Assisting companes of all sizes manage Human Resources and Labor Relations






Advisors to Management in HR

How to Reduce Employee Turnover

A few weeks ago, a client asked me to fix her company’s salary administration problem.  I was told, “My people are taking jobs with several of my biggest competitors and I need you to tell me how much to raise my salary and benefits structure so they won’t leave.”  To this company CEO, the problem was clear; my people are leaving for higher paying jobs so I must raise my wage and benefits structure to at least match the competition.  While a possible option, it may not solve the real problem at this company and create additional problems down the road.


Let me paint you a picture of what happens in many companies today.  Bob has worked for the Widget International Company for 10 years and for the last four as a sales representative.  During that time, he has become one of the company’s best sales people consistently meeting or exceeding his sales goals.  But during the last six month he has become dissatisfied with his job because he can’t work with his new boss, John.  John is 10 years younger than Bob and has his own ideas of how the company can increase sales and service.  Whenever Bob offers suggestions for product or service changes to John, he is met with skepticism.  Even though Bob knows he has a good performance record, he also knows what he reads in the paper about older workers getting the shaft when younger bosses come on the scene.  Real or perceived, Bob is worried and starts to look elsewhere for job openings just to be on the safe side.


Four weeks later Bob hands John his resignation and says he is going to work with their closest competitor.  All John can see is how he has finally rid himself of the “deadwood” in his department.  Incidentally, Bob’s new job has a 20% base salary boost and a more generous incentive plan.  When asked by the CEO why Bob left, John says their salary and incentive plan is too low and that is why Bob left.  The CEO sees one of the company’s best people leaving to work for the competition and the reason is clear - salary administration.  Their salary and incentive plan is under market and needs to be fixed and fixed fast before they lose anyone else.  Being a decisive CEO, it’s quickly changed based on the assumptions presented.


Of course, we know better.  We know that if the company does nothing more than to increase the base salaries for their new hires and to increase the incentive plan, nothing will change.  Actually, something dramatic will change.  The company will be paying more for their people than necessary and still have their turnover problem.  Instead of getting better it will get worse.  Like grabbing a water can to douse a fire and finding out you grabbed a gas can instead.


The old adage, “don’t fix the symptom, fix the cause,” applies here.  But we have a problem - how do you know or find out what the real reason is for your people leaving your employ?  Who do you trust when people tell you why they are leaving your company?  What can you do to get an accurate feel of what your employees think?  What can you do to identify problems before they get out of hand?


The answer is simple.  Just ask.  There are two primary options you can consider.  1) You can ask them with a written questionnaire or 2) you can ask them in person through focus group sessions.  The major difference is focus group sessions work well for small to mid-sized companies and written questionnaires can be more cost effective for larger organizations.  In either case, the key is to ask your employees for their opinion on those things that matter the most to them; their jobs and how to make the company a better place to work.  You may be pleasantly surprised at the breadth and depth of the answers you will receive.  Your employees really care about their company and want it to be the best it can possibly be.  They know it is a long-term relationship, or at least they hope it will be, and want to do all they can to make their company successful.


A note of caution.  Either method of surveying your employees carries with it certain risks and responsibilities.  Mainly, whenever you ask a question you had better be ready to deal with the answer.  So, if you ask your employees what they think about your company’s safety procedures, supervisor staff, salary administration or other such things, you must be ready to make significant adjustments if they are necessary.  If you don’t, you may as well close up shop because your employees won’t trust you as far as they can throw your building.  But there is an even bigger trap here.  That trap is in not asking the question in the first place.  If you never ask, you may never really know until it’s too late.


Just as surveying your market is important in keeping your products and service on track, so is regular communication with your employees.  And, just because your employees don’t complain to you directly doesn’t mean they don’t have suggestions to improve their own productivity, reduce waste and expenses and increase the company’s profitability.  You may think you have a good dialogue with your employees.  But you may only be fooling yourself if you don’t use one of these methods to see if your information is accurate.  There is too much at stake not to be absolutely sure.


For more information on possible solutions to this, check out our Employee Communications and our Salary Administration pages of this website.




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