A January 2020 survey of CEOs revealed that while a recession was their greatest external fear, their greatest internal concern was attracting and retaining talent.
In a matter of months, those concerns have become all too real as the COVID-19 pandemic has sent us into an economic slump. Businesses are making unprecedented levels of layoffs and furloughs, employees are adapting to new ways of getting work done, and healthcare facilities are left scrambling to care for patients struck with the virus.
In 2018, the Bureau of Labor and Statistics issued a report showing that on average people change jobs 12 times during their careers, and that the median tenure in any one job is a little over four years for men, and exactly four for women.
Turnover is particularly pronounced in the healthcare industry, where in 2018 it jumped to 19.1 percent, nearly one point higher than the year before (when it was 18.2 percent) and its highest rate of the decade. It was also significantly higher than the national average for all businesses (15 percent).
Estimates vary as to how costly turnover can be for any given company, which will be especially significant as businesses rebuild their profits after the coronavirus shutdown. One approximation put it at between 20 percent and 200 percent of the departing employee’s annual salary, another at between six and nine months of a worker’s pay. Still another concluded it was dependent upon where the employee stood in the company hierarchy -- i.e., the higher up in the food chain a particular person might be, the more it would take to replace him or her.
Suffice it to say that the cost is significant, especially when matters such as advertising, interviewing and onboarding are taken into account. Productivity is also disrupted for a certain amount of time -- a period that varies according to how quickly an opening can be filled, how long it takes the newcomer to get up to speed, etc.
Turnover, then, is something businesses would do well to minimize. And most experts believe that doing so is a matter of communication and culture -- i.e., transparency and establishing a positive, safe, inclusive environment where employees feel they are challenged, valued and developed.
The Value of Intentional Culture
One of the phrases being bandied about in business circles these days is “intentional culture,” which was defined in a 2018 Forbes Council article as continuously aligning and regulating an organization’s values, beliefs and behaviors with its business strategy.
The author, Dave Fechtman, went on to write that while different employees would define the word “culture” in different ways, an adroit leader can draw everyone onto the same page, whether that is by identifying and measuring what that entails through surveys and/or interviews (of not only employees but clients and vendors as well), setting a good example or making sure objectives are communicated clearly.
Another blog post put it more succinctly, saying that an intentional culture is the product of observation, definition and alignment, but the overall point is this: A leader has to do his or her due diligence. It’s a matter of establishing an open-door policy, but one that swings both ways, enabling employees to walk in and discuss whatever might be on their minds, but also enabling the CEO to walk out and mingle with the rank and file, so that he or she has a clear understanding of their day-to-day circumstances. (A Harvard Business Review piece identified the latter as an “MBWA leadership style” -- i.e., “management by wandering around.”)
There are dozens of examples of organizations that have established an intentional culture, none better than the fast-food company Chik-Fil-A, which boasts 97 percent corporate retention and a 96 percent franchisee retention. The pillars to the company’s success are strong leadership, affording employees opportunities for professional development and making the work meaningful, three things that resonate in particular with Millennials and those in Generation-Z.
Factors in Retention
Certainly, however, there are businesses that are far less successful in establishing the sort of culture workers might find appealing. Another Harvard Business Review piece listed no fewer than eight ways in which leaders unintentionally drive employees off:
- Setting inconsistent goals and expectations: When priorities are not made clear;
- Having too many process constraints: When performance suffers because of factors beyond employees’ control;
- Wasting resources: When money and time are squandered;
- Putting people in the wrong roles: When leaders fail to understand employees’ talents;
- Assigning boring or overly easy tasks: When there is little appreciation for what might stoke a worker’s passion;
- Failing to create a psychologically safe culture: When leaders won’t elicit or accept input;
- Creating an environment that’s too safe: When the work has little meaning;
- Leading with bias: When leaders have preconceived notions about workers’ abilities.
The solution in a larger majority of cases is, again, communication. It’s making clear what the expectations of employees are (as is the case, for instance, at Disney’s Magic Kingdom, where employees are informed that the priorities are safety, show/performance and efficiency, in that order). It’s considering outside factors that impact workers’ performance, what their strengths and weaknesses are and how they might best use their time and resources. And it’s the humility and understanding that there are those who have more to offer (particularly when it comes to ideation), no matter their pay grade.
Retention only figures to grow in importance in the months and years ahead as we all weather the storm wrought by COVID-19. And while the meaning of an appealing company culture will likely evolve in the aftermath of the coronavirus, what won’t change is the dedication and humility required of leadership teams to keep employees feeling challenged, valued and developed.