The intent of this piece is to outline the hidden costs of attrition and its impact on organizations. It explores the root causes of loss of talent such as feeling devalued and not supported in realizing their aspirations. In this context, employees reassess their expectations and look for new roles. The manager's role in understanding these expectations and supporting employees in meeting them is essential to retention. A shared sense of community and accountability for the organization's success creates meaning for employees and fosters their commitment.
The impact of attrition
High levels of attrition deplete the vitality of an organization and its long-term performance. The organizational and financial costs of attrition are significant but are often unseen. According to Gallopup, it costs one-half to two times their annual salary to replace an employee who leaves, depending on the role's complexity level. This figure includes recruitment costs and the productivity lost while the new employee becomes fully proficient. The reconfiguration of teams caused by the departure of key members can significantly impact performance until teammembers ‘find their feet’ with the newly distributed responsibilities. As a result of all this planned outcomes are likely postponed with the associated costs.
The current landscape of how employee experience their work
The COVID era and its aftermath undeniably brought significant changes to the workplace. New practices such as online work have significantly impacted employee experience and aspirations. A McKinsey survey reported that 35% of US workers work from home full-time, and 23% work from home part-time.
With this backdrop, there is evidence that many employees have reassessed what they expect from work. Their conclusions are starting to manifest themselves. For instance, LinkedIn has shared more stats that are concerning: 85% of American professionals are looking to find a new role and 67% report low engagement. As many as 50% of the professionals surveyed said their level of engagement was so low that they were putting in minimal effort in their work. Essentially, these people have quit and stayed until they can get a job that better meets their needs. Even though they are not part of the attrition stats, they likely soon will be.
The root causes for people leaving
People decide to leave for many different reasons, but there are central tendencies in their perceptions and logical steps they follow:
Employees perceive a loss of trust and confidence in senior leaders. They are disillusioned by what they see as the infectiveness of management or the organization.
They sense that their manager offers insufficient coaching or feedback. They conclude rightly or wrongly that they are not valued, recognized or heard.
They experience cheated expectations about their role, responsibilities and assignments.
Their perception of work/life imbalance might worsen because they no longer believe their efforts will be recognized.
They perceive they are not being paid fairly or at market value.
They conclude that their manager is not committed to their success, leading them to think they have little opportunity to progress.
They might start feeling vulnerable because they sense that their employment security is threatened, and they convince themselves that they better take their fate into their own hands by initiating a search for alternate employment.
They perceive that they are in an environment where they can’t speak freely with their manager about their perceptions to determine whether what they see is real.
My own experience illustrates these points…
I once went through a similar logic when I worked for a senior leader who was very demanding and was regularly critical of my decisions. I sensed that he did not have a favourable view of my contribution. I stuck it out because I was highly committed to the challenge I had taken on. He then moved on to another role, and a year later, I was in his office having a friendly conversation, and I mentioned to him that while I was working for him, I could visualize that he had my dismissal letter ready to give me from the top drawer of his desk. He was shocked when I told him this and went on at length about the value of my work. While working for him, I did not see the space discussing what I was experiencing. I went through each of the steps outlined above. I would have left if I had not been entirely committed to completing the projects I had taken on.
This example illustrates how the manager’s role in retention is paramount but underplayed. Many leaders believe that attrition is inevitable when their role in keeping people is a critical determinant in people deciding to leave and search for alternate employment.
The manager’s role as a key determinant of retention
Research by the Corporate Leadership Council reported that only 25% of employees who leave express dissatisfaction before they leave. This is why, when employees decide to go, it is too late to convince them to stay. Managers have to be proactive when it comes to retention. Although understanding what causes people to leave is helpful, managers should focus on what causes them to stay. The key is to shift from reacting to prevention. People join companies for rational motives (better compensation, benefits and career opportunities), but they stay and work hard for more aspirational reasons that include:
1. Meaning and purpose - a sense of connection to the firm’s mission[CG1]
2. A positive connection with the values and culture of the organization
3. Having what they need to make a contribution and succeed
4. Perception of fair and equitable treatment
5. Opportunities to learn and grow
6. Feeling rewarded, recognized and appreciated by their manager
7. What they want for their career aligns with the company's intentions.
From Entitlement to Self-initiation: the evolution of the employment contract:
The bond between employees and the organization has irrevocably shifted without being articulated clearly. The employment contract has gradually shifted from ‘entitlement’ to ‘self-initiation.’ In the more distant past, employees saw their security as residing in being part of an organization. This is less and less the case. Layoffs occur regularly without either experience or performance appearing to be factors in selecting who has to leave. Most people now see their employment security as residing in their capabilities.
The more traditional contract brought them to do what they had to do to get to stay. The new contract incites them to dedicate themselves to creating value for an opportunity to develop their capabilities. The more they contribute, the more they will be recognized and offered opportunities to develop their abilities further to improve their employment mobility. Instead of working for the company, they see themselves as fundamentally self-employed.
The implications for retention are clear: acquiring capabilities aligned with their aspirations ensures a more highly committed workforce. This shift benefits and serves organizations by motivating employees to optimize their contribution to access enhanced opportunities to develop their capabilities. This is what managers have to keep in mind to retain their employees.
Managers who align aspirations and commitment
The research on engagement consistently emphasizes that team members' interactions with their managers are crucial to commitment. Through these discussions, managers genuinely demonstrate that they care about team members' success in their current work and beyond. Engagement surveys consistently report that as much as 70% of the variance in engagement is attributable to the interactions between employees and their managers. Someone who is fully engaged is less likely to leave. This explains why managers who actively coach their team members will experience significantly less turnover.
A manager who shows respect and appreciation for a team member will inquire regularly about how satisfied they are with their work. In an open and trusting interaction, the answer is also an indicator of the propensity to retain them. Another helpful question is, “What motivates you most about your work?” Other valuable questions could include “What would you best like to be known for having achieved?” or “What capabilities would you most value having acquired?" The most meaningful question a manager can ask their team members is “What are your aspirations, and how can I help you realize them.”
The central role of one-on-one meetings
One-on-one meetings offer the best opportunity for interacting with their team members. My interviews with team leaders in technology firms about One-on-One meetings have shown that most employees are not satisfied with them. Most of these meetings are often used to cover matters covered at length in project management meetings. Instead, these meetings should help team members resolve issues and set expectations about contribution and development. Regarding development, they should explore what expectations could be set to develop skills that they agree would represent the next best steps in building capabilities in line with career aspirations.
A manager should aim to have laid out development expectations for all their direct reports. This is the understood ‘quid pro quo’: their team members commit to a level of contribution and, in return, get active support from the manager in developing capabilities that will help them realize their career aspirations. It is also essential for managers not to be limited to development opportunities in their teams. If they take an organizational perspective and look for development opportunities beyond their own teams, team members will see that internal mobility will make it possible to access exciting opportunities in other parts of the organization.
Instilling a sense of community in the organization
People need to be proud of their organization. They need to find a deeper purpose in what they do and feel that they are contributing to the success of a worthwhile organization. They need to think that being part of a context where they collaborate and support one another is at their best. They espouse shared values that represent the social glue that binds the organization.
This sense of community is undermined when a short-term view prevails, and people are a fungible commodity based on quarterly results. The trust reservoir is depleted by changes for which there seems to be no business rationale. The leadership stands apart from them, leading to distrust. People feel devalued.
A sense of community fosters collaboration, interdependence and a shared understanding of accountability for the organization's success. Instead of competing, people build on one another’s capabilities. They see a high level of integrity in the conduct of leaders who are not ego-based and self-serving. Instead of being devalued, people find meaning in their work. These are the tell-tale signs of an organization with a sense of community.
In closing…
People will hesitate to leave situations where they feel their manager is committed to their development. They will realize that it is not easy to duplicate an environment that ensures an engaging, uplifting employee experience. With this in place, employees will still leave to pursue their careers but will resign in far fewer numbers, and the organizational bench strength will support continued vitality.