Employee retention is a significant issue in today’s business environment, as organizations across the nation are plagued by a revolving door of hires and departing staff. According to the Bureau of Labor Statistics, median employee tenure of U.S. workers fell from 4.6 years in January 2014 to 4.2 years in January 2016.
While this is just a snapshot of tenure statistics, it’s important to note that a new generation entered the workforce during the end of this period—one with drastically different ideas about employment. Millennials, often stereotyped as job hoppers, are the least likely of any generation to stay with an employer for a significant amount of time. In the 2016 Deloitte Millennial Survey, which collected responses from nearly 7,700 college-educated, full-time workers born after 1982, 66 percent of millennials said they expected to leave their current employers at some point within the next 5 years.
This figure wouldn’t be very significant if millennials weren’t a large part of the labor force. However, as Pew Research Center announced, this generation surpassed Gen X as the largest working group in 2015. As older workers retire and millennials’ share of the job market increases, their attitude toward job tenure will have a greater effect on a company’s employee retention efforts, and it stands to reason that average turnover rates will likely increase. Given that the Work Institute estimated that costs of replacing an employee range from $4,000 per individual to 1.5 times that person’s salary, the financial implications of low tenure and high turnover can be staggering.
The issue here is clear, and as more millennials—and members of Generation Z, who have similar ideas regarding employment—enter the workforce, business leaders should endeavor to increase employee tenure within their organizations. Below are ways upper-level managers and executives can effectively target 2 types of turnover: voluntary and involuntary.
Reducing Voluntary Turnover
The phrase voluntary turnover describes instances when employees leave their jobs willingly. To effectively reduce this voluntary turnover, business leaders should focus on increasing employee satisfaction. It goes without saying that people who are happy with their jobs are less likely to quit, especially compared to those who are dissatisfied. Managers, both immediate and those at higher levels, usually have the most power in effecting changes that improve employee satisfaction rates, which can reduce voluntary turnover.
According to the Society for Human Resource Management’s “2016 Employee Job Satisfaction and Engagement” research report, which surveyed over 600 U.S. employees, most of the workforce believes the relationships with their immediate supervisors and senior managers are significant factors relating to job satisfaction. However, there is a disconnect between what employees need and what they receive from these leaders. The survey found 67 percent of employees believe “respectful treatment of all employees at all levels” is “very important,” making it the top contributor to job satisfaction for the second year in a row. However, only 31 percent would say they were “very satisfied” when asked how their managers perform in this regard.
Other important factors for job satisfaction include:
- Trust between employers and senior management
- Relationships with immediate supervisors
- Immediate supervisor’s respect for employee ideas
- Management’s recognition of employee job performance
- Communication between employees and senior management
- Management’s communication of the organization’s goals and strategies
As the report makes evident, managers and supervisors have a significant impact on employee job satisfaction. Therefore, improving satisfaction and reducing churn is almost impossible without managerial support.
To help provide that leadership support, students at the Washington State University Carson College of Business can learn supportive, effective managerial leadership skills through our online Master of Business Administration program. Students take courses on decision making and managerial leadership in addition to traditional business concepts, which can help them become more effective team leaders.
Students at the Carson College can learn supportive managerial skills.
In addition to greater education, here are 3 strategies that can help current and future managers increase their teams’ satisfaction:
1. Improve Relationships with Team Members
As discussed in another Carson College article, building strong relationships with team members can help managers increase employee engagement and satisfaction. Turnover rates can improve as a result. This knowledge can be helpful for those in a high-level management career.
In addition to the tips mentioned in that article, the Society for Human Resource Management’s research shows that managers should also make sure their employees feel respected, specifically by listening to their ideas and concerns. Per the report, 49 percent of participants rated respect for their ideas as very important. Employees of all levels believe their thoughts are valuable and can contribute to a better workplace. However, the ideas of junior staff sometimes aren’t given much consideration from senior leadership. This situation makes employees feel undervalued, and they may start looking for an employer that appears to appreciate them more. Listening to the ideas from all levels of staff can help improve relationships with those team members.
2. Utilize Soft Skills to Make Employees Feel Valued
Managers can show respect for their team members by utilizing soft skills, such as active listening and empathetic decision making. Doing so shows employees that they are considered unique individuals, not parts in a machine.
Additionally, managers should work to improve communication regarding organizational operations to make employees feel valued. People like to be notified of changes that affect them, yet many employees are caught unaware by major organizational shifts. As such, they grow disengaged, their job satisfaction suffers, and they become more likely to quit. Students at the Carson College who aspire to a managerial position should prioritize learning effective communication strategies, especially in regard to change management, to help bolster their soft skills.
3. Arrange Workloads to Reflect Employee Interests
Employees are more engaged when they can take pride in their assignments. There are 2 ways employees can do work that makes them proud:
1. Work on assignments relevant to their interests
2. Perform challenging tasks that utilize their skills
That said, a heavy workload—even one a person finds engaging—leads to burnout, which takes a huge toll on retention efforts. According to a joint national survey conducted by Kronos Incorporated and Future Workplace, 95 percent of human resource leaders—including HR executives, vice presidents, managers, and directors—believe burnout is a major threat to retention.
Therefore, managers must make sure their teams have realistic workloads. This step may mean hiring more staff or relying on contracted work.
Reducing Involuntary Turnover
While voluntary churn has a significant impact on employee retention efforts, high-level managers should also focus on involuntary turnover, which is when an organization chooses to terminate an employee. A high amount of involuntary churn points to inefficiencies in business strategy—whether poor hiring procedures that onboard underskilled individuals, insufficient employee development methods, or unrealistic performance standards.
Below are 3 ways managers can work to reduce involuntary turnover:
1. Adjust Hiring Priorities
According to a CareerBuilder survey from 2016, 75 percent of employers have hired someone not fit for the position at least once. There are several possible reasons for this high number, including employers:
- Being forced to hire unqualified applicants to fill open positions
- Not investing enough focus on their hiring strategies
- Hiring candidates who seemed fit for the position but are later deemed unqualified
Given the high costs of repeatedly finding and onboarding new hires, businesses should avoid hiring mistakes and employ the correct candidate as frequently as possible. Strategies to achieve this goal may involve:
- Investing in new hiring strategies that attract targeted, qualified candidates
- Implementing candidate assessment tools during the application process
- Using background checks to screen candidates prior to their start dates
Businesses should boost efforts to find and hire the right candidates.
2. Implement Employee Development Programs
If poor performance is a primary contributor to churn, managers should encourage improvement rather than terminate staff. One way to do so is to create development programs that help staff improve specific skills. Not only can this solution help employees become more proficient and correct mistakes, but the individual attention also helps develop their relationships with their managers. As noted above, a strong manager–employee connection can increase engagement and reduce turnover.
3. Set Aspirational Performance Standards, Not Impossible Ones
Heavy workloads and unreasonable goals cause stress, which harms both employee engagement and performance. To set fair performance standards, many businesses use S.M.A.R.T. goals. Each letter in the acronym stands for one of the following criteria:
- Specific: Employees should understand exactly what they need to achieve.
- Measurable: Progress should be quantifiable.
- Achievable: Goals should be realistic.
- Relevant: An employee’s assignments should have meaning.
- Time-bound: Goals should have a specific deadline.
Some organizations use the word “aspirational” rather than “achievable” for these goals, placing targets a little out of reach. This way, employees are encouraged to work their hardest rather than become complacent.
Strengthening Managerial Skills at the Carson College
Students at the Carson College receive a comprehensive education designed to provide them with the knowledge and skillset that can help them reach a high-level management position or promotion. Not only does the curriculum include concepts like data analytics and financial law, but it also contains classes on operational management and business leadership. The coursework involved can shape students into effective team leaders who improve employee job satisfaction and performance, which can then boost retention.