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Be Better Seal

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BY LARRY KIM – Founder and CTO, WordStream

CREDIT: Getty Images

Given the cost of losing great employees (and hiring and training new ones), employee retention is a major issue for businesses of all types and sizes. In fact, lost mid-range employees — those earning $30,000 to $50,000 a year — cost 20% of their annual salary to replace. And it’s gets more expensive, the higher you go up the ladder.

For highly educated executive positions, the cost of turnover can be up to 213% of the annual salary.

Obviously we have a lot of tangible and compelling reasons to keep our employees happy, productive and profitable.

So when you discover that your company is experiencing a high turnover rate, you need to get to the bottom of it. You need to stop the bleeding.

Last August, a Gallup poll pointed to one overwhelming reason employees quit their jobs: to get away from their manager.  “People don’t leave jobs, they leave managers,” the WSJ announced.

And it’s true. In their poll of 7,200 American adults, Gallup discovered that about half had left a job at some point in their life to get away from a manager they didn’t like. Communication was pegged the most influential factor in whether an employee got on with their boss or not.

Now, you would think that if good employees leave jobs over bad managers, the opposite must then be true, right? You might think it makes sense that if you’re a great manager, you’ll have no problem keeping your best employees.

But you would be wrong.

New research from the University of Illinois shows that even great leadership doesn’t necessarily mean you’ll be able to stop your most amazing people walking out the door.

In a new paper entitled Boundaryless LMX: Examining LMX’s Impact on External Career Outcomes and Alumni Goodwill, researchers Sumita Raghuram et al found thatemployees leave good and bad bosses at about the same rates.

Two of the study’s authors, Ravi S. Gajendran and Deepak Somaya, shared their findings in a recent HBR column. They explained: “What we discovered was surprising. Good leadership doesn’t reduce employee turnover precisely because of good leadership.”

Wait a second… so being a good leader still means employees are going to leave you?

What gives?

“Supportive managers empower employees to take on challenging assignments with greater responsibilities, which sets employees up to be strong external job candidates. So employees quit for better opportunities elsewhere–better pay, more responsibility, and so on,” the researchers concluded.

They also note that employees who liked their bosses tend to think more positively of their former employers, so good leadership is still an important tool for goodwill. That goodwill can result in opportunities and productive relationships in future.

So if being a great manager won’t help you keep your best employees, what will?

Reduce the impact of toxic people in the workplace by better managing them, or getting them out of your ranks. Make your workplace a fun, stimulating place for employees to be at their best.

And remember that good management will still help you attract the best talent in future–even if they’re destined to move on to greater things and don’t stick around quite as long as you’d like.

 

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