts on the issue because there is no question that the challenge for employers is figuring out what to do to maintain top talent.
Caution: One Size Does Not Fit All
We certainly don’t disagree that the issues Randstad cites could be playing a factor with employees at many organizations. But, we caution companies to not employ a one-size-fits-all approach to reduce turnover and retain high-performing employees. How do you know which of these are the most impactful at your organization? Remember: each organization is different, and the factors that contribute to turnover differ depending on the organizational context. Unfortunately, one-size-fits-all is only helpful when you need hats, gloves and the like – not when running a business.
An Analytics Approach
Instead of relying solely on turnover/retention research, best practices, and benchmarking surveys, it is important that you conduct internal analyses to identify the factors that contribute to turnover in the unique context of your organization.
- The first step in using analytics to diagnose turnover risk is to collect the appropriate data (e.g., competency ratings, employee opinion survey results, performance ratings, objective turnover data, and/or employees’ turnover intentions) at the appropriate level (e.g., workgroup level).
- The next step is to conduct a linkage analysis to identify the critical drivers of turnover risk. Using structural equations modeling (a sophisticated statistical technique with many advantages over correlation and/or multiple regression analyses), it is possible to identify the critical competencies, attitudes, etc. that lead to higher levels of turnover. The combination of multiple data sources and the statistical linkage to turnover adds analytical rigor to the processes and reduces ambiguity about the factors that contribute to turnover in your organization.
- Although the results of the linkage analysis are informative, few senior leaders have the time to wade through piles of data to identify actionable results. SMD has developed the Turnover Risk Scorecard™ to enhance interpretation and make the results readily accessible by all members of your organization. A sample of the Turnover Risk Scorecard is provided in Figure 1.
SMD conducted an analysis like mentioned above, utilizing SMD Link, for a large healthcare organization experiencing high nurse turnover. The intervention, which was targeted at the organization’s 800 nurses, produced a substantial ROI. Within one year, the nurse turnover rate dropped from 18 percent to 12 percent, meaning that they lost 48 fewer nurses than in the year prior to SMD’s involvement. The cost of nurse turnover was estimated to be $50,000 per nurse. Therefore, SMD’s work resulted in an approximate savings of $2.4 million (i.e., $50,000 X 48 nurses) for the organization. A tailor-made approach; can you argue with the results?
Why Does It Matter?
Employee turnover is rampant in today’s competitive talent market – and it’s a costly problem for organizations. The costs associated with recruiting, hiring, and training new employees are often greater than 100 percent of the annual salary for the position being filled.¹ At the executive level, these costs have been estimated at two to three times the executive’s annual salary. Worse news than that — the costs increase dramatically when the time and expenses associated with temporarily covering the vacant role are considered. What organization can afford this type of hit?
Consider the tailor-made approach for your employee retention efforts. To learn more, download our white paper, “Understand Your Turnover Risk: An Analytics-Based Approach” or contact us at email@example.com.
¹Allen, D. G., Bryant, P. C., & Vardaman, J. M. (2010, May). Retaining talent: Replacing misconceptions with evidence-based strategies. Academy of Management Perspectives, pp. 48 – 64.