Some time ago, I wrote, A Frightening Look At The “Cost Of Selling.” It has been one of the most widely read posts I’ve ever written, with 10’s of thousands of views and 100’s of tweets. The post generated lots of discussion and comments about the challenges of recruiting, hiring, onboarding, performance management, development planning.
There’s been lots of discussion about attrition–voluntary and involuntary. Along with this has been some discussion of millennials–saying, “They will always be moving to other jobs…..” Many in comments and in other articles take this as a fact, but don’t look at the underlying issues or how to change it–if you want to.
So I thought I’d try to take the issue of attrition head-on. Before I go on, I have to offer a disclaimer. There will always be attrition–both voluntary and involuntary. People will find great opportunities and move on, we will never be perfect in finding people that meet our performance expectations.
However, I think we treat the issue of attrition far to lightly — as mentioned in the article, the impact is millions and up. In one very large organization, we looked at the very high attrition of first year hires and determined the adverse revenue impact to be greater than $ 750 Million.
Attrition is a leadership problem. If we are to look at pointing fingers, we must start with executive management. Despite all the corporate culture, recruiting posters, and other PR efforts, to often, “People are our most valuable assets,” is often nothing more than lip service.
Let’s break down attrition.
Involuntary Attrition: Actions taken by management to terminate employment are all grouped under involuntary attrition. It happens because of several reasons:
- Performance problems with individuals. Individual performance issues are usually driven by a few things, the wrong person in a job, the person doesn’t understand expectations of the job, the person doesn’t have the skills or capabilities to perform in the job. Too often, we tend to look at these as “That’s the individual’s problem,” because it’s that person that’s performing badly. But really it’s started with mistakes management has made. Bad hires, poor onboarding, poor training, poor performance planning/feedback, poor coaching.
- Systemic performance issues with the team/organization. Often, this is manifested by large numbers of people not making their numbers or other goals. The root of this problem is with management, as well. It could be the business/markets have changed, yet we haven’t changed how we go to market. We continue to do the same things, perhaps faster, with greater intensity, or more frenzy; somehow expecting the results to change. We may have the wrong deployment strategy–a shift from direct, to inside, to channels, or something else. We may have the wrong team because we don’t have a competency model that fits the needs for success in today’s markets, we may not have provided the right training, tools, systems, or programs to support people in being effective. Sometimes when the business has shifted dramatically, we have to take dramatic action in changing the organization, upgrading skills or getting the right people on board. But, I’ve seldom seen such sudden and dramatic changes in markets or needs. Usually, it’s because management has taken their eyes off the target.
- Layoff’s/Riff’s. This is closely related to the previous point. Layoff’s are the result of a massive strategy/execution failure on the part of management. Unfortunately, it’s the sales people that bear the brunt of this action. Layoff’s and Riff’s are massively disruptive to the organization and to your customers. In layoff’s we lose very talented people through both involuntary and voluntary attrition (they lose confidence and want to go some place better). It used to be, and I’m dating myself, that management did everything possible to avoid layoff’s and Riff’s. Sometimes, they were unavoidable, they meant the survival of the company (usually these are actions taken by the new managers replacing those that failed). Too often, however, I see organizations leaping to this alternative too quickly. It’s an “easy way” of dealing with performance problems–we don’t have to go through a measured mile, we just get rid of them through a layoff and some minimal package. This is management/leadership at its worst!
Voluntary Attrition: Voluntary attrition is when our people, usually our best, leave for another, possibly better opportunity. It happens for a number of reasons:
- They see no future for themselves in their current roles/organization. Perhaps they are stuck in a job, they don’t see a growth path to grow their capabilities, skills, and ability to contribute at a higher level. Management is coaching them or developing them to step into bigger levels of responsibility. They want a bigger challenge, but see no opportunity for those challenges in the current company.
- They see no loyalty from the company to its employees (refer to items 2 and 3 in involuntary attrition). They believe they are being treated as commodities, they see the company has no respect for individuals or don’t see the company valuing the knowledge/experience of its people as a differentiator. They don’t see management investing in the people, developing them, helping them grow, develop, and contribute at higher levels. All development and training is focused on optimizing current performance. Usually, there is a gulf between management and the people in the organization. Coaching is virtually non-existent, people aren’t valued for ideas. While companies like this may have suggestion boxes, but they are always empty because people recognize management doesn’t pay attention.
- Management has unrealistic expectations. They are setting goals that are unrealistic–based both on past performance, investments, and a realistic assessment of future opportunity. (Usually these companies suffer from the same issues described in 2 and 3 of Involuntary attrition.)
- The company isn’t doing “exciting things.” This doesn’t mean a company has to be a “Hot,” or “High Growth” company. This means the company is continuously learning, improving, innovating, changing. Being part of this is challenging and exciting to everyone. Companies focused on doing this always create new opportunities for individual as well as organizational growth.
- They can get more money someplace else. This is the excuse that’s given far too often. There are some individuals who are solely focused on compensation–these are probably bad hires in the first place. Sometimes, the company compensation is out of sync with others in the industry. Recently, I saw one organization losing very good people after a few years because their compensation was about 50% less than similar organizations. The executive team had some “old/bad” ideas around sales compensation. As a consequence, they were hiring great entry level sales people, training them for other companies to hire–never achieving what they could in growing the sales organization. But unless, something is really wrong with the compensation plan, money is seldom the driving reason people leave.
The (not so) “special case of millennials.” There’s a lot written about millennials. They do want to work differently than previous generations, they need to be led, motivated, and managed differently (but isn’t this true about each individual?). It seems there is a foregone conclusion and acceptance that millennials will job hop and never be loyal to a particular company. I don’t buy that, I think it’s an excuse too many managers fall back on to justify high levels of voluntary turnover with millennials.
Millennials come to the work place with a slightly different, perhaps jaded perspective of the “work place.” They were raised in the late 80’s, 90’s and early 2000’s. They saw their parents being subjected to Layoff’s, Riff’s time and time again. They saw the rise of outsourcing, temporary/contract employees, flexible workforce, and other “employment practices.” Where many of their parents expected to work with 2-3 organizations for their careers, they saw a different reality. They have grown up seeing parents subjected to much of what I’ve outlined above. So they come into the work place with some healthy and natural skepticism of management and companies, realizing they have to look out for themselves.
But for management to accept as a foregone conclusion that millennials cannot be retained, they will move from job to job every year or so and this is simply the “new work place,” is to accept defeat from the outset. Millennials are no different than any other individual. They want to learn and grow. They want to be challenged and see future opportunity. They want the opportunity to contribute and be recognized for that contribution. They want to be associated with organizations and people doing exciting things. Like anyone else, if they don’t find that in their current job, they will look elsewhere–as they should. But if they are in an organization that enables them to learn, grow, be challenged, contribute and can see a future for themselves, there is no reason they won’t stay in the organization that provides that workplace environment.
Action Steps: So now that I’ve painted a pretty dismal picture for management, what are managers to do?
- Understand attrition in your organization. Measure managers on both voluntary and involuntary attrition. Understand why people leave, conduct exit interview for every person leaving the organization (voluntarily or involuntarily). Collect and analyze the data, understand the patterns so you can determine the problems.
- Avoid the factors that drive attrition. Have a well defined, current competency model for each position in your company. Hire to that model to minimize the chance of a mishire. Make sure you have a strong onboarding program, with clear, realistic performance expectations. Make sure managers are actively involved in coaching each person on their team. (Ask me for our free Sales Competency Model Starter Kit, if you need help on this.)
- Focus on retention. Recognize people want to grow and develop. Make sure each person in the organization has not just a performance plan (focusing on current performance), but they have a development plan in place. Understand their aspirations, coach them on their development, provide developmental opportunities. Remember not everyone wants to or should move into management, but there are extensive career/development paths for individual contributors.
- Train managers on recruiting/hiring, performance management, development planning, coaching, and dealing with problem employees. One of the biggest challenges I see is managers simply have no training in these areas, so they don’t know what they should be doing or how to do it effectively. Senior management needs to take on the coaching and development responsibility for managers reporting to them. Just as attrition is a problem for individual contributors, management attrition (voluntary or involuntary) is a major business problem. Organizations that don’t invest in the development of the leadership and management skills of it’s management team will face all sorts of challenges, with unusually high attrition numbers being just one of them.
More broadly, people–their knowledge, experience, capacity to innovate and contribute is the single most important part of the organization and it’s ability to grow, innovate, and thrive. People are the ultimate and most sustainable differentiator. Somehow, it seems too many organizations have lost sight of this. Without attracting and retaining the very best in each function, no organization will achieve its goals, grow, or survive.
Concluding Thoughts: Attrition will never and should never be eliminated. We will never be perfect in recruiting, hiring, and onboarding. Some people will not fit, despite everything we do. Business needs and conditions will change, requiring changes in our people requirements. People will move on for very good reasons, creating opportunities for us to back fill and continue to improve the capabilities of the organization. We have to understand the causes for attrition and seek to eliminate them.
Our jobs as leaders and managers is to maximize the performance of our people in executing company growth strategies. We cannot treat this casually, the all in cost of each bad hire or lost person is millions of dollars. Cumulatively, the impact of attrition on results can be tremendous. It’s too important for it not to be a top priority with all leaders, executives, and managers.