Creating virtuous circles for employee retention

Creating virtuous circles for employee retention

 Joe Colihan

 

| ˈvər-chə-wəs |  Morally excellent, righteous [www.merriam-webster.com]

 

Research on reducing employee retention has found some interesting interaction effects that could play out as virtuous or vicious circles.  Such a circle is found when there are complex series of events that provide a feedback loop that tends to push behavior in one direction or another. 

Agovino (2019) cited some disturbing trends in employee retention, not surprising in a tight labor market with unemployment hovering around 4%.  This gives employees more confidence to seek other opportunities and makes employers work harder to find an adequate supply of talent.  In 2018, average voluntary attrition increased by 8% over 2017, and by 2020, the average annual attrition rate could approach 33%.  Top reasons for leaving included opportunity for growth, work-life balance, and manager behaviors.

Rubenstein & colleagues (2017) provided a meta-analytic review of 316 studies on the predictors of voluntary attrition.  The average sample size of the studies was 1,053, and the average turnover rate was 23.5%.  While many of the traditional predictors found continued support in having significant relationships with turnover (e.g., job satisfaction, commitment to the organization), the interaction effects are especially interesting.  As summarized by the authors: 

Interestingly, we also find that the null zero-order relationship between sex and turnover becomes significantly more negative when the sex makeup of the sample is increasingly male.  A similar personal fit result is also seen for tenure, where the negative relationship between tenure and turnover becomes more negative in organizations mostly made up of senior-level employees….  One other finding is also noteworthy: Satisfaction and commitment as fit moderators are both significant and negative, suggesting that, in organizations where employees are more satisfied and committed, on average individual satisfaction/commitment–turnover relationships are even stronger (i.e., unhappy employees are even more likely to leave when surrounded by mostly happy peers).

In short:  gender is a bigger factor where there is lack of balance (e.g., women leaving a mostly male organization).  The same effects are seen for age.  In industries like the railroad industry, the majority of employees are often older, and voluntary attrition among younger employees are often higher. 

This study suggests that a feedback loop based on dissimilarity to the rest of the group drives more attrition. 

This effect even applies to satisfaction – among a satisfied workforce (positive climate), unhappy people are more likely to leave!  This could be seen as the icing on the cake for understanding and making improvements to workplace climate.  Positive climate leads to lower voluntary turnover, AND the ones that leave tend to be the ones who are unhappy, thus likely to be performance problems, less likely to be positive contributors or show healthy citizenship behaviors.

Moral one:  create a positive workplace climate to hold on to your talent and create sustainable success.

Moral two:  address inequities to foster fairness and commitment.  “When we all do better, we all do better.”  Paul Wellstone (1999).  Colihan (2019) finds negative ratings on fairness issues (e.g., respect, integrity, treatment) that range from 10-18%.

Colquitt (2019) reports that inequities abound.  For example, CEO pay in many companies averaged over 300X that of the lowest paid employee.  In some companies, that difference is over 900X.  Colquitt argues that variable pay policies designed to reward and drive high performance, are often among the main culprits.  As the old adage goes, be careful what you wish for, you may be sacrificing equity at the alter of performance.

 

Sources: 

 Agovino, T.  (2019)  To Have and to Hold Amid one of the tightest labor markets in the past 50 years, employee retention is more critical than ever.  https://www.shrm.org

 Colihan, J.  (2019).  Minnesota Workplace Wellness Assessment benchmarking research.  https://www.colihanconsulting.com/

 Colquitt, A.  (2019).  CEO Pay, Employee Pay, and Pay Inequality in Organizations: Meritocracy or Monkey Business?  https://www.alancolquitt.com/blog-1

 Rubenstein, A. L., Eberly, M. B., Lee, T. W., & Mitchell. T. R. (2017).  Surveying the forest: A meta-analysis, moderator investigation, and future-oriented discussion of the antecedents of voluntary employee turnover.