“Regrettable” Turnover – and What to Do About It.

“Regrettable” Turnover – and What to Do About It.

For many reasons – some obvious, some not so obvious – the departure of a talented manager or employee can have big impacts on an organization. The obvious costs include things like the cost to recruit and fill the position, and the cost to train and onboard the new employee. The less obvious costs include the loss of the departing person’s knowledge, the loss of key relationships, and critical projects not getting accomplished or falling by the wayside.

Yet it’s not when a talented employee leaves that the real cost of turnover begins. The meter actually starts running when he or she is still working. Once someone decides to leave, his or her productivity declines precipitously – often 50-75 percent.  This can be considered a “pre-departure” cost.

The time that colleagues devote to filling in for the departing employee is another pre-departure cost. First, it results in a loss of traction on their projects and initiatives. In addition, people doing “double duty” may resent the fact they have two jobs now, rather than one. They may start looking at other options – increasing the hidden costs of turnover.

So what can you do to mitigate these costs?

First, measure the degree to which “regrettable” turnover is occurring in your ranks. If you’re seeing more than 1-2 percent regrettable turnover per year, then something is wrong. The number one reason people quit is because of dissatisfaction with their bosses. So ask yourself: Have we assured there are no rotten apples in our management team?

The second reason people quit is because they have a better offer. According to Forbes magazine, when an employee leaves a job, he or she will typically see a 10-20 percent increase in salary, and even as much as 50 percent. So ask yourself: Have we done a salary survey? Are we paying people what they’re worth?

The third reason people leave is because the organization is not utilizing them to their full potential. Ask yourself: do we have a comprehensive strategy for investing in the development of our people?

For our clients, we’ve seen significant reductions in regrettable turnover when they’ve invested in what we refer to as a “leadership culture” – where people operate with clear expectations, where they receive frequent positive feedback and coaching, and where people regularly get stretch assignments and rotate through different assignments to help them expand their knowledge and grow their skills. Such a culture does require an investment, but the benefits are huge.

In short, turnover of talented people is a sign of a stale, sluggish organization. Rather than bemoan the loss of talent, take a good look at what you might be doing differently – and better – to retain them in the first place.

LRI’s consultants can help you design comprehensive individual and leadership development plans to build a leadership culture–and reduce regrettable turnover

Eric Douglas

Eric Douglas is the senior partner and founder of Leading Resources Inc., a consulting firm that focuses on developing high-performing organizations. For more than 20 years, Eric has successfully helped a wide array of government agencies, nonprofit organizations, and corporations achieve breakthroughs in performance. His new book The Leadership Equation helps leaders achieve strategic clarity, manage change effectively, and build a leadership culture.

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