I read a shocking statistic today.
If 25% of a company’s workforce leaves voluntarily in a year, that could cost a 100-person company between $438,000 to $4,000,000 per year. (Source – Gallup)
Can your company afford to lose $4 million a year?
A headcount of 100 people means that’s a medium-sized business. Most businesses I know of that size run a little lean. They could use some extra money in their coffers at the end of the year. So, to know they’re bleeding cash at that rate makes me… well… shocked. Perhaps what’s most shocking is this is a loss that can be greatly mitigated, if only companies would pay some attention to it.
Here’s the thing:
The reason so many employees quit their jobs is their manager.
In this time of fierce competition for tech talent, many organizational leaders would have us believe the fault for huge turnover lies with technicians who are happily crossing the street to work for the competition for a few dollars more per hour. Well, that may be so in some cases. However, it’s more likely they began looking for a new job in the first place because they didn’t like their boss. At least 75% of turnover can be influenced by managers. Money is important, but it doesn’t buy loyalty from employees. What employees tell you in their exit interviews might not be the real reason they’ve left.
Most of the reasons employees give for leaving their jobs point back to things that can be directly influenced by their managers.
Oh, boohoo, you might say. So, they don’t like their boss—toughen up! You might also think “good riddance” to those who do leave your employ, if they can’t take a little “tough love” from their managers. However, that attitude is costing you.
I’m not saying it’s all the manager’s fault. Oh no, I’m saying it’s the fault of leadership for not developing their managers properly.
Wait! Before you shut down this blog, give me a second to explain.
Most managers don’t really know how to lead people. They are promoted into management because they did a good job of the tasks they were responsible for. They were put in the leadership role and then left there to sink or swim. Only about 10% of managers have the natural talent to lead others. This means a good number of your managers struggle with how to lead others well. Because they lack the emotional intelligence required for people leadership, they lose valuable members of their teams.
Knowing the vast majority of managers has no innate talent for leading others, it makes sense that organizations would offer leadership training to their new managers. Yet few do. Not only that, many organizations demand their managers focus on tasks of their own and put off the people management things they should be doing like one-on-one conversations, relationship-building, providing feedback, coaching, and professional development. Managers are caught in a squeeze between trying to keep up with task demands and trying to keep employees. Managers are in a losing battle.
To me the solution is apparent—Develop Your Managers!
When I wrote my book, I heard from dozens (more than 100 actually) of people who quit their jobs. They came from a variety of organizations, industries, and job levels. Each of these people quit their jobs because of actions taken (or not) by their managers. In every case, what I heard was a complete lack of care and respect for these employees. But ignoring managers’ development is a costly mistake.
I don’t believe managers can be held completely accountable for this.
As said above, most people lack the innate talent and sense of what to do when they’re put into a management role. Some of them receive “manager” training, but it generally consists of HR and Finance reporting requirements and other task-related stuff. Few managers receive soft skills training.
Ignoring managers’ development is a costly mistake.
After hearing the stories of all those people I interviewed in my research process, I knew I had to start a company with the mandate to train managers in soft skills. And so I did. I quit my own manager (yes, his lousy treatment of me pushed me out the door) and started my own training company, focused on developing managers.
Why do I do this? It’s because I truly believe organizations have the power to change the dismal state of employee disengagement and turnover that exists in business today. They will do this by focusing on their managers.
Managers need training in the following:
- Feedback and coaching and most of all…
- Building relationships
Our manager training courses put emphasis on each of these 5 areas, because we know how crucial they are to retention. By the way, managers could also use training in many other soft-skills areas (like conflict resolution, change management, problem-solving and decision-making, strategic thinking, etc.) but these all have the above topics at their roots. Start with the basics (above) and then tackle the more strategic topics later.
If you would like to assess the impact, do some math. What is your current turnover rate and what is that costing you? Now, what if you reduced it even 5%? What is the difference to your bottom line? It’s appreciable, isn’t it?
Employee turnover will happen. However, turnover rates of 25% or more don’t have to be the accepted norm. You know what will change it? Focus on developing your managers. That will change engagement and culture in your company for the better, leading to fewer people quitting. To add even more fuel to that fire, better engagement leads to higher productivity, fewer safety incidents, less absenteeism, higher customer satisfaction, and increased revenue (yay!).
A little time and budget put toward developing your managers will result in huge returns. As Gallup has found, when you compare the cost of training your managers with what you could lose due to people quitting, it’s clear investing in manager training is an excellent business decision.