To Get a Vibe on Employee Engagement at Your Organization, Look at Turnover

Updated: Jan 29

Leadership can say their employees are engaged or not. They can care or not. But one thing is true - engaged employees don't leave. They stay. They add greater value as they learn and grow within the organization. And these employees often are an organization's biggest recruitment tools - living the company's vision and values for all to see.

Losing top talent and experienced employees to other companies is frustrating to both leadership and team members "left behind," decreasing morale and increasing workloads for everyone. Losing talent is costly to organizations:

  • For entry-level employees, it costs between 30 to 50 percent of their annual salary to replace them.

  • For mid-level employees, the costs go up to 150 percent of their annual salary.

  • For high-level or highly specialized employees, you're looking at 400 percent of their annual salary.

As organizations pay the high price of recruiting new employees to replace the ones who've left, it can be the remaining employees who suffer the consequences, becoming unmotivated as they watch the latest "star" come and go.

Yet, we know that some of our talent will be lured away. You can't make everyone happy. And even a wonderful employer might not be the right fit for top talent due to many things beyond the control of the company or employee. With people having an average of 10 jobs before 40 years old and 12 to 15 jobs in their lifetime, all organizations will deal with turnover. Think your employees aren't looking to leave? Recent research says that about half of workers are looking to leave their current jobs.

Compare the above stats regarding the cost of turnover with the stats below. When compared with business units in the bottom quartile of employee engagement, those in the top quartile realized improvements in the following areas, including turnover:

All Roads Lead Back to Employee Engagement

In our research and work, when you talk to people about reducing turnover, conversations can quickly turn to employee recognition programs and to different recruiting practices to get the right employees in the first place. Both are valid initiatives when approached as part of a larger employee engagement program that is holistic and long term, from before people join the company, throughout their tenure and beyond.

Below are three best practices for recruiting and retaining employees.

Best Practice #1: Promotion from within (when possible and appropriate) creates a holistic employee experience for all generations.

What's better - to bring in newer employees or look internally to fill positions? Did you know that external hires make up to 20 percent of their internal peers, and often the time and stress of bringing external hires up to speed negatively impacts the performance of the entire unit? There are exceptions to this, of course, such as when a superstar along with his or her team move together to tackle a new job.

Below are two companies using promotion from within as a tool for providing a holistic employee experience, reducing turnover and spurring growth:

  • Chick-fil-A. In an industry where the turnover rate is 35 percent for store operators, Chick-fil-A's turnover rate is five percent. What are some of their secrets? They value young talent and experienced talent, actively recruiting high-school students, offering college scholarships and then hiring them for full-time positions. More than half of store operators worked previously as part-timers at stores. Most store operators stay for more than 20 years. After growing up in the business, people live the values and culture as easily as a second skin. There is a strong focus on equipping people managers with the skills they need to develop their teams. In addition, it is easy for employees to access leaderships' mindsets by picking up Chick-fil-A Founder Truett Cathy's book, "How Did You Do It, Truett?"

  • American Fidelity Assurance: It's estimated that only 11 out of 100 employees last longer than 36 months in the insurance industry, but ninety-five percent of the officers of this company have come up through the ranks. American Fidelity is a third-generation, family-owned life and health insurance company. It is gaining national recognition for its workplace culture (the company hands out a wallet-sized pamphlet called the AFA Hymnal). It also was ranked by Computerworld magazine's list of the "Best Places to Work in IT," cited for its excellent employee training programs and its retention of employees. In addition, AFA was also named to Training Magazine's 2007 Top 100 list.

Best Practice #2: Throw the annual review out the window. Incorporate frequent, ongoing conversations about employee's performance.

Who hates the annual performance review more - managers or employees? It would seem both. One study found that 95 percent of managers are dissatisfied with the way their companies conduct performance reviews, and nearly 90 percent of HR leaders say the process doesn't yield accurate information.

Accenture, General Electric, Adobe, Microsoft and Cargill all are companies who are throwing out traditional employee performance practices (some say this is largely due to Millennial expectations for ongoing, frequent feedback). Accenture's CEO Pierre Nanterme, who says the status quo makes him "nuts," is leading the company to change 90 percent of their internal employee performance management processes, including doing away with rankings (where employees were judged against other employees) and the official annual performance review.

In our conversations with clients and benchmarking partners across industries, performance management is a top concern. Generally speaking, employees feel these reviews are ill-handled while management is struggling to find the time to do them well. Many employees feel their only chance to talk about opportunities for advancement are during their annual performance review. When the big day finally arrives, they feel like that the review is often delayed and then too short for meaningful conversation, resulting in employees feeling like the prognosis is: "Keep doing the same thing. Nothing is changing for you. Even if employees do need to "keep doing what they're doing," saying that without repeatedly helping them see the value their work throughout the year to the organization is a lost opportunity.

Adobe HR head Donna Morris, who led Adobe's transformation away from annual reviews, says: "It's a process that looks in the rearview mirror, that's focused on what you've done a year ago. That just isn't current with how I think we're working and how many of the employees that we're looking to attract or grow have been raised."

Best Practice #3: Ensure your managers can help their team members see how their goals align with those of the organization.

Use whatever descriptor you like, a marching band, a rowing team, birds flying in formation, alignment is an efficient way to improve engagement, and engagement reduces turnover. Employees who say they can link their goals to the organization's goals are 3.5 times more likely to be engaged. However, only 44% of employees strongly agree that they can make this link.

To gauge alignment at your organization, consider how you would answer the below questions. Don't get too bogged down with the details. What does your gut tell you?

  1. Does leadership share a consistent and compelling mission and vision? Messaging needs to be consistent, or people will not trust it. Missions need to be compelling so that people can engage with them passionately. Also, it is OK for a mission to have a sense of fun, or adventurous spirit. Not many people are inspired by dictionary-like missions.

  2. Do people managers understand how to break down the mission, vision and business goals for their teams? The ability to make business goals relevant to employees is a skill that needs to be honed in people managers, and they must have the resources they need to feel supported. Some companies we work with provide visual learning maps to managers that they can study and reflect on the information and discuss it with their peers before talking with their teams. The more practice your people managers have in breaking down the big picture beforehand, the more able they will be to answer questions comfortably and confidently in the moment.

  3. Do employees have a sense of being connected to each other, the different work groups in the company and the organization as a whole? Understanding the roles that other people play in the organization helps employees understand their own roles better. They are more able to see how their impact can ripple through the organization when they have this insight.

  4. Do employees understand how what they do each day aligns with the company'’s mission, vision and business goals? If you ask this, and employees say they don't understand, then re-evaluate how you answered the above questions!