Taming Turnover

Employees are truly a valuable resource. Regardless of the type of business you operate, or the country in which you operate, every business depends on having qualified and experienced people to reliably perform all of the tasks required by the business.

It is undoubtedly true that some employment positions are more important, more vital, and contribute more directly to the overall success of the business than others. A highly competent Production Manager in many cases is more vital to the business than a General Manager or Finance Manager, because his / her company – specific technical and operational skills and leadership are key to the successful daily operation of the business. In many cases these skills cannot be replicated by an outside hire or an internal promotion without many months or years of intensive training.

However, if your business has any employees or positions that are truly non-important, than as a Manager you are being irresponsible for maintaining such positions or employees. Is the cleaning lady (or cleaning person to be politically correct) a vital position? Probably not, because an outside hire (direct employment or contract) can successfully mobilize in the position and be effective with not more than a few hours of orientation. But don’t make the mistake of thinking of a cleaning lady as being a non-important position. Try running your office or business for a few days without anyone to clean the toilets, canteen, and general office area, and you will quickly discover just how important this function is to a happy and healthy office environment.

I fondly recall one cleaning lady who worked at a factory that I managed nearly 20 years ago. She was a contractor, supplied by a maid service company, and was one of the longest serving members of the office staff. I was very proud to attend the wedding reception for her daughter, and all of us were very sad when she retired. Many tears fell in the office and around the factory site on her last day of service.

The cleaning lady wasn’t the only member of the factory “team” that had served devotedly and loyally for many years. We were very proud to have quite low turnover on our team. Thailand, where this factory was located, and where I have lived and worked for many years, has an entrenched culture of job hopping across all levels and positions. I have probably interviewed well over 1,000 employment candidates, and I have undoubtedly reviewed several times that number of employment applications. In the vast majority of cases, I observed that candidates changed jobs every 2 to 3 years. I rarely received an application from a person who had been employed by the same company for more than 5 years, let alone 20 or 30 years. 

Long service employees do exist, but once an employee has stayed with a company for 4 or 5 years, he / she is quite unlikely to resign except in the case of a significant change in company environment. Such change could include financial distress, a change in technology or operation that significantly alters or eliminates the incumbent employee’s position or job responsibilities, or a change in leadership or ownership that significantly changes the culture and social environment of the workplace. 

Can your company survive and achieve its full potential, if you must replace every employee, including staff, supervisory, and management positions, every 2 to 3 years? Can you provide best service to your customers and shareholders when key positions are vacant, and experienced incumbent personnel are long gone before qualified candidates can be recruited to fill the vacancies? How do you train new employees to fill positions when the experienced former employee is long gone?

Managing an industrial business, serving customers, and defending your market share against competitive challenges is difficult enough when every position on your organizational chart is filled with qualified personnel. You don’t need the additional headache of staff turnover, recruiting and training replacements, and dealing with team morale issues associated with a revolving door work environment. If these issues are all too familiar to you and your team, you must urgently find a way to promote long term loyalty and employment retention.

Reasons for Leaving

Staff retention is a complex and diverse subject. However, it can be boiled down to some simple concepts that can be applied across countries, cultures, and industries to minimize turnover and maximize staff satisfaction and loyalty.

I hear many managers complain that their staff will quit their position for a few percentage point increase in salary at a new company. I don’t doubt that this is in many cases true. However, I think many managers interpret this phenomenon in the wrong way. Most employees are not so focused on compensation that they will quit a secure position to face unknown challenges at a new company for a 2% increase in basic salary. More accurately, such employees are so dissatisfied or feel so disconnected from their current employment that it only takes the most minor incremental incentive for them to risk the unknown. In these cases, if employment conditions were to degrade further, these employees would even accept a cut in basic salary to escape from the drudgery of their current employment experience.

Look in the mirror, evaluate the employment environment that you are providing to your employees, and understand that the problem isn’t your employee’s attitude, but rather the environment that you are providing.

In other cases, employees report resigning from their current position to seek “advancement” or promotion elsewhere.

If you are managing a trade school, college, or university, you should be proud to train your “students” to best serve their future employers. However, if you are running an industrial enterprise, you must train employees to excel in their current roles, then carefully provide a career path, mentoring support, and encouragement to enable your valuable employees to grow into more responsible and challenging roles.

When an employee truly excels in his or her role, organizations often think of such employees as “invaluable”. However, they then proceed to treat these invaluable employees as hardware, plugged into a position with the expectation that they will stay plugged in until they become obsolete or burn out and require replacement. Unsurprisingly, these high performers quickly discover that other organizations also value their skills, experience, and motivation, and are willing to provide incentives including compensation and a positive work environment, to liberate them from their current indentured servitude.

Reasons for Staying

I personally believe that high performing individuals have earned the privilege of being promoted in recognition of their performance. In many cases, a linear promotion opportunity may not be available. A lab technician at your facility might excel and eventually achieve the position of lab manager. They appear to have reached the pinnacle of their career ladder, at least within the confines of your organization. However, if you ignore the career aspirations of such a high performing individual, you can be sure that eventually your lab manager will resign “seeking advancement”.

A few years ago I ran into a former colleague who was the lab supervisor in one of my factories. Shortly after I left this company, she also moved on. When I met her in a popular restaurant, she was surrounded by colleagues, all wearing the same business uniforms. I was very proud to learn that she was the Plant Manager of a well-respected petrochemical complex, and she was enjoying lunch with her loyal subordinates.

Do not place artificial limits on your valuable employees. Allow them to grow, including providing them with opportunities to branch out onto parallel career paths. Or resign yourself to being a charity training institute serving the interests of your competitors and regional peer organizations.

Retention is not just about compensation and advancement. These are certainly very important aspects of retention, but by themselves they are not sufficient to create long-term employee loyalty.

Most people, especially in collectivist cultures, greatly value connection and engagement with fellow team members. Creating a happy workplace, with an inclusive and supporting culture, is perhaps the most effective way to promote employee retention.

Does your company have a culture? Can you describe it? Do you manage and promote your company culture? Do you even give any consideration to the cultural environment of your company?

If your culture is “just another company”, a bunch of people punching the clock, doing their jobs, following procedures (or perhaps shortcutting procedures when not being closely supervised), then going home or to the pub to complain about the drudgery of their positions, then don’t expect to have any success retaining staff.

Creating a company culture takes time and effort, but it certainly doesn’t require a significant budgetary commitment. Evaluate what type of workplace environment your team would most appreciate. Treat your employees as valuable members of a team working towards a common goal.  Define the goal(s), and provide objective metrics so the team can understand and evaluate their performance. Involve your team with your operating strategy, at least to the extent that is safe and prudent with respect to corporate intellectual property and financial reporting regulations. Find ways to treat your employees as fellow shareholders and stakeholders. Solicit suggestions from your team, give them serious consideration, implement worthwhile suggestions, and publicly recognize all valuable contributions.

I have been in factories where employees had no idea how their product was used by customers, or how important their product was to their customer’s success. How does your product contribute to society? If your factory makes rubber blades for windshield wipers, your product might seem to be low tech, simple, and nearly insignificant in the broad scheme of human endeavors. However, that simple blade of rubber represents an important component in each car produced by your customer. If your team doesn’t deliver the windshield wiper blades on time and fully compliant with quality parameters, the car manufacturer can’t deliver completed cars to their customers. The car owner and drivers also depend greatly on the quality and performance of the windshield wiper. A defective wiper can easily become a major factor in an accident, and innocent people might be injured, crippled, or killed. Frankly, there are no unimportant products … if your product has no significance to society, you will very soon be out of business. Be sure your team understands and appreciates the important contributions their work makes to a well-functioning society.

You undoubtedly have a sales team. I typically observe that the sales team is completely isolated from the operations team. They might as well be working for a completely different organization, serving markets and customers on a different planet. This is terribly unfortunate, because in order for the sales team to proudly and effectively represent your product or service to customers, they must understand and appreciate the hard work, dedication, and attention to detail that goes into producing these products. 

Likewise, the operations team needs to understand and appreciate the importance and unique value of the products that they are producing, and how important each team member’s contributions are to the overall success of the product and company. I strongly recommend that you routinely send your sales team into the factory to “sell” your products to your operations team. Teach the team about your customers, how they use your products, what they value in your products and how your products compare with competing products. And insist that your sales team frequently visits the factory floor to gain first hand experience about the product and production process. These modest activities will significantly boost the loyalty, pride, enthusiasm, and effectiveness of all members of your team.

Regardless of industry, country, or market, I do not believe that any company has to accept high turnover as an insurmountable fact of corporate life. As a responsible, enlightened manager you must seek to clearly understand the factors contributing to employee turnover, and you must create an environment and culture in which your employees feel safe, secure, comfortable, and confident. You and your company will never realize its full potential without a loyal, stable, motivated, and happy workforce.