When Roy Keane walked out of Ireland’s World Cup squad in 2002 many went into meltdown. Some relationships never recovered. But regardless of the rights and wrongs of that fiasco, what does linger is the all-important message about the need to have an employee retention strategy that cultivates good working relationships and is cognisant of the fact that ‘people often leave people’ rather than just the job or the organisation.

Labour Turnover: Levels and Impact

Labour turnover rates vary widely across industries, organisations, occupations and regions. For example, whilst the Irish Business and Employers’ Confederation estimates that the average rate amongst its membership (for 2017) was over 7 per cent, the Health Service Executive’s rate was over 10 per cent (varying from public health nurses’ rate at 3 per cent to almost 75 per cent for non-consultant hospital doctors). It has also been estimated that two-thirds of Irish call centres experience an average rate of 30 per cent. The highest rates tend to be in retailing, hotels, catering and leisure, call centres and among other lower paid private sector employments. These rates also vary geographically, (understandably) being highest where unemployment rates are lowest.

It is reasonable to conclude that with an economic resurgence and a tighter labour market, the process is becoming problematic for many employers. For example, the Central Bank recently reported that it was facing a ‘resourcing challenge’ because of a high turnover rate that’s compounded by not enough appropriate applications from external applicants. Indeed some even suspect that Ryanair’s recent volte face on the thorny topic of trade union recognition had little to do with a change of heart and a lot to do with their pilots leaving (which gave rise to an unprecedented number of flight cancellations and a dip in the company’s share price). On a broader front, the Chartered Institute of Personnel and Development’s 2018 ‘H.R. Practices in Ireland’ survey found that most organisations are experiencing skills shortages. This is evident across all sectors and industries, with more than 4 out of 5 employers experiencing such shortages in the last year.

The reality is that workers’ departures often have a damaging effect on the organisation’s performance. This can manifest itself in not having enough personnel for production and\or service provision, lost (long-established) employee-client relationships, the cost and time devoted to recruiting and training newcomers - who may have little or no experience, giving rise to further losses from defective work and wastage. By understanding and addressing the reasons behind labour turnover, an employer can minimise both its incidence and impact.

That is, it helps when employers are alert to their employee turnover rate and appreciate how it affects the entity’s performance and capacity to achieve its strategic objectives. It is only on this basis that one can design an appropriate or customised resourcing strategy. For example, exit and staff attitude surveys help employers understand why staff leave, enabling appropriate action(s) to be taken. Likewise, by ensuring that newcomers have realistic expectations and are provided with the necessary induction training, their turnover rate - especially during their all-important (but notorious) first six months – can be reduced.

Labour Turnover: The 'What' and the 'Why'? 

Labour turnover refers to the rate at which employees leave employment. It is normally calculated via the number of employees leaving vis-a-vis the total or average numbers employed in the period. For example, if there were 2,000 employees on average during the year 2017 and 100 persons left, the labour turnover rate is 100/2000 = 5% for the year. Of course it’s possible and appropriate to calculate more focused breakdowns of the data (e.g. across occupations, departments, time periods, by excluding retirements).  A wide range of reasons for this turnover can be identified. The avoidable reasons often include: a lack of care and interest on management’s part, a poor work atmosphere, relatively low wages and incentives, bad working conditions and limited training\development and promotion opportunities.

Labout Turnover: What to do?

When the impact of labour turnover proves costly, employers are naturally motivated to do something about it. When trying to retain talent, the following actions or strategies are most commonly applied and adapted based upon the source(s) of problem:

1. Find out who’s leaving and why! Before any prescriptive process kicks in – with all of its associated costs – it’s important to know where and why the problem exists. It is only after this investigation has been properly conducted that an appropriate prescriptive process can be devised and implemented.
2. Both as part of this investigative process and plain good management, many employers use ‘exit interviews’ to establish the reasons for staff departures. However, in the euphoria of leaving for ‘greener pastures’ and\or the prospect of a damaging reference, getting to the heart of the reason for leaving isn’t always straightforward. Hence, the interviewer should not be the interviewee’s manager and the confidentiality of the process should be guaranteed.  Hence, a practical tactic that is deployed is to retain the services of an outside agency to undertake the interview. In a similar vein, one might defer the (confidential) interview or questionnaire data gathering process for a period of time after the former employee’s departure.
3. Take the employee engagement, morale and satisfaction temperature periodically. This can be an effective means of gauging organisational morale and whether employee turnover and retention is (or is likely to be) an issue. If so, it may well prove problematic in an improved economic environment as people have greater choices about where they work. Related thereto is the importance of one’s manager showing care for and interest in their employees. For example, Gallup's research reveals that employees don't leave organisations, they leave managers and supervisors. In the absence of an appropriate avenue to make one’s feelings known, to voice dissatisfaction or to influence outcomes, the prospect of leaving for ‘greener pastures’ becomes a more attractive option. A definite manifestation of this is when staff perceive themselves to have been unfairly treated (e.g. in promotion or bonus allocations). Accurate or inaccurate though the perception may be, it can only help to tune into this sense of grievance and to agree a route that ensures that – even if it can’t be rectified immediately - it doesn’t linger, fester and contaminate colleagues.
4. Where the problem is sourced amongst newcomers, it can be addressed via professional recruitment, selection and induction processes. This should ensure that the employer is getting what’s required (vis-à-vis the Person Specification) and that the employee’s expectations aren’t unduly raised. Realistic job previews that don’t oversell the role or minimise its downsides have much merit.
5. Provide training\development and career progression opportunities, enabling employees to develop their skill set (e.g. via a sideways move) and to maximise their reward package.
6. Try to match the attendance (and work demands) to the employee. That is, if possible, implement flexible working to accommodate the employee’s attendance needs and wants so that they may decide to stay. This is especially relevant to the father/mother wishing to have more ‘family time’.
7. Beware of poachers/head-hunters, who successfully secure key personnel for the organisation, only to return thereafter to re-poach the placement (or other employees) for another employer.

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Note: Dr. Gerry McMahon is delivering two of Legal-Island's practical workshop events in May:

Successful Negotiating Skills: Getting to Yes (3rd May 2018, Radisson Blu Hotel, Dublin Airport) - Only 6 places remaining!

Successful Selection Interviewing (30th May 2018, Radisson Blu Hotel, Dublin Airport) Only 7 places remaining!