Taming Employee Turnover
An Interview with Employee Turnover Expert Dick Finnegan
With employers struggling to defuse the Great Resignation in full swing, Geeks Geezers Googlization podcast host Ira S Wolfe reached out to Dick Finnegan to learn how organizations could tame employee turnover.
A fan of Good to Great and author Jim Collins, Finnegan relates the current employee lifecycle to a doom loop.” A doom loop is a continuous cycle of recruitment, hire, replace. Because new employees don’t show up or they quit the company in the short term. Finnegan shares his strategy to retain employees and mitigate the high cost of employee turnover in your organization.
Doom loop, according to Jim Collins, is characterized by leaders continuously shifting strategies and consistently getting poorer results.
That describes HR and modern-day recruitment in many companies. It’s not only bad business. This approach is bad for the bottom line. Employee turnover rates have become the second or third major cost for corporations. The number of people quitting their jobs is at an all-time high. Because the number of job openings is also at an all-time high, losing existing employees only compounds the pain.
The responsibility for taming employee turnover extends beyond the walls of the HR department. The CFO must become involved to acknowledge that there are financial implications of employee turnover. Like sales, employee retention must be converted into the forecast which will ensure that executives have their eyes on employee retention too. Turnover and retention then secure a place on the financial dashboard, putting these metrics on full display, holding everyone accountable.
One highly effective tool to break the doom loom, according to Finnegan, are stay interviews. For best results, leaders and managers must gain the trust of their employees, to listen and address their concerns. When performed often and properly, employees stick around longer.
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1. “We high five each other when we hire somebody but we forget to low five each other when that person quits.” 8:25
In an organization the hiring of an employee is accepted as a cheerful celebration but when the same employee quits, it is generally not treated with the same respect or concern.
2. “3.25% unemployment is far lower unemployment than we have seen this century.” 10:35
The predicted unemployment rate for 2022 will be around 3.25%. The lowest unemployment rate in the past century was 3.5%. Given the current market scenario, filling open jobs and retaining employees in this environment will be no small task.
3. “The number one reason people stay or leave or for that matter engage or disengage is how much they trust their boss.” 16:38
The relationship between managers and employees is a key deciding factor in whether employees stay or go. Bosses need to build trust with their employees as that can bring down employee turnover rates.
4. “If you want to cut turnover, convert turnover to dollars, to wake up your executives, get your CFO involved.” 17:22
Employee turnover needs to be converted to a cost incurred by the business. By associating turnover with expenses, executives will be motivated to invest in a strategy to lower the costs. This would require not only the involvement of the HR department but also the CFO and management team. Imagine the shift in attitude when employee turnover costs are reported on the company’s financial dashboard and P&L.
5. Operationalizing retention works. If HR principles are applied, it is a bust.” 18:18
Retention works better if principles of operations management are applied to it. Executives can be trained to forecast turnover rates just like salespeople are given customer retention targets to meet.
6. The 5 questions every manager should be asking in the stay interview are:
- When you travel to work, what things do you look forward to?
- What you are learning here?
- Why do you stay here?
- Teams skills and how to fix it?
- What can I do as a leader to keep you working here?
These are the five essential questions that leaders need to ask their employees from time to time. This is a level of engagement that can help leaders understand their employees better and also bring in necessary changes for all levels of employees.
7. “Stay interviews are good but they only work if you convert turnovers to dollars.” 25:05
Decisions based on data can help find causes and lead to solutions. The ultimate solution should be retaining employees, maximizing earnings, and cutting turnover costs.