There are many reasons but I want to focus on the top four reasons: Wrong Hire, Superficial Induction, Poor co-worker/boss and Lack of a transparent performance management system.
Let me explain each of these reasons:
Wrong Hire: The seed of early exit often lies in wrong hire. Most employers want the best employee for the salary they pay. Very often when my customers describe the “outstanding achiever” they want to hire for the “low” salary they want to pay, my standard response is ” If I find such a person I would rather keep him for myself” The problem starts with utopian specifications. Next is the assessment. There are two types of assessments required before you hire. First is the “Can Do” and the second is “Will Do” , “Can do” assessments are about past experience , competencies etc to determine whether the candidate “Can Do” the job. While some companies have developed scientific protocols for “Can Do” assessments , many still prefer subjective interview based assessments which are faulty. But the bigger problem is “Will Do” assessments which determines whether the candidate will stay and succeed in the company’s work environment. This covers culture and personality fit, aspiration fit etc. This is left to HR to assess but HR team requires special training and specialised instruments, which is often missing. Consequently company ends up hiring a person who they think is the best person to do the job because he/she succeeded elsewhere but he/she cannot perform in this specific company work environment and resigns.
Superficial Induction: This is valid for junior management positions. We at TMI are currently hiring for the most difficult role in a retail bank called “CASA” executive. The job is to go into the market , and “open” Current Account or Savings Account for individuals and small enterprises. This is complex process as it involves convincing along with lots of due diligence by the executive at the customer’s end. The induction training across private sector banks for this role varies from 21 days to 4 days. The quality of the induction training is the single cause of high attrition. The induction duration should be determined by job complexity and quality of the intake. But in reality it is determined by the “business” which fixes the time and budget constraints. Now you can imagine the attrition in the bank which trains for only 4 days. Why does this happen? it is a chicken and egg story. HR reduces the induction training since the attrition is high. Attrition is high because the training is superficial.
There is one more issue with the way induction is designed. Most of the time it is devoted to company /group/HR induction. The role induction is inadequate and even this role induction is often about the Job description , the targets etc. Very little time is spent on “how to” undertake the various tasks and activities. The “how to” part also is determined by Training team often based on theory and their own experience. Ideally, the “how to” should be determined from the best practices adopted by winners – not winners from the past, but winners in the current team. Hence the curriculum requires regular updates on the best practices which is not done.
Co-worker , Boss and less time to settle down: On top of the poor induction (for junior management roles) , when the employee reaches the branch or work location he/she gets a very cold response. Why ? Because the attrition is so high , existing employees in the branch don’t want to invest in the new person. The boss is even worse. His first statement is “how much business are you going to close this week?” The new employee is demoralised and starts the new job search. Employers have to reverse this cycle. Unfortunately HR finds it difficult to enforce an induction code on line managers because ” business comes first”. Line managers and business heads have to understand that business is done by “people” and people are not “robots”. They come with feelings and want to be inducted in the system first.
The co-workers can make or break the confidence of a new employee. Very often the successful employees are very busy and the new entrant meets the losers in the first few days . The first question that is asked is ” how come you joined this company? Did you not find any other better company?” This disorients the new entrant. The boss wants results and productivity from “day one” . He/she is busy chasing difficult targets and has time only for the “winners” and hence has very limited time for new entrants. He/she has no time to create or build “winners”
Lack of a transparent performance management systems: Every employee expects that the performance criteria is explained properly , the targets are fixed realistically, the resources are made available, the performance is measured accurately and transparently and credits are assigned properly and finally the rewards are aligned to the performance, this rarely happens. Let me share an example. A few years ago we started a pilot program to bring in flexi time employees ( MBA students) for a very large telecom handset company. These employees worked only 20 hours a week – on week ends and in the night ( after college hours) to balance the peak load. After one year the program was suspended. The Reason? These flexi -employees were out performing the full time employee and the full time employees were stealing credit for the work done by the flexi employee.
Lastly, how important is compensation in retention?
In my mind employees come into the company after negotiating their salary or after being told what the compensation is. The offer letter is often explicit. So when does compensation become a factor. When does an employee feels that his/her compensation is “unfair”? When the employee realises after joining that his colleagues are paid better. Or when a new employee is hired on a higher pay or during a compensation review he/she feels that lower achievers were rewarded more. It is my staunch belief that compensation data in a team should be transparent and this may solve many of the problems . A transparent system puts a lot of pressure on the HR and the boss but it is the way to go. Despite all the transparency, if employees leave for better pay, it is ok as long as they leave after adequate stay in the organisation. Many companies including TMI are not the best pay masters but attract talent because of the learning that they get and this learning gets them a better pay at the “exit”. In my view employees are willing to work in a low pay master company as long as it is fair vis-a vis other employees and the higher pay they get from the next employer when they exit more that compensates for the lower pay.