The remedy for high turnover

Business leaders know there’s a strong correlation between low employee turnover and high profitability. But executives whose companies are plagued by high turnover either assume nothing can be done or fruitlessly pull on the wrong levers.

This confusion and frustration around finding an efficient and lasting remedy to high turnover stem from two sources: First, executives underestimate the financial and cultural costs of employee turnover. If they had the full picture, there would be no ignoring it. Second, they misunderstand the root causes of turnover, and they are unable to effectively address what they don’t comprehend.

High turnover is commonly attributed to some failure on management’s part. However, an employee’s decision to quit is often influenced by factors outside of a manager’s control, including an undesirable schedule, family illness, or a poor job fit. And some industries — for example, retail, custodial, and food services — simply have perennially high turnover. (There are, however, a few organizations in this realm that break the mold, such as Trader Joe’s and Costco, thanks to the ways in which their employee-focused culture informs their operating models.) To be sure, certain professional positions, such as management consultant, technology user experience designer, and software engineer, are also prone to high turnover because these skills are in great demand. But our focus here is on hourly service industry turnover.

Given the imperative for businesses to manage costs, it’s important to understand what drives employee turnover. We have identified those factors and addressed them with what we call the turnover remedy: four elements that, when combined in a hiring and support infrastructure, will make new hires less likely to quit. Those elements are smarter recruiting, smarter onboarding, continued training, and the deployment of highly skilled frontline managers who are adept at engaging with as many employees as possible.

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