Why People Leave Their Jobs—and What to Do About It
Employee-owned companies have less turnover than non-employee-owned companies, but it is a rare company that does not lose people it values. What makes people leave? And what, if anything, can you do about it? Research tells us that a lot of people leave for reasons beyond the control of the company; others seize an opportunity for substantially better compensation. But the biggest factor in turnover is unhappiness with the content of the job.
What Causes Turnover?
A lot of turnover is unavoidable. Georgetown University professor Brooks Holtom led a research team that found that what he calls “shocks,” such as a spouse relocation, health issues, children, or an unexpected offer that is too good to be turned down, account for about one-third of turnover. The research on what goes on inside the firm finds that job content matters much more than pay. One of the largest surveys done on why people leave their jobs comes from Sirota Survey Intelligence. In 2005, Sirota analyzed surveys of 228,000 employees they had conducted over the years. Only 45% of employees planning to quit within one year were satisfied with the type of work they do, while 84% of those intending to stay five years or more were satisfied with their work. Just 20% of employees planning to quit within one year were satisfied with opportunities for advancement, while 54% of those planning to stay five years or more were satisfied with promotion opportunities. By contrast, 28% of those intending to quit within one year were satisfied with their pay, while 47% of those planning to stay five years or more were satisfied with their pay.
This is not to say that compensation does not matter. There is a minimum level of pay and benefits that any individual employee will be willing to continue to work for. Pay equity matters, too—the perception that your pay is fair relative to other people’s pay. But what the research suggests is that beyond what is considered fair compensation, it is difficult to increase retention simply by giving people more (although there may be other reasons to do that). Another problem for many companies is that opportunities for advancement are one reason people will stay, but with many employee-owned companies moving towards flatter organizational structures, these opportunities may be less present.
In an insightful article from an issue of Workspan, the publication of WorldatWork, Frank Giancola argues that job enrichment is the key. Job enrichment was much discussed in the 1970s, but the subject lost its cachet in recent years, despite consistent research showing that it worked. Job enrichment sought to enhance a number of elements of work, including:
- Skill variety: A job that involves different skills, some of which are developed through additional training offered by the company.
- Task identity: The sense that you or your team can complete an entire job, not just a small piece of one.
- Task significance: A sense that what people do matters in terms of values, contribution to the company, customers, or other people you work with.
- Task autonomy: You or your team get to make more decisions without management interference or second-guessing.
- Feedback: Getting noticed when you do something well and being helped when there are problems.
Employee-owned companies accomplish this in a number of ways. Many have work teams with considerable autonomy. These teams usually are formed so that they have meaningful control over a complete task, whether it relates to their specific job function or cross-functional issues, such as safety. Many companies increase the sense of significance by giving employees at all levels some direct contact with customers. Most employee-owned companies go beyond these traditional elements, however, by practicing some form of open-book management. Not only does this give employees a better sense of the significance of what they do (provided the system specifically shows people how their work affects the bottom line), but it also gives them an important feedback tool to assess how they or their team are performing. Even better, many companies have employees themselves involved in creating and managing employee involvement systems.
Beyond the content of the job, however, research also shows that people have a strong need for a sense of community at work. After all, for almost all of our evolution, we were tribal. We learned to live and work as small, interdependent communities. The shift to individual, competitive models for “economic man” is relatively recent—too recent for our brains to have evolved in step. Study after study, in fact, shows that having a sense of community, whether at work or in one’s personal life, is a key measure of personal satisfaction. By creating opportunities for employees to work as teams, that sense of community is powerfully engaged.
These approaches do more than help keep turnover down, however. Research at the NCEO and elsewhere definitively shows that high-involvement workplaces of the kind described here perform substantially better and are more adept at generating ideas. It takes a lot of effort to create and sustain this model of workplace, but it is well worthwhile.