Management turnover is inevitable. Employees come and go. Baby Boomers retire.
Turnover can be a positive process when managed to bring new and better people into your organization. Yet, unmanaged employee turnover can easily weaken your company's leadership brand, knowledge base, profits and competitive edge in the marketplace.
Excessive turnover is often a symptom of fundamental problems in the business. From my experience, the major reasons for high employee turnover are:
Improper recruitment
The nature of the job and culture of the company
The characteristics of the individual employee
By focusing on improving incoming employee quality (from sharpening recruitment methods to better matching of candidates with the job and company culture) and reducing the length of time that a position is vacant, an organization can substantially reduce turnover costs.
In a report in The McKinsey Quarterly, the consultants, Matthew Guthridge, Asmus B. Komm and Emily Lawson, point out that companies face a “demographic landscape dominated by the looming retirement of Baby Boomers in the developed world and by a dearth of young people entering the work force.” At the same time, they say, “question marks remain over the appropriateness of the talent in many emerging markets.”
Managers promote the idea that their employees are their biggest source of competitive advantage, the consultants write. Yet, most are as unprepared now as they were a decade ago for recruiting and retaining capable workers.
Managers surveyed by McKinsey blamed everything from short-term financial pressures — which keep them from investing in talent development — to less-than-capable human resource departments for the persistence of the problem.
Given that the old ways are not working well, it is time for a new approach, Peter Cappelli, a professor at the Wharton School, contends, and he suggests four steps for companies and managers.
First, “a deep bench of talent is expensive,” so undershoot what will be needed, and plan to hire from the outside.
Second, recognize that “uncertainty in demand” for talent is a given, and respond by training smaller classes of managers more often and creating a companywide pool of talent, instead of developing depth in individual departments.
Third, increase the return on the training investment by persuading employees to work voluntarily on stretch assignments, the rationale being that they will gain skills that will make them more valuable in the future.
Finally, give employees a greater say in their career paths so that they do not feel frustrated by what the company has mapped out for them and be tempted to leave.
As the management turnover rate continues to rise to the highest levels, it is good to know that finding, hiring and keeping the right people can be accomplished with more than just subjective observation, opinion and emotion. A wide variety of valid and reliable pre-employment assessment tools are available today, ranging from integrity tests to competency instruments and personality profiling, to help recruiters interview, match and hire the right person for the open position.
Source: The New York Times, March 15, 2008