retention Archives

It’s time to stop making excuses about your turnover problem. Research shows that average employee tenure is rising rather than falling.

Let’s blow up the rising turnover myth

There’s barely a week goes by where I don’t read something about rising turnover rates.

You know the story. Turnover is rising. Retention is falling. It’s all the fault of Gen Y. They just don’t value career development. And they have no loyalty.

You could be forgiven for thinking that we’re facing a turnover epidemic.

What really worries me is when I start to hear the ‘turnover epidemic’ used as an excuse. This conversation: “Yes our turnover is much higher than we’d like, but that’s just the state of the market”.

I think we’re hearing this story so much in the business press that we believe it as fact. So is rising turnover and declining retention supported by the data?

Declining tenure is not supported by data

Employment data just doesn’t support a ‘turnover epidemic’. Despite all the noise, average retention is actually rising, not falling.

The best data here comes from the Employee Benefits Research Institute (EBRI). They produce a major report on employee tenure trends every two years. You can check it out here.

But I know you’re too busy to read a deep statistical analysis on the state of workforce tenure. So here’s the quick conclusion: job retention has stayed basically unchanged for the past 30 years. Far from declining, average tenure is actually up.

Some powerful facts (if you’re a HR geek like me!):

Average workforce tenure has been rising consecutively in every survey since 2002 (from 4.7 years up to 5.4 years).
Average length that someone stays in their job has actually risen since 1983 (up nearly half a year)

Workforce myths are very sticky

What’s amazing here is just how sticky workforce myths can be. As the EBRI report makes clear, there’s a long list of workforce myths that get taken as fact.

Believe it or not, one of the biggest workforce myths is lifetime employment. There’s this common conception that previous generation were typically employed by one company for life. But just like this ‘turnover epidemic’, lifetime employment just isn’t supported by fact.

Previous generations of employees may have had the option to stay at an employer for life. But that doesn’t mean they actually did. And whilst perceived job security may have declined, this hasn’t changed how often people move jobs.

As far back as records go, employees have been staying in their jobs for an average of about five years. Despite all workforce myths and rumours to the contrary!

Your turnover problem is in your control

Yes, turnover is a huge business cost. There’s plenty of big Australian business that have turnover costs running to hundreds of millions of dollars. All because they’re facing tenure that’s nowhere near this 5-year market benchmark.

But blaming the problem on the market or generation of employees isn’t helpful. Fundamentally, your turnover problem is always in your control.

Employees have (and will always) leave organizations for a reason. And if you’ve got a major turnover problem, that reason is almost always tied to bad performance management. Nothing drives employees to leave your business faster than managers who don’t provide good regular feedback and development opportunities.

So if you’ve got a turnover problem, avoid the typical excuses. Start with your performance management and fix the basics. My experience has always been that you’ll see a dramatic and quick improvement.

What’s your take on the state of employee retention? I’d love to hear what you’re seeing in the market. Jump into the comments below and let’s start the discussion.

Image credit: NASA (Public domain)
http://commons.wikimedia.org/wiki/File:LC-36A_Demolition.jpg

There’s been a lot published over the last week on “tour of duty” employment. The noise is coming from the publication of a new book by Reid Hoffman, Ben Casnocha and Chris Yeh called The Alliance.

So, what does a tour of duty means in the context of the employment relationship?

The crux of the idea is that the employment relationship today is broken. Companies demand employee loyalty without guaranteeing job security. At the same time, employees promise loyalty but are quick to move if offered a better role or pay-rise. Everyone says the right things. But nobody is making promises they intend to keep.

A tour of duty moves the relationship from a transactional relationship to a mutually beneficial alliance. As Hoffman puts it: “Employment should be an alliance. [That means] a mutually beneficial deal, with explicit terms, between independent players”

What’s important here is the acceptance that the employee and employer don’t have the same agenda. Neither party is pretending to make a lifetime commitment. Instead, both set out about what they expect the other party to deliver over the next 2, 3 or 4 years. There’s plenty of examples of how Reid has successfully used the approach at LinkedIn. See this Wall Street Journal interview and in the original idea-piece in HBR.

So without further ado, let’s talk about what tour of duty employment might mean for HR.

Expect a two-way focus on performance management

Performance management becomes a two-way conversation with serious consequences for both parties.

The employee has always been responsible for hitting KPIs. But now the company is also responsible for delivering promised development. Examples include mentoring, a leadership course, or an offshore posting with increased responsibility.

In a tour of duty world, performance management has to hold both the employee and the employer accountable. It’s no longer just a one-way conversation.

Now, a failure to deliver great performance management is a breech of contract by the employer. You’re assessing the employee on their performance. But they’re also assessing whether you’re advancing their career as promised. It’s no longer a one-way conversation. Stop for a second and let that sink in.

Clear objectives are (still) critical

Both employee and employer are signing on with a specific outcome or mission in mind. So it’s critical to make sure this mission is clear.

Nothing will doom a tour of duty employment relationship faster than a mission that’s subject to misinterpretation. And that runs both ways. Both the employee and the employer need to be able to state what the other party is getting out of the relationship.

Again, SMART goals and objectives are performance management 101. But in this environment the consequences are significant. Misalignment or plain old laziness will all lead to quick turnover.

You have the ability to increase retention of specialist employees

One of the common misconceptions in that a tour of duty approach will reduce the tenure of employment. With one caveat below, I don’t think that’s the case.

There’s a good analogy in an emotional relationship. Through having hard conversations, we can fix issues at an earlier stage. We continue to recommit if it’s working. And we don’t hold onto the illusion of staying together if the relationship is broken and we’re not BOTH achieving what we set out to.

For knowledge workers in specialist positions, there’s always the opportunity to ‘cheat’ on their employer. Recruiters call regularly. Employees know the options and opportunities.

Tours of duty make clear that you’re just as invested in their growth as they are. And that’s a really meaningful differentiator.

But poor execution creates turnover risk

If you do this badly, you’re going to significantly increase your workforce turnover. It’s the equivalent of reminding employees just how little they’re getting out of their job. Picture this conversation:

“Hi Bob, remember how we promised you all these things about how great this opportunity would be for your development and career? Well we actually didn’t deliver on any of our promises… Now how did you go with your KPIs?”

So here’s my recommendations to you

If you’re already best practice in performance management then this is something you need to be thinking about. Talent supply and generational trends mean you won’t have a choice. Your competitors will start making these kind of commitments. And they will be a real differentiator for employer brand. Gen Y loves the authenticity of “you don’t have a job for life but we’ll make sure you get as much out of this as we do”.

If your company does tours-of-duty well, the approach will help you retain your best employees for longer. It will help you do this at a lower cost. And it will make clear which managers are delivering great employee development.

Finally, a word of warning! If you’re just starting on your performance management journey then you need to get your house in order first (as Josh Bersin shows nicely here). Start with the basics. That means clear expectations and regular, documented conversations.

To extend the military analogy – you can’t go to war until you’ve trained the troops.

Photo credit: MONUSCO (Used under Creative Commons SA 2.0 licence)

Posts

Is this the biggest lie in HR?