The beginning of a new year is a time for reflection. It’s a time to consider what’s working and what’s not . . . what needs to stay the same, what needs to change. If there is one thing we did last year that we could do over again, what would that one thing be? And how would we do it differently. And what better outcome would we expect if we had done it that way in the first place? What about the coming year? What challenges do we expect to face, and how will the lessons of last year help us deal with the challenges of this year? Coincidentally, we recently had an opportunity to speak with Lisa Gilbert, President of the Schaumburg Business Association, so we asked her what she’s hearing from her members. “What are business leaders worrying about?,” we asked. “What are their concerns as we enter 2020?” For her answer, and for some thoughts about her answer, please continue reading below.
Employee turnover is not a human resources issue. It’s a management/leadership issue.
Employee turnover. That’s what Lisa Gilbert told us seems to be uppermost in the minds of her Schaumburg Business Association members. She didn’t say, “Hmmm, let me think about that.” She answered without hesitation as if she had been expecting the question. She hadn’t surveyed her membership on the question of employee turnover, but still, she does talk with members every day, so she has a pretty good sense of what’s on their minds.
Considering we’re in a period of extraordinarily low unemployment, it’s not surprising that business leaders are worried about holding onto their best and brightest. During the Great Recession a decade ago, the opposite was true. Employees weren’t leaving because there was no place to go. Most companies, if they weren’t laying people off, were at least declaring a hiring freeze. Obviously, that’s not the case today. If an employee is unhappy in a job, he or she probably needs to look no further than the company next door to find a new one.
So what should you do? How do you hold onto people who may be eyeing what they perceive to be greener pastures?
First, let’s agree that you’re not going to hold onto everyone. Some defections are preventable, but some are not. For instance, there isn’t much you can do when an employee is leaving:
- due to a health issue
- for retirement
- to take a job offer that you simply cannot match
- to pursue work in a different industry
- because his or her family is moving out of the area
So our retention efforts should be focused on departures that are preventable. That is, people who are leaving simply because they can’t stand working for us any longer.
You probably already monitor your compensation and benefits programs to make sure they’re competitive, but if you haven’t done that lately, do it now. It doesn’t matter how many ping pong tables you put in the break room or how many Friday afternoon pizza blasts you have, if people feel they are not being fairly compensated for their work, they’re as good as gone. But let’s assume that’s not an issue . . . that your pay and benefits are fair and competitive. Then what?
The old axiom where employee turnover is concerned is this: “Employees don’t leave their companies. They leave their managers.” There is also another concept that applies here which is: “You can manage things (equipment, schedules, buildings, etc.), but you can’t manage people. People need to be led.” Think about that. Do you really believe people get up in the morning saying to themselves, “I can’t wait to get to work where I can be managed. I love having the boss breathing down my neck, watching my every move, and pushing me to work harder and faster.” No, of course not. People don’t like to be managed and will resist being managed. But people do want to be led and will accept, even seek out, enlightened leadership. Therefore, your first line of defense against employee turnover is you and your managers. If all of you are following sound leadership practices, the amount of preventable turnover will be minimized.
There is a fallacy held among many small business owners that if you’re in a managerial position, you’re automatically a leader. Or that if you’ve got a college degree, you’re qualified to step right into a leadership role. Or if you’ve been with the company for five years or more, you qualify as a leader. Wrong, wrong, and wrong. While it’s true that some people are natural leaders, the vast majority of us are not. Leadership is a skill that can be learned through a formal training program or through informal coaching and mentoring, but it does have to be learned and practiced and honed. It doesn’t just happen because you’ve got a managerial title or a college degree or few years of experience on the job.
Employee turnover is very, very expensive. Productivity takes a serious hit. You not only have inexperienced people who will need some time to ramp up to the productivity level of their predecessors, but you also have experienced people who can’t be as productive as they normally would be because in addition to doing their own work, they’re burdened with helping to train the new people. When productivity suffers, so does profitability. Quality also suffers because new people make more mistakes than the old hands they replaced. So if you’ve been telling yourself that you can’t afford leadership training, it’s hard to imagine that leadership training would cost anywhere near what turnover is costing you.
As noted earlier, you can’t stop all turnover. You probably wouldn’t want to even if you could. Some turnover is a good thing because it brings in new people with fresh ideas. But you do want to prevent good people from leaving your organization just because of leadership failures amongst your management team. So the challenge is, how do you recognize strong leadership potential in people before you put them into positions of authority? And then, how do you nurture and develop that potential into leadership skills that will help prevent valued employees from walking out the door? Those are the questions we’ll explore in our next posting.
Meanwhile, if you’d like to explore ways to develop leadership skills specific to your organization, call me . . . always glad to talk and to help where I can.