Whatever about culture eating strategy for breakfast, a poor culture can eat your company.
Several months ago I received a phone call from a potential client who had $1million in employee turnover last year – a staggering loss.
He asked me why I think this is happening and I replied, “Without knowing any details, there’s a good chance it’s related to your culture.” And do you know what? It was.
Although many organizations in the US are experiencing strong revenue growth, thanks to a strong economy, they are suffering because employees are leaving in droves.
Why are employees fleeing like never before? By the year 2020, 50% of the workforce will be made up of Millennials, and this generation is not willing to work in a crappy dysfunctional culture. It’s that simple.
Millennials have helped ‘bring rise’ to something called the Employee Experience. At its most basic core, the employee experience is every experience an employee has in your organization.
From applying for a position, being interviewed, receiving a job offer, Day One, and onboarding, to the performance management process, interactions with one’s supervisor, internal communication, training and development, and recognition, all of these experiences help shape ideas in employee’s heads – and feelings in their hearts – about you as an employer.
Although the Employee Experience has been in existence since the dawn of business, generations of workers pre-Millennials had a higher tolerance if it was poor. Why? In my opinion, it’s because of what I call the Golden Handcuffs.
Decades ago, organizations had lucrative things that they could dangle in front of employees to entice them to stay with the company for life, such as a Pension Plan, lifetime health benefits, and a gold Rolex watch at the employee’s 35th-anniversary retirement party, for example. In addition, decades ago loyalty was valued much more in business than it is today.
Today, tolerance and loyalty are scarce. If you do not deliver an amazing employee experience, you run the risk of losing your most valuable asset: your employees. How bad is the issue? Very.
According to a survey by Jobvite, while only 18% of the total workforce changes jobs every one-to three-years, 42% of Millennials do.
If you want to calculate your turnover, add up the number of employees who left in 2018 and divide it by the total number of employees at the beginning of 2018. That’s your employee turnover percentage.
Again, the average turnover among all employees in all industries is 18%, so if you conduct this exercise for your Millennial population only, you can see how your organization is doing retaining this generation of workers.
In addition to the fact that losing great talent is undesirable, it’s also costly. Employee Turnover Cost is the cost to hire a replacement employee and train that person. Replacing a professional employee costs 75-125% of the employee’s annual salary, as you will incur:
- Lost productivity costs
- Recruiting costs
- Interview costs
- Post-interview costs
- Hiring costs
- Onboarding costs
- Training costs
In addition, you will have the cost of reduced employee engagement from other workers, who have to cover the workload of the employee who left and who view the resignation as a sign that your organization isn’t the wonderful place that you are making it out to be.
The net-net? Employee turnover is a very costly proposition, so you should do everything in your power to avoid it. What can you do to put your organization on a winning path?
- Calculate your total employee turnover rate and your Millennial turnover rate. Knowledge is power.
- Administer an Employee Engagement Survey to determine the percentage of your employees who are engaged.
- Develop a strategy to improve your culture. The strategy will be actions that managers need to do in the trenches with their teams in an effort to improve the culture.
- Engage your CEO in your Employee Engagement Journey. The strategy should be communicated to managers from the CEO, so everyone sees that culture change is a priority.
- Set goals. If 50% of your employees are engaged, set a one-year goal to increase engagement to 55%.
- Hold managers accountable for results by giving them all a shared Performance Management goal: Increase engagement from 50 to 55% in one year.
- Course correct if you miss the engagement goal and reward managers for their progress.
In conclusion, I am approached every week by leaders and managers who tell me that employee engagement is difficult. The truth? It’s not difficult. The definition of culture is how we do things here. So in order to create an amazing culture, you simply need to do things here differently tomorrow than you are doing today. That’s it. And when I say you, I don’t mean one individual or your Human Resources department. I mean all of your frontline managers because they are the people who have the most interaction with employees.
In general, people don’t leave wonderful workplaces that are meeting their needs, so if you have a retention issue, you have work to do. Follow the seven steps above to the letter and I guarantee you will see improvements in six months. In addition to minimizing turnover, an extraordinary culture will boost employee productivity and creativity, customer satisfaction, and revenue growth. Priceless. What are you waiting for?