Leadership Barometer 40 Turnover

March 2, 2020

Is employee turnover killing your company? Turnover is one of the most significant, and avoidable inhibitors of profit. The US national average for turnover usually runs between 2-3% per month, whereas the top 100 companies often have a turnover rate of only 2-3% in an entire year.

In this article, I put a spotlight on the turnover problem and offer some antidotes that are common sense but sometimes not common practice.

For professionals, the cost of replacing an employee is roughly the annual salary of the individual. That means a company with 1000 people, each with an average annual salary of $48K, will lose more than $17 million per year due to turnover. These costs go directly to the bottom line in good times and bad.

Even in periods of high unemployment, turnover is still a problem for most groups. When jobs are scarce, workers may not leave immediately, but they are quietly planning on exiting once the job market improves.

One recent estimate is that 40% of workers are unhappy and plan to move within the next year if jobs become available (National Labor Statistics). That would mean a dramatic rise in turnover costs and a significant shift of the best talent from organizations with poor practices to those with stronger cultures.
How can we fight this needless drain? Here are seven key factors that can help you reduce turnover in your organization:

Supervision

When people decide to leave an organization, it is most often the result of dissatisfaction with their direct supervisor. The most important thing to improve is the quality of leadership at all levels. Teaching supervisors and managers how to create the right culture makes a huge difference in turnover.

Unfortunately, when money is tight, often the first thing that gets cut is training. Improving leadership at all levels needs to be a continual investment, not a one-time event when someone gets promoted to a supervisory role.

Supervisors who are well trained recognize their primary function is to create a culture where people are engaged in the work and want the organization to succeed. These people rarely leave because they are happy where they are.

Compensation

Pay is often cited as a reason for people leaving an organization. Pay may be a factor in some cases, but it is often just the excuse. What is really happening is that the work environment is intolerable, so the remuneration for the grief to be endured is not a good tradeoff. We need to teach managers to improve the trust level within the organization.

High trust organizations can pay workers non-inflated wages and still have excellent retention rates. There are numerous examples of this. One of them is Zappos, where they have such a great culture, that when employees are offered $2000 to leave, they do not take it.

In Drive: The Surprising Truth About What Motivates Us, Dan Pink points out that the relationship between pay and motivation is not what most people think. He cites several studies that show a pattern where higher pay can actually lead to poorer performance.

Pink advocates paying people enough so that the issue of money is off the table. Then three other conditions, Autonomy, Mastery, and Purpose, will take over as the key drivers to satisfaction and motivation, and therefore, retention.

A better future

Another key factor that causes people to leave is lack of a path forward. Employees who can visualize some pathway to a better future will generally stick around to experience it. Training and development are a key enablers for people to know there is a brighter future. Cross training is a particularly helpful way to have employees feel they are being developed to be more important to their organization. Cross training also helps make the work environment more interesting.

A family atmosphere

If you read about the culture of the top companies worldwide, there are many common themes. One of these is that employees describe their work associates as their extended family. They cherish the relationships with their co-workers. Sure, there will be some squabbles and an occasional lecherous uncle, but the overarching atmosphere is one of a nurturing and caring group of people similar to a family. Who would want to leave that environment?

Freedom

Enabling people to do their own work without being micromanaged is a characteristic of organizations that are good at retaining people. Nothing is more irritating than being ordered to do things in a certain way by a condescending boss who does not really understand the process as well as you do.

The ability to use one’s own initiative and creativity to get the job done right helps build self esteem, which is a key ingredient in the retention of people.

Recognition

Knowing that someone cares about you and recognizes your efforts and accomplishments goes a long way toward building employee loyalty. A loyal employee is not out there looking for another position. Instead, he or she is thinking about how the organization’s success can be enhanced through even more effort. The collective muscle of thousands of employees who each feel that way is amazing to behold.

Safety

Many organizations live on the edge of impending disaster. The competitive world has forced legions of companies to downsize on a regular basis simply to survive. When employees witness the revolving door that occurs as a result of things they cannot control, you can’t blame them for wanting to find a safer mode of transport through their career.

If the other suggestions above are followed religiously, then the organization will have a lower risk of having to lay off people, so they will enjoy a lower turnover rate.

These seven factors are not an exhaustive list, but I contend that groups who focus on these seven conditions and understand the dynamics will have consistently lower turnover rates, saving millions of dollars each year. That advantage is sustainable and scalable. It just requires leaders at the top who are skillful and relentless at applying these principles.

Bob Whipple, MBA, CPLP, is a consultant, trainer, speaker, and author in the areas of leadership and trust. He is the author of: The Trust Factor: Advanced Leadership for Professionals, Understanding E-Body Language: Building Trust Online, and Leading with Trust is Like Sailing Downwind.


Does Happiness Beget Morale?

July 22, 2016

Are morale and happiness really the same thing? We say that people at work have high morale when they are happy, but does one always follow the other?

I can imagine that they are linked in some way, but it is possible to have high morale even if you are not particularly happy with your current job.

Since this article will explore subtle differences between these two words, it would be wise to start with an attempt to define each one:

Happiness – is about feeling good. It is a state of well-being, satisfaction, and contentment.

Morale – is about having enthusiasm. It is a state of confidence, loyalty, fulfillment, or common purpose.

Think about some job or activity that you have had in the past that you really did not enjoy very much. You were not cheerful while on the job, but you might have had high morale because it was getting you somewhere.

A good example might be working toward a college degree. I recognize that, for most people, reading textbooks, writing papers, and taking exams are not fun activities.

I remember many times being very unhappy with the stress of being a student, yet while not enjoying the work at all, I still had very high morale because I knew the education would pay off in the end, which it did.

Lack of education does not doom a person entirely, but it severely limits the potential to experience all that life has to offer. This limitation lowers the potential for happiness. In “Kodachrome,” Paul Simon wrote: “…and no, my lack of education has not hurt me none, I can read the writing on the wall.”

Let’s find an example of the reverse situation: Happy, but with low morale.

There are numerous ways this can happen. You might be in a situation where you are working for a leader you do not respect and who tries to bribe people into being engaged in the work by letting them get away with things and giving away perks beyond a reasonable level.

This leader has one thing in mind: make people at work happy. Well, he can accomplish this and make me happy about all the goodies he is providing and that he lets me go home early whenever I want.

Although I may be happy, I suspect my morale would be low after a while. Reason: I am not challenged and am given things that I do not deserve.

Another example might be when working on a specific project that I know is important. I am working in a not-for-profit organization. Here I am happy because my labor is going for a good cause. The result of my work is helping many needy families.

I have to tolerate the fact that my boss is a hopeless micromanager who needs to know the details of everything I do and wants me to do everything how he would do it. I can be happy with my contribution to society, but my morale is low because of the working conditions I must endure for the privilege of making that contribution.

The concept of motivation is more closely linked to morale than to happiness or satisfaction. Motivation is a state of desiring to do something, and for the most part, it is generated intrinsically rather than by external factors.

Some valuable insight about motivation and happiness was provided over 60 years ago by behavioral scientist Frederick Herzberg, who taught us with his “Two Factor Theory,” that the controlling factors for happiness are different from those that generally cause motivation.

Herzberg called the things that keep people from becoming unhappy “hygiene factors.” These would be things like pay, bonuses, nice offices, clean restrooms, comfortable furniture, and parking close to the building. If the hygiene factors are missing, then people are going to become dissatisfied, but piling on more hygiene factors is not the way to create higher motivation or morale.

The “motivating factors” of responsibility, accountability, autonomy, flexibility, caring, and other less tangible factors have more power to create morale and motivation.

We see that there is a general trend that happy workers have high morale, and I grant that is usually the case. The two concepts are not the same, and neither are they hard-wired together.

To have the most productive workers, not only do they need to be reasonably happy, but they must simultaneously have high morale. Leaders need to test for both conditions.

Key Points

1. Most of the time happiness and morale go hand in hand, but it is not always the case.

2. In trying to improve morale or motivation, it is not a simple matter of making people feel happier. You don’t just add more perks.

Exercises For You

1. Imagine you are at a party and, surprisingly, Frederick Herzberg himself shows up. You want to ask him some questions about his Two Factor Theory. What three questions would you ask? How do you think he would respond?

2. Name a good way to make someone happier. Now name a good way to increase someone’s morale. See the difference?

Bob Whipple, MBA, CPLP, is a consultant, trainer, speaker, and author in the areas of leadership and trust. He is the author of: The Trust Factor: Advanced Leadership for Professionals, Understanding E-Body Language: Building Trust Online, and Leading with Trust is Like Sailing Downwind. Bob has many years as a senior executive with a Fortune 500 Company and with non-profit organizations. For more information, or to bring Bob in to speak at your next event, contact him at http://www.Leadergrow.com, bwhipple@leadergrow.com or 585.392.7763


Is Happiness the Same as Morale?

March 23, 2013

Laughing out loud croppedAre morale and happiness really the same thing? We say that people at work have high morale when they are happy, but does one always follow the other? I can imagine that they are linked in some way, usually, but I suspect it is possible to have high morale even if you do not particularly like your job.

Think about some job or activity that you have had in the past that you really did not enjoy very much. You were not cheerful while on the job, but you might have had high morale because it was getting you somewhere.

A good example might be working toward a college degree. I recognize that, for most people, reading books, writing papers, and taking exams are not fun activities. I remember being very unhappy as a student many times, as the stress would get to me. Yet, while not enjoying the work at all, I still had very high morale because I knew the education would pay off in the end, which it did.

Let’s find an example of the reverse situation: Happy but with low morale. There are numerous ways this can happen. You might be in a situation where you are working for a leader you do not respect and who tries to bribe people into being engaged in the work by letting them get away with things and giving away perks beyond a reasonable level. This leader has one thing in mind, make people at work happy. Well, he can accomplish this and make me happy about all the goodies he is providing and that he lets me go home early whenever I want. It is not hard to imagine my morale being rather low after a while. Reason: I am not challenged and am given things that I do not deserve.

Another example might be when working on a specific project that I know is important. I am working in a not-for-profit organization. Here I am happy because my labor is going for a good cause. The result of my work is helping many needy families. I have to tolerate the fact that my boss is a hopeless micromanager who needs to know the details of everything I do and wants me to do everything how he would do it. I can be happy with the contribution I am making to society, but my morale is low because of the working conditions I must endure for the privilege of making that contribution.

Most of the time we see a linking of happiness and morale. Workers who are satisfied usually also exhibit high motivation, but it does not always have to be so. In fact, Frederick Herzberg taught us over 60 years ago, with his Two Factor Theory, that the controlling factors for satisfaction are different from those that generally cause motivation. He called the things that keep people from becoming unhappy “hygiene factors.” These would be things like pay, bonuses, nice offices, clean restrooms, comfortable furniture, and parking close to the building. If the hygiene factors are missing, then people are going to become dissatisfied, but piling on more hygiene factors is not the way to create higher motivation or morale. The “motivating factors” of responsibility, accountability, autonomy, flexibility, caring, and other less tangible factors have more power to create morale and motivation.

We see that there is a general trend that happy workers have high morale, and I grant that is usually the case. The two concepts are not the same, and neither are they hard-wired together. To have the most productive workers, not only do they need to be reasonably happy, but they must simultaneously have high morale. Leaders need to test for both conditions.