Today’s Myatt on Monday’s question comes from a CEO who asked: “Our employee turnover is higher than I would like it to be. If you had to point out one factor that drives employee churn, what would that be?” Few things in business are as costly and disruptive as having the proverbial revolving door for employees to exit from. Even worse is not knowing how to stop the door from turning.

While an “employer job market” can certainly help slow the churn, it will not stop it. The harsh truth is that there are many secondary and tertiary items that can influence an employee’s decision to leave, in today’s post I’ll address the primary item; the one single factor that constitutes the overarching reason which drives a person’s decision to leave their employer.

Let me begin by stating that no company in the world has a 100% talent retention factor if measured over any meaningful length of time. However, the question I want you to ponder is this: why do some companies have the ability to create excellent work environments leading to superior employee satisfaction and retention while others seem to fail miserably in their efforts in this regard. The answer is simpler than you may think…Organizations that display the healthy, dynamic, and positive culture that fosters a motivated and engaged workforce all have one thing in common…great leadership.

There is an old saying that goes; “Employees don’t quit working for companies, they quit working for their bosses.” Regardless of tenure, position, title, etc., employees who voluntarily leave generally do so out of some type of perceived disconnect with leadership. Furthermore, while the accuracy of exit interviews are somewhat debatable, they nonetheless support the conclusion drawn in the previous sentence. The following list contains just five representative samples of the differences between solid company leadership and poor leadership

  • Hiring Methodology: Great leadership teams use a values-based hiring methodology. They hire slowly, carefully, and only to fill a defined need with a specific skill set. Companies with challenged leadership hire quickly, often based on how affordable they can fill a position and many times in the absence of a defined need.
  • Leadership Continuity: Great companies have a clear vision, mission, and strategy, which are evangelized by a cohesive leadership team. A crisply articulated vision and continuity of leadership create an engaged workforce that understands the business model and key objectives of the enterprise. Companies that have a fractured leadership team lose the confidence of line and staff. Employees that don’t understand what they’re playing for are very difficult to motivate and as a result, are often disengaged and non-productive.
  • A Planned Transition: Outstanding leadership teams set employees up for success and not for failure. They have an established on-boarding process that puts forth an initial road-map for a successful transition by clearly defining key performance indicators, business objectives, and other key metrics. Well-honed leadership teams immediately assign an in house mentor to new hires to help ensure a successful acclimation. Unsophisticated leadership teams usually have a sink or swim mentality with regard to new hires and have substantial voids in training and management processes in the early days of a new hire. Poor leadership teams have a lack of continuity in their training and development which breeds discontentment and dissatisfaction.
  • Compensation: Great leadership teams understand the value of tier-one talent, and are not afraid to pay-up in order to attract it and retain it. They create a multi-tiered compensation plan that rewards employees at the top of the industry scale when performance objectives are met or exceeded. Moreover, they understand the value of non-compensatory recognition and apply it generously and judiciously. Companies with poor leadership often trip over dollars to pick up pennies when it comes to compensation. Their compensation plans lack sophistication, creativity, and are engineered by default and not by design. People will often cite non-competitive compensation as an issue for leaving a company, but what they are really stating is that the company has an unsophisticated leadership team that is out of touch with both the market and the needs of its employees.
  • Professional Development: Solid leadership teams challenge their employees by offering them a clear path toward personal and professional growth. Great companies create a career path that offers the successful employee the option of matriculating throughout the company based upon achievements, needs, and qualifications. Great leadership teams understand that in order to create a thriving and sustainable enterprise that a key priority is to develop talent to their greatest potential, and ultimately to create other leaders. Poor leadership teams don’t see the value in training, mentoring, coaching, and other forms of professional development. Their workforces are stagnant and not competitive, which places them not only at a competitive disadvantage but also at risk for long-term sustainability.

While today’s post was an extemporaneous highlight of just a few critical acknowledgments, I hope it clearly portrayed the value of leadership in employee retention and development.