In my first two posts in this series, I explored the costs of voluntary employee turnover (reducing your annual turnover rate by 3% could save you between $135,000 and $540,000 EVERY YEAR), and then I gave you some solutions for making sure your turnover rate was at least close to the median (by addressing salaries, technology, and conflict).
Now let’s talk about how to be BETTER than average. You want your turnover rate to be well below the median rate of 13% annually, and to be in the top 25% for nonprofits, you need to get that rate down to about 7%. To achieve that, you’ll have to go beyond the low-hanging fruit of salaries, technology, and conflict. So here’s where you should focus:
- People-centric customization
- Strategic clarity and involvement
- Top-down transparency
This comes from our research. We’ve been gathering culture data from organizations since 2016, and we have more than 1.2 million data points. Most of are data are about the presence of 64 individual culture building blocks inside organizations, we also collected one metric of employee engagement, the employee Net Promoter Score (eNPS), which is based on one question: would you recommend someone to work here?
The correlation of the 64 individual culture metrics and that one engagement metric is an important calculation. When building blocks have a strong correlation with the eNPS question, it means that when that block is present, people were more likely to recommend the organization as a place to work, and generally speaking, if you’re recommending someone to work there, you’re probably not thinking of quitting, so this could directly impact turnover. The blocks with the strongest correlations fell into those three categories above, so if you want to get your turnover rate down to “above average,” then you would do well to focus on those categories. Here’s what we mean.
People-centric customization. Traditionally, organizations have been designed around the needs of managers/owners, and not the employees. That has shifted over the years, and employee needs are considered much more today than 100 years ago, but the blocks that we measure related to customization and focusing on employee needs show up as some of the least present inside cultures today (but with a strong correlation to engagement). When people feel like the organization cares more about itself than its people, they are a turnover risk. So if you want to become above average regarding turnover rates, work on becoming above average around customization and meeting employee needs. Consider doing things like:
- Health and welfare programs, and activities to reduce burnout
- More flexibility or time off
- Customized solutions around job descriptions, career paths, or process improvement.
Strategic clarity and involvement. George Bernard Shaw once said, “The biggest problem with communication is the illusion that it has taken place.” This applies 100% to organizational strategy—we think that everyone knows our strategy, but that is frequently not the case. When people are unclear about where the organization is headed and how their job fits into that, they are a turnover risk. Consider these approaches:
- Visible dashboards and KPIs to track strategic progress
- Involve all levels in the strategic planning process early on
- Quarterly strategy reviews with all staff, sharing changes and adjustments being made
Top-down transparency. There is some overlap here with the previous issue, but outside of strategy, the top leaders must learn how to be more transparent with the rest of the organization. To quote a wise manager I met decades ago, “You need to tell your people stuff, because if you don’t tell them, they’ll make it up, and whatever they make up will be worse than the truth.” When your people have to make up their own stories about what’s happening, they are a turnover risk. Think about instituting practices like these:
- Share notes from every senior leadership meeting with the whole staff
- Expand your intranet. Make it a strong communication hub for senior level decisions and the thinking behind them
- Coffee chats. Create a structure where people can get 1-1 time with senior leaders for informal conversations.
The nine bullet points above are what we call “culture plays.” They are changes you make to the way you do things that will change your culture in ways that make you more successful. They are the heart of our culture change model that we call “culture design,” and that will be the topic of my final post in this series next week.