Flight Risk Signals Uncovered: Why Employees Leave
It’s critical to develop a proactive program to retain employees, predict employee flight risk and mitigate the risks of avoidable employee turnover. The right data-collecting and management policies can reduce flight risk and save thousands of dollars on the costs of training new employees. TLNT.com reports that the average cost of replacing an entry-level employee runs between 30 to 50 percent of an employee’s salary. Mid-level employee replacement averages about 150 percent of the worker’s annual salary. Replacing a highly specialised employee or senior executive can run as high as 400 percent of his or her annualised salary. Bottom line, flight risk is a major issue for most companies.
About half of HR talent-management staff use manual processes to monitor flight risk and gather data about flight risk signals. This approach can be enormously inaccurate because it involves making unsupported judgements based on feelings and subjective assessments. Performance reviews can be good indicators, but these often don’t occur fast enough to identify employees who might be planning to leave a given company. An article in Forbes revealed some astonishing statistics about why employees leave. Staying with the same company for longer than two years could reduce lifetime earnings over by 50 percent. Employees earn average annual raises of 3 percent, but switching employers usually leads to an average salary increase of between 10 percent and 20 percent.
What Is Employee Flight Risk?
Flight risk refers to the likelihood that an employee or a top-performing leader will leave the company presumably for a better job opportunity elsewhere. The flight risk most often involves an increase in salary, but other reasons can prove equally compelling. These non-financial motivators for switching employers include:
- Adversarial relationships with supervisors, managers, senior executives or fellow employees
- Work that is boring and doesn’t challenge the employee
- No corporate transparency that links employee contributions with the company’s business goals
- Micromanaging policies that leave no room for innovation and autonomy
- Worries about a company’s financial stability or fears the business will be sold or fall to a takeover attempt
- No recognition for each employee’s accomplishments
- Little or no hope for career advancement and development
The Astonishing Cost of Losing an Employee
There are two major areas to consider when estimating the cost of losing an employee. The first is flight risk generated by financial and non-financial reasons that convince employees to seek other jobs at different employers. The second area of concern is making bad hires that inevitably lead to dismissal or employee turnover. This flight risk is generated by poor management decisions instead of flight risk caused by employee attitudes.
Losing a valued and productive salaried employee averages a replacement cost of between six and nine months of that employee’s salary according to SHRM. Other studies predict even higher costs that run as much as twice the employee’s salary. There are many intangible factors that affect the cost of employee turnover such as:
- Needing to train multiple replacements when a job is extremely demanding
- Onboarding costs
- Reduced productivity and employee engagement
- Costs of mitigating customer service errors
- Expenses of advertising, interviewing, screening and hiring replacement staff
- Training and development costs for new hires that include travel costs for remote candidates, training, orientation, on-the-job training and mentoring, getting certifications and other expenses
Preventing bad hires is especially important because – depending on the position – bad hires can cost between 30 percent and 100 percent of a worker’s annual salary. However, there are also associated costs that include loss of productivity, reduced employee morale that affects job performance and damage to a company’s reputation that a bad hire can cause.
The Flight Risk Signals of Employee Turnover
It’s critical to identify those employees who seem to be considering other job offers. Although many experts suggest that millennials aren’t loyal and regularly switch jobs, millennials can be very loyal to their bosses, career and industry – just not to their employers. Involving managers and supervisors in the process of retaining employees is the single most productive way to retain top talent. That means empowering managers to recommend career advancement, promote promising employees and award raises commensurate with each employee’s performance and potential.
In order to identify those employees who might be wavering, it’s necessary to recognise the most common flight risk signals. These include:
- Taking Too Much Sick Leave. Employees who use all their sick leave, vacation days and personal time off as quickly as they accumulate them are usually not invested in their jobs. Using available time off isn’t a violation of company policies necessarily, but it could indicate that an employee is dissatisfied with his or her job. Taking days off or getting others to fill in could also indicate problems with a particular co-worker or manager or some unknown difficulties at home such as health problems or troublesome teenagers.
- Workers Starting Work Late and Leaving Early. When people start considering a job change, it’s quite common for the person to start work late and leave early. This is one of the most telling flight risk signs.
- Employees that Haven’t Received Promotions. Some employees are comfortable in their jobs and don’t seek promotions for various reasons. However, most people are disheartened when passed over for promotion multiple times.
- Those who Never Earn Salary Increases. Some employees never earn raises in their salaries. This could be due to a company’s failure to recognise the employee’s contributions or to the employee’s poor performance. Either reason could contribute to employee turnover.
- Poor Performance Assessments. Employees who regularly receive poor performance assessments and show little or no improvement could indicate a flight risk or a candidate for dismissal with just cause. Determining why the employee consistently performs at a subpar level or doesn’t rise to his or her potential is important so that managers can take appropriate actions.
- Decreasing Performance. A good employee who suddenly begins performing at a subpar level is one of the strongest flight risk signals. As always, investigating the cause of decreasing performance is the first step in dealing with the problem.
- Risk of Recruitment from Competitors. Top-performing employees also generate substantial retention risks because their efforts and abilities are noted by others. The best employees receive regular job offers from competitors, and monitoring these offers is a difficult process that walks a fine line between the employee’s right to privacy and the legitimate business intelligence-gathering activities that a company is expected to perform. Keeping in touch with rumours and employee gossip can often provide insights, but monitoring an employee’s peer-to-peer contacts and industry reputation provides an even more accurate assessment of a given employee’s appeal to other companies.
- Disengagement. Seriously disengaged employees provide a clear flight risk warning that they aren’t satisfied with their work, company culture or career-advancement opportunities. Employee turnover is expensive, but managers face a challenging task when deciding how to deal with the problem. Should managers keep disengaged employees on the team and hope for an improvement or cut their losses and fire employees who are just going through the motions? It’s important to determine the problem, listen carefully, ask probing questions and document the issues. After discussing the issue, managers should commit to taking appropriate actions. Dealing with an employee’s legitimate concerns can help to retain staff and prevent employee turnover.
- Poor or Confrontational Attitude. Employees who aren’t engaged often develop poor or confrontational attitudes just prior to seeking employment elsewhere. It’s critical not to let bad attitudes slide because they can affect other workers and damage productivity. The best practice is to investigate the problem to determine the cause of dissatisfaction. It could be that the unhappy worker has problems with another employee or manager, feelings that his or her work is not appreciated or unhappiness after being passed over for promotion. The problem could also be caused by personal issues that don’t involve the company.
- Problems with Managers. Most workers don’t leave the company; they leave their managers because of their negative dispositions, demanding attitudes or lackadaisical management style that doesn’t recognise and reward employee contributions.
- Commuting Problems. Many employees have long commutes because they live far away, have to pay too much for parking and tolls or have other commuting-related difficulties. These concerns can often be addressed by offering more flexible work conditions such as working remotely, providing company parking benefits and other solutions.
Using Reward and Recognition to Lower Employee Turnover
One study found that the burgeoning $46-billion-dollar employee recognition market often awards recognition based on tenure-based programs. However, this kind of incentive has been found to be ineffective for retaining employees and strengthening employee engagement. Performance-based rewards are more appreciated and more effective – especially when feedback is regularly given for specific job tasks. About 87 percent of companies use recognition to reward employees for service or tenure, and about 70 percent of employees claim they are recognised once a year or not at all.
The best practices for rewarding and recognising employees include the following strategies:
- Recognise specific accomplishments and behaviours instead of generalised performance.
- Share and publicise stories about employee accomplishments.
- Recognise employee accomplishments regularly and often.
- Recognise how meeting performance objectives achieve company goals or promote the company’s values.
- Encourage peer-to-peer recognition in social media, company newsletters and cloud-based industry platforms.
- Foster a company culture where managers recognise the achievements of their team members.
- Reward employees for providing outstanding company service and solving complex problems to foster a company environment of ‘doing the right thing.’
Tips for Measuring Employee Engagement
Today’s digital technologies provide many tools and resources for monitoring employee behaviour and measuring employee engagement, but HR staff members and team managers are the best partners in determining what to measure. Depending on the company and industry, benchmarks to assess employee engagement can vary tremendously. Of course, it’s critical to monitor voluntary and involuntary employee turnover, but managers can ask employees important questions during performance reviews. HR staff can also survey employees with direct questions. The Gallup Organization came up with the following key questions to determine employee engagement:
- Do you know what’s expected of you in your job?
- Do you have everything you need to complete your work successfully?
- Do your opinions get considered and lead to action?
- Is your job important to the company’s core mission?
- Do you get the opportunity to do work you love each day?
- Are your fellow workers committed to their jobs and doing quality work?
- Do you receive praise, recognition and feedback on your work?
- Do you have a best friend at work?
- Does your supervisor see you as a person and show empathy about your personal well-being?
- Do you get regular feedback on your progress?
- Do you have a coach, mentor or fellow worker who provides encouragement and support?
- Did you receive opportunities to grow and learn during the past year?
The integration of company ERP and CRM software with HR management allows managers and senior staff to monitor employee behavioural patterns. Connecting with peer-to-peer networks and social media platforms enable gathering business and employee intelligence to detect flight risk signals.
Using the right software applications and intelligence-gathering strategies provides the raw data that can foster accurate predictive analytics. Integrating the right technology provides a transparent and holistic view of daily employee activities, time and attendance. An integrated platform with the right software capabilities fosters a symbiotic relationship between departments, company planning and manager decision-making that streamlines recruitment and retention practices and provides a well-rounded holistic view of all company operations.
Losing an employee – for any reason – is never a desirable outcome. The best methods of reducing employee turnover include proactively identifying the best hires to pursue and monitoring flight risk signals. Keeping track of the warning signs of flight risk can deliver astonishing predictive capability while providing intelligence on those employees who can’t be retained. The latter information reduces the element of surprise when turnover can’t be avoided, and HR departments can begin planning a succession strategy or recruitment effort to move quickly to replace a departing worker.