Note: This article is part of an occasional series dedicated to exploring the contribution of human capital assets (people!) to the valuation of a business. Welcome to The New ROI: Return on Individuals. Previous articles in the series can be found here.
60% of the U.S workforce leave their jobs each year, and the majority of them are voluntary departures.
Sorry to scare you, but this is what the research from the ADP Research Institute indicates.
There are many reasons for this, and if you’re aware of these reasons and serious about retaining good people, you might just be able to avoid some of the damage. But how do you get your arms around these issues before it’s too late?
In this article, we explore the effectiveness of the exit interview and the impact of your company’s online reputation.
The revolving door
While it’s nice to have a laundry list of things to be aware of regarding employee retention, and even if you are working proactively to address each of them, it can still be difficult to know exactly why employees are leaving.
For example, I was chatting recently with someone who told me about her former employer. The company was very focused on corporate culture and understood that turnover is very expensive. Despite this, the company experienced a troubling amount of turnover in one particular department. The proverbial revolving door.
The employees all knew why this was happening, but they put on a facade for the leadership team.
They talked among themselves as a coping mechanism to survive the day-to-day, but the reason for the turnover was a certain department head. The guy apparently “didn’t get the memo.”
Like many places, this company had a formal exit interview where they hoped to get useful feedback about the employee’s experience with the company. Each employee, on their way out, however, said that the reason they were leaving was simply for a “better opportunity.”
This pattern continued until the company’s CEO decided that it was time to find out the real story behind the turnover. When the next resignation happened, the CEO called the exiting employee personally to ask why.
“Better opportunity” was the response.
To which the CEO said with relief, “OK, I just needed to hear that you were leaving for a better opportunity and not that you were running away from our company.”
The reality check
They are running away from your company. And they are telling their friends (and the world) to stay away also. With sites like Glassdoor and others, it is easy for current and former employees to share their thoughts about what it’s like to work at your organization. This can have a tremendous impact on attracting talent.
According to the folks at Energage, job seekers will assess your company’s online reputation by turning to workplace review sites and checking your company ratings before they apply for a job or accept your offer. A bad reputation costs a company at least 10% more per hire in additional salary to convince a candidate to come on board – IF you can convince them. And 71% of employees surveyed by Career Builder indicated that they would not apply to a company with a bad reputation.
According to a recent study conducted by Energage, “Organizations ought to pay close attention to their online reputation on review platforms, as online reviews sites do reliably reflect the reality of their workforce experiences.”
“We were quite surprised at our own findings,” Fraser Marlow, head of research at Energage, told me. “Most online reviews are written by ex-employees, and they are subject to a more negative skew than internal surveys. But they do correlate pretty well to other measures of the organizations’ culture.”
Corporate culture and employee engagement go hand-in-hand, and it’s a fragile thread that connects the fabric of the organization.
It’s one thing to not ask any questions. But when leaders simply accept expedient responses because they are fearful of, or disinterested in, hearing the real answers, they send a very clear message to their people.
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Your current employees would like you to stop kidding yourself and face the music, so to speak. But, when they are walking out the door, ex-employees have no good reason to burn bridges. They’re done – it’s not their problem anymore. They are less vested in helping you fix the issues, so why would employees share negative feedback on the way out?
Besides, they don’t believe that you want to hear it anyway.
Breaking the cycle
What if the CEO of this story really did want to hear the truth? What if this particular departure was truly the tipping point in that organization’s awareness of the problem?
How can organizations break the cycle of hearing the “party line” and get the real feedback that they need to make a change?
Please leave your answers to this question in the comments section below.
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