Factors that Cause Turnovers
The report lists five categories as a start at detailing the factors that lead to turnover: compensation, benefits, career opportunities, the quality of the "work content," and "affiliation" — the degree to which the organization supports employees in their functions. Companies with a turnover problem need to attack these areas to help them retain employees and bring in new ones when needed. Sibson calls this the "employee value proposition."
The consultancy has identified "exit drivers" that companies need to consider as part of the cure for toxic turnover. Some are obvious; drivers in the compensation area include a lack of "pay system satisfaction" and "pay raise satisfaction," along with low levels of information about pay. In the affiliation area, however, the drivers may be a bit muddier; not enough organizational commitment or support for employees, who also rate "trust in management" and "understanding of vision," along with fairness and reputation in deciding whether to stay on.
In one case that Sibson offers as an example, a company found turnover up 20 percent over historic rates, and even higher in some business units. After interviewing exiting employees, administrators saw that the problem was more than low pay, which was at first suspected. The problems cited were unhappiness with project assignments, training, and scheduling. To confront the real problems, the company changed its project assignment and training, and installed a comprehensive communication system to explain the changes. Pay levels weren't changed at all, but turnover rates plunged.
Finance chiefs should get involved in this process early, demanding richer, less simplistic information about critical jobs from HR — and increasingly they are, says Sorensen. "Ultimately, if the business can't afford to fill the critical gaps, it's going to have to go to the CFO anyway to ask for more money."
That's if the company even survives the outflow in a competitive world.
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