Blog Post: Position your company NOW to retain top talent with the market turns

During the course of a given week or month, I speak and meet with employers of all different sizes and types.  While they differ in numerous ways - size, industry, product suite, locations, etc - they all have one thing in common: they have people working for them.  And those employees have something in common as well: they are just aching to quit.

That's right - a sizable chunk of your employees are showing up to work every day, doing their jobs, then going home and polishing up their resume, connecting with friends, clients (your clients), and other contacts to figure out the best time and method of making their exit.  Many are going to school at night or online in order to set themselves up for their departure from your organization.

Why?  It's pretty simple - they've been held hostage by the economy.  We've seen turnover rates drop to record lows over the last two years.  Every organization has a natural or "normal" turnover rate; it's just different from company to company.  And the chances are that your current turnover rate is less than half what it was just two years ago.  That's a dream scenario for owners, managers, and HR professionals, but it represents a potential nightmare for employees.

Look back at my previous blog about the lessons I've learned in the past nine years here at Jobing.com and you'll see why.  Many of your employees get up and come to work because they must.  That is, they need to eat and working for you is better than whatever else is available out there right now - or unemployment.  So they show up dutifully, do their jobs well, and go home to wait it out.

More specifically answering the "why do my people want to quit?" question is this: there are always people in your organization who want to leave but, in today's economy, they have nowhere to go but the unemployment office.  So the ones who would normally leave are staying...at least until they can find the bigger, better deal.  Then they will be gone.

I present you with this statistic from the Bureau of Labor Statistics (BLS): the "quit rate" - that is, the number of people voluntarily resigning their positions - has dropped by nearly 30% in the year from August 2008 to August 2009, from 1.8% per month to 1.3% per month.  Measure that against the quit rate in 2005 through 2007 (about 2.2% per month) and you get a 41% decrease in the raw number of voluntary resignations. 

That means if you had an average turnover rate of 23.4% (the average across all industries in 2006) then your turn rate is now less than 10% - a very favorable condition for an employer.  But that also means that over half the people who normally would have left are sticking around. 

That may or may not be good for your company, but for the sake of this blog, I will argue specifically that the possibility of mass exodus of top talent when things improve is more dangerous than the risk of keeping a few "wrong people" on the payroll today.  That's an entirely different blog, as is the "but I only keep them on because I need someone to do the work or I'd fire them" blog.

To put this all in raw numbers, if you employ 50 people and have an average turnover of 23.4%, you generally lose/replace 12 people a year voluntarily.  It's been two years, so you would have lost 24 people by now (in a "normal" world).  If this economic mess starts to clear up - and there are growing indications that it already is - you could be in a world of hurt with nearly HALF your workforce walking at the first chance they get.  Even if you only had a 5% turnover rate, you would have lost 6 people by now...and that's over 10% of your total headcount - still a potentially devastating number if you're already bare-bones like many companies are these days!

So what is an employer to do about it?  Here are a few ideas for you:

1) Start by identifying those you definitely wish to keep for the long term and make sure you connect and communicate with them regularly.  Find out where they are at, what they want and need, and do your best to meet those needs as an employer within the constraints of your resources. (Disclaimer: this is not to say you shouldn't be doing this with ALL your employees ALL the time.  I'm merely suggesting that you take protecting your top talent seriously and make it a priority.)

2) Consider soliciting and accepting genuine feedback from employees.  An anonymous survey including questions/statements like "I intend to stay here for the next 5 or more years" will give you a nice gauge.

3) Make sure you are treating ALL your employees with respect and creating a fun, challenging place to work.  "Fun" doesn't have to mean all play and no work.  However, studies show that putting a little effort into engaging your employees yields exponential results in the turnover and productivity realms. 

4) Make sure all your efforts are genuine.  If you've been an ogre of a boss for the last 18 months (privately laughing to yourself as you look at the P&L and thinking "AWESOME! Payroll costs haven't grown in almost 2 years!"), an all-of-a-sudden effort at employee engagement and retention will be seen as insincere and, most likely, will fail.

5) Begin to build a pipeline of potential replacements.  Yep, I said it.  Now is the time to re-start your recruiting machine.  While I will reserve the bulk of my reasoning for another article, I will share this:  talent has been so plentiful, at such depressed rates for so long that once the rush for talent starts there will be a talent vacuum unlike anything seen in decades.  Be prepared for it, because regardless of the efforts you make now, you will surely lose some of the "a" players you kept through this recession, and you will need to replace them before everyone else scoops up the best talent.  I know of a great, cost-effective recruiting resource if you are interested. 

I will leave you with the answer to a very important question that I am sure many of you have asked: "Why should I care about this?"  The answer is simple: economics and profitability.  Turnover is expensive, disruptive, generally unproductive, and often demoralizing.  Again, while I could (and do) argue that certain types and amounts of turnover are good for your organization, the turnover I'm referring to here is the mass loss of talented employees who have felt hostage to their jobs for the past two years.

All companies are built on human capital - people.  Without people, your business is nothing but a storefront with some product on shelves, a truck parked in a lot, or a website that never gets updated and eventually crashes.  Make sure you invest the proper resources so when the tide shifts - and it will - your best talent doesn't desert you en masse when you need it most.