Why HR Doesn’t Understand the Real Reasons Employees Leave

Reasons Employees Leave

Two-thirds of UK organisations say they want to reduce their employee turnover rate. Yet, three out of four companies have no explicit staff retention strategy or budget in place to achieve this.

Why HR Doesn’t Understand the Real Reasons Employees Leave

This contradiction was uncovered when employee engagement and staff retention consultancy great{with}talent surveyed HR professionals. The study looked at 316 organisations to examine the impact of staff turnover on organisational performance. They also investigated HR attitudes towards employee retention, the interventions and approaches adopted and the use of exit interviews.

According to the survey, 44% of organisations have a staff turnover rate higher than 15% per year, with one in ten exceeding 30% per year. Yet, 81% of organisations believe employee turnover has a detrimental impact on their effectiveness.

Read: How to Calculate Staff Turnover Rate with Exit Process Cost Calculator.

The Facts of Staff Turnover

While not all employee turnover is negative, it becomes a problem for organisations if employees with key skills or potential are leaving. Lowering staff turnover can reduce unnecessary recruitment costs and improve the morale, motivation and performance of existing employees.

Part of the problem is that the received wisdom of HR professionals clashes with reality. The results show a misunderstanding with the reasons employees leave.

HR practitioners presume that people leave because of ‘lack of promotion opportunities’ (61%), ‘inadequate pay’ (49%) and ‘poor relationship with manager’ (26%). Anonymous exit data, collected from 5,000 leavers, across different industry sectors, however, paints a different picture.

Although ‘promotion prospects’ and ‘pay’ are indeed drivers for leavers, they are not as important as HR practitioners perceive. Employees highlight other factors that drive them out. These are less appreciated by HR professionals: ‘uninteresting work and boredom’ (25%), ‘lack of training and development opportunities’ (25%), ‘lack of teamwork and cooperation’ (19%) and ‘promises not kept by management’ (17%).

There is a clear financial case for employee retention. The average cost to replace an employee is between £7,750-£11,000.

Exit Interviews

The survey suggests that a lack of honest and reliable exit data is what prevents HR from gaining a true picture of why employees leave. For the most part, approaches towards collecting exit data are haphazard and non-strategic. HR professionals tend to rely on hearsay or opinion, rather than a systematic analysis of reliable data.

Traditional face-to-face exit interviews are used by 57% of organisations. This is also their main source of data to find out the reasons employees leave. Yet, only half of them aggregate the data to reveal exit patterns and only four percent collect anonymous exit data.

This suggests that the exit interview is treated as more of a check-box process rather than a strategic opportunity. It is questionable whether traditional exit interviews provide honest information, as a leaving employee may choose to avoid confrontation to maintain a good reference.

Read: Recruitment Strategies and Employee Retention are a Mixed Bag for the NSPCC.

Employee Retention Strategies

The research showed that 93% of organisations claim to have implemented staff retention initiatives over the past year. This includes improving employee involvement and communication, improving the induction process and increasing learning and development opportunities. Yet nearly half (47%) still admit that they have a problem retaining staff.

Organisations that provide challenging work and opportunities for training and development are more likely to experience a lower staff turnover rate. Despite this fact, only seven percent of organisations attempt to redesign jobs to improve staff satisfaction.

There is a clear financial case for employee retention. The average cost to replace an employee is between £7,750-£11,000. Alongside the additional ‘costs’ such as lost opportunity time.

Even a one per cent reduction in staff turnover would cut recruitment costs significantly, as well as increasing overall organisational effectiveness.

Written by Ron Eldridge the director of great{with}talent.

Contact great{with}talent and find out more about their Last Opinion exit interviews.

[youtube http://www.youtube.com/watch?v=1UJ1B36TuqA]

(Main image from Inc.)

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