Your company is working with a great idea/product/... You have such talented people in your team with the right attitude and abilities. You have growth plans, metrics and you see progress taking place. You offer some benefits, everyone gets to participate in a yearly offsite, you have written down some guidelines and other basics are covered. All seems good enough, why worry. Well, welcome to the experience you most likely have had yourself in previous workplaces and now are letting to take repeat in your company.

At one moment, you find yourself from a loop of constantly being on a search for new people. What is happening? There is always someone leaving! You get a new employee settled in and they are reaching their productive contribution phase but another person announces they are leaving. The feeling of "we could achieve so much if the team only would be in place" is taking over? Great to note that there are things you can do to break out of this excessive employee turnover loop. In modern HR (People Operations) it is called Employee Experience Management or sometimes Culture Management. Leading employee experience is also known as the process of encouraging people to be interested and/or involved in the work of an organization - creating a connection to and with the mission while ensuring a balanced experience throughout the employee lifecycle.

What is the harm of voluntary turnover?

According to LinkedIn 2018 report, the average turnover rate for the IT sector is 13%.

Yes, new people with new ideas and new energy sounds good! But doesn't that lean on the concept that experienced people in an organization are tired and uninspired and therefore unable to contribute? Why is that? Where comes the normalized idea that working in a company equals people exhausting themselves and losing their efficiency factor? If we would let go of that norm, we could move forward with thinking about how employment can be exhilarating, empowering, and enjoyable for longer than a year or 2. Through that, we would be able to have control over turnover.

Work Institute’s 2017 Retention Report estimates that it costs as much as 33% of a worker’s annual salary to replace. For instance, replacing a mid-level full-stack software engineer in Estonia (earning 54 000 EUR gross yearly) has a cost of over 17 000 euros for the company. Every lost engineering lead would cost your company close to 30 000 EUR.

Next to direct financial costs are also the so-called productivity costs of lost institutional knowledge, the time lag it takes to find a replacement, the time it takes for that new worker to become fully productive, and decreased team morale.

What does actual data say about turnover?

Turnover can be born from either your employee (1) being approached by another company and taking their offer; (2) no longer wanting to work in the current company or (3) searching for new opportunities.

The decision to leave a company most often does not come out of the blue. Based on extensive research, Mobley (1977), put together a publication that is considered one of the most influential ones in the field of applied psychology. According to Mobley the process of dissatisfaction evolving into a turnover (employee's decision to leave the company) consists of 8 phases.

For any HR (also known as People Operations) professional this is great knowledge! Any time there is a way to divide a big daunting problem into sections means you are closer to addressing the right issue for specific employees. Instead of having generic surface-level initiatives that are like a bandaid for a bleed, you can, with an educated approach, open the wound, attend to the specific problem and guide the group of patience into recovery. What I am trying to say is that so many turnover reasons could be prevented.

8 phases of the decision to leave

(1) dissatisfaction, (2) thoughts of quitting, (3) evaluation of subjective expected utility (SEU) of job search and costs of quitting, (4) search intentions, (5) evaluation of alternatives, (6) comparison of alternatives and present job, (7) quit intentions, (8) quit

Alternatives to leaving

Hulin (1985) supplemented the theory by pinpointing new aspects between step 7 (quit intentions) and 8 (quitting). His findings clarified that dissatisfaction does not only culminate in leaving but there are individuals who either lower their job input (get withdrawn from their role, team, and/or organization) or improve their circumstances (land a promotion; redesign their role, move horizontally inside the company). This was also a big step forward for the work adaptation theory, which has been a big help to prevent the decision to leave.

Unfolding model

Lee & Mitchell (1994) were the first, after a long period of time, to come out with a radically new turnover theory known as the "unfolding model". They describe 4 different paths to turnover that is based on "shocks" or jarring events that prompt thoughts of leaving.

(1) A so-called "shock" in the shape of a personal life event activates a preexisting plan for leaving. For example a change in their personal life like a breakup empowering the employee to take bigger risks and put their preexisting leaving plan in action. Or the partner gets a new job in a new location and due to that, the employee knows their agreed course of action is to quit theirs.

(2) A negative job "shock" goes against employees' values, goals, and/or beliefs making the employee reconsider their attachment to the company. For example, people are promoted due to their illegal or immoral actions and that becomes a push factor for the employee. Mostly connected to value versus integrity clash.

(3) Alternatives that seem better. An employee initiates an attempt to look around in the job market and via that gets access to data with what they assess compatibility with the companies and offers against the existing ones. The curiosity offered comparisons and thanks to that employee was provoked to leave.

(4) A dissatisfied employee quits after getting a new job offer.

Practical things an HR (People Operations) professional can do and note

• Beware of the snowball effect. People working closely together (so-called communication network) in similar positions are prone to quit in clusters. Most often it is not planned as joint quitting, but due to the social ties, they take over each other's discomfort and dissatisfaction.

• Although the act of leaving is merely the opposite of staying, contend that motives for leaving and staying are not necessarily polar opposites.

• Initiatives and practices implemented on a group level have higher results to reduce collective turnover. For example, managing pay expectations only on an individual level (whoever asks, gets a raise. Or each team lead handles their own budget for pay raises) versus a company-wide salary system leans clearly towards company-wide systems to have better control to turnover rates.

• Track each team's satisfaction, job involvement, absenteeism data and analyze them for patterns. This will help you evaluate where the pain point is located in your company.

• The US median number of years for a person to stay in a company is 4.2 years. When diving more precisely into demographic characteristics, then for 24 to 34 years olds, the median is 2.8 years. The same number (from 2019) for European Union is 9.8 years, and Estonia 7.8 years. The Estonian overall average job tenure of 7.8 years also had a median for 24 to 29 years olds (2.8 years) and 30 to 34 years olds (4 years).

• Work on your retention strategy for boomerang (employees who quit but eventually return) and alumni (the ones that will not return). Best to identify by classifying employees into (a) enthusiastic leavers - want to leave and do, (b) reluctant stayers - want to leave, but cannot, (c) enthusiastic stayers - want to stay and do, (d) reluctant leavers - want to stay but can't.

• Implementing person-organizational fit selection producers help to screen applicants who might become prospective leavers.

• As most turnover occurs when new hire faces difficulty adjusting to the job, there pay special attention to your onboarding practices.

• Workplace conflicts and not having the skills to manage conflict situations and/or prevent them leads to creating a negative work environment and therefore an increased likelihood of turnover. Offering company-wide conflict management skill training helps turnover prevention.

• Job engagement surveys show only symptoms of reluctant stayers. Use exit interviews to get data also from enthusiastic leavers and work on ways to gather input from enthusiastic stayers and reluctant leavers.

  • I would put special attention to reluctant leavers, as this is an engaged group of employees who think that their circumstance needs them to quit. As an employer, you have the power to prepare counteraction to solve the forces for leaving (family pressure; relocation; nature of the work etc).

Is your HR (People Operations) team equipped to handle it?

People Operations is an actual profession that derives from science. There is logical reasoning behind the behaviour, decisions, and overall efficiency of people management and process building. For example, do you know what is the formula for deciding the ideal team size from a productivity and performance perspective? If you have obtained a degree in People Operations, I am sure you know it.

I truly believe that everything can be learned if the motivation exists. The emphasis just has to be on learning and being aware that copy-pasting the best practices from different companies (without understanding the why behind the practices) to your own workplace is not the way to go about having a successful People Operations function. Successful organizations have a strategic and knowledge-based framework related approach to their People Operations.

In Estonia, it is very common for people to grow into People Operation roles by either just being the first more active person in the company and therefore getting a People Operations title or starting as a recruiter and then having other People Operation topics also on your table. Learning by experience is great, but one thing is learning in an established company but completely different thing is to learn while you are also the only person supposed to be in charge of building the People Operations function. I can't emphasize enough the importance of knowing what profile your company needs and how to balance the number of professionals and juniors.

Scientific research of "One Hundred Years of Employee Turnover Theory" from P.W. Hom, T.Lee and J.D. Shaw (2017).

Statistics regarding job tenure from OECD.

LinkedIn 2018 report summary.