Should Managers be Held Accountable for Labour Turnover?

In the present economic climate should managers be held more accountable for labour turnover?

Turnover rates ran at between 6 and 9%, and almost 30% in London,in 2009 according to an IRS survey.

Just over half of employers believed the impact of  economic conditions had been to reduce turnover.

There is some survey evidence that many employees are just waiting for the recession to lift before they jump ship – and not for more money. A CMI survey found that 50% of employees are dreaming about exploring new career development opportunities including turning their hobbies into a business.

As recruiters will tell you: people join organisations but leave managers. So the turnover figures could be much higher if the job market was better and in the meantime disgruntled employees will take off more time and be less productive.

The surprising fact is that only 10% of organisations can put a figure on the cost of replacing leavers and they estimate the cost at around £550. This is a ludicrous under-estimate. I have an old Audit Commission report on labour turnover in the NHS which estimated the cost of replacing a qualified nurse at almost £5,000 back in 1995!

Now 1995 might seem a long time ago but times were hard in the early to mid-90s too. The Audit Commission research found that only half of the labour turnover could be accounted for by market conditions and the rest was due to differences in employment practices. Would it be any different today?

The report found that in many organisations there was an induction crisis. When staff were replaced they often left in the first year due to poor induction and management not managing expectations (or overselling the job).

It’s common knowledge now that the first 100 days are the key to succeeding in a new job.

The report went on to suggest asking staff why they were leaving and offering more family-friendly working conditions such as job-sharing and career breaks. Exit surveys and the other policies are now fairly standard, at least in large organisations, but have they actually had an impact on employee engagement? World-wide there has been a decline in employee engagement for the second year running.

Because this is not about employment practices per se but about how people are managed. Why are employees in family firms more loyal than in other sectors? Because they feel more valued among other reasons. Companies bucking the trend in having engaged employees listened to employees and took action.

Managers have the prime responsibility for keeping staff engaged and motivated, even in difficult times. That’s what makes a good manager isn’t it? Unfortunately there are still too many ineffective managers. The CMI thinks that ineffective management is costing UK businesses more than £19 billion in working time lost through ineffective management.

Amongst the worst practices are poor communication, lack of support, micro-management, lack of direction, and discriminatory and bullying behaviour. Companies bucking the trend in having engaged employees listened to employees and took action.

And the most effective managers inspired confidence, recognised staff contributions, gave staff challenging work to do, and showed a sense of responsibility to employees and their community.

So if your organisation thinks it hasn’t got a turnover problem now, or that it can exploit employees who are in fear of losing their jobs and can’t get another at the moment; think about what you are doing. Times will change, good staff will leave anyway, less marketable employees will stay and be unproductive or even sabotage your business.

CMI research suggests that 50% of employees are thinking about exploring new career opportunities, many wanting to turn hobbies into businesses.

The same survey showed that 2 out of 3 people are “gripped with fear” over job security.


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