Understanding Post Recession Turnover

Post Recession Turnover Statistics

Recent statistics show a growing trend of employees interviewing (or looking to interview) for new opportunities, even though most (78%) believe this is the worst job market of their careers.

Data Source:  Adecco Group (Apr 2010)

Background

Understanding why employees willingly leave their jobs following a recession is important to retention and profitability.  Following the recession of 2000, many companies did not anticipate high rates of employee turnover and subsequently they suffered.

This recession has been more destructive (in terms of job loss) than the recession of 2000 (see Unemployment Rate), which may only increase the rate at which employees leave their current jobs for new opportunities.

Data Source:  US Bureau of Labor Statistics (Apr 2010)

Motivation

Management companies are paying attention and examining the phenomenon of post recession turnover.

In a recent Deloitte study (Managing Talent in a Turbulent Economy, Mar 2010), survey results showed:

46% of surveyed executives recalled that voluntary turnover at their companies increased after the 2001-2002 recession ended

52% of surveyed executives predict an increase in voluntary turnover at their companies 12 months after the current recession

The data also suggest that 48% of the executive polled either don’t anticipate high rates of employee turnover or are not focused on it being a significant threat.  Another view suggests that 44% of executives believe additional increases in turnover will lead to future cost savings.

It is a mistake to believe that you can manage a person’s decision to leave, attend to change employee’s minds with counter offers, perks, etc., often only delay departures.  Rather, you must manage the motivators.

Motivators differ from employee to employee, but there are similarities across generations of works, for instance, Baby Boomers often prefer strong leadership whereas Gen X and Gen Y individuals prefer compensation or opportunities for advancement.

Understanding motivators is essential to managing them; the key to understanding them begins with listening to your employees and recognizing how your decisions impact the motivators that influence their decisions.

What Leaders Can Do

Understand that current productivity levels are not sustainable.

Some would say that productivity has gone because employees afraid of loosing their jobs have been working around the clock, while others would argue that productivity is up because companies laid off those who were dragging productivity down.

Regardless of your opinion, it is important that you recognize that many survivors are being pushed to work in ways that aren’t sustainable (see graph below).

Data Source:  US Bureau of Labor Statistics (Apr 2010)

To prevent burnout and employee fatigue you need to recognize that value isn’t generated by the number of hours worked, but rather by how much value is produced during the hours employees are working. Working longer hours, juggling more tasks and answering more emails isn’t the solution.

Recruit critical talent now by taking advantage of sourcing opportunities

Now is the time to assess the greater needs of the organization, finding opportunities where a single, multi-faceted employee can bring value to the organization beyond a single role.

Hiring now may seem like a risk, but revenue growth does not come from cost cutting, rather it comes from competitive and product differentiation, finding a high performer now can save on the bidding war latecomers get into when searching for talent.

Some argue that the high performers are already employed and will bring on a bidding war, as they are recruited.  This simply isn’t so as many committed high performers were among the millions of people who have lost their jobs and used that opportunity to return to school (like myself) or to start their own businesses.

There are the people who are most eager to re-engage in a new opportunity.

Conclusion

Leaders need to act now to stem the high rates of turnover that typically follows deep and long recessions.  Some of the turnover can not be helped as employess are mentally and physically fatigued from years of added work, doing more with less and generally fearful of another round of layoffs.

The keys to effective action include

Listen to your employees – Identify and focus on the most important issues

Invest in Talent and Training – focus on priorities that drive revenue

Differentiate yourself in the talent market – explore what Motivates Your Teams

The Cost of turnover is significant, because of this leaders must take a proactive and balanced view of retention.

The future of IT, foster growth and profitability

The old adage in IT used to be “The Business is IT’s customer,” but that is a belief that goes against the definition of new leadership, sustainable solutions, and most importantly the future of IT.

In their book “The real business of IT: how CIOs create and communicate business value” Richard Hunter and George Westerman describe how a “business is IT’s customer” viewpoint is damaging to IT and offer a more business orientated viewpoint.

“It is a legacy of the era in which the data processing organization was almost entirely populated with people who had very little day-to-day connection with the rest of the business.  Those days are gone, but the mindset subtly persists and it separates IT from the rest of the business in an unhealthy way.” (Hunter & Westerman, 2009)

CIOs must demonstrate that they can deliver services as well, and as economically efficient as any credible vendor, which requires the vision and execution of leadership along with the quality and measurement of sustainable solutions.

To be successful a CIO has establish the management framework that guides the actions of the IT organization, ensuring they support the company’s products and services in the most effective and efficient manner possible.  These CIOs must bring innovation to the forefront, injecting leading-edge technologies into products and services that foster growth and profitability in the enterprise.