Merge's Blog

High employee turnover? It’s not usually about compensation

Often in my practice, I come across managers struggling with high employee turnover who believe that the most effective way to stop their top employees from walking out the door (and going to the competition) is to increase their salaries.  Now don’t get me wrong, you can’t underpay people (you have to give them what is considered reasonable for that specific job in your geography), but once they’re paid a salary that they consider fair, throwing more money at them is not going to keep them.  In fact, the research shows that money is not the driver for why people quit their jobs.  The two top reasons people resign – because they are tired of dealing with what they perceive to be a high level of bureaucracy and/or because their immediate manager is a lousy leader.  And for the record, money doesn’t even make the top three (salary makes the list at #5).

So what does this mean for a leader who’s facing high employee turnover and is concerned about losing his/her best people?  Instead of thinking about how to increase your compensation budget, assess yourself honestly in two other areas.

  1. First, is it easy for your people to get things done? Can your top performers exercise good judgement and take action when they need to, or do they have to jump through hoops and check in for approvals every step of the way?  Are they able to focus on their core responsibilities, or are they dealing with system bottlenecks and unwieldy administrative processes?  Everyone can deal with some level of bureaucracy, but ask yourself, honestly, whether it’s crossing the line from reasonable to excessive and unnecessary.  If the latter, invest energy in breaking down those roadblocks, or find ways to buffer your people from their impact.
  2. Second, are you a good leader? No, honestly … would your people say that you’re supportive, decisive, communicative, and empowering?  Or are there other contrary adjectives your folks would use to describe you?  If you have an ongoing issue with high employee turnover, could the problem be you?  Assess yourself honestly and with an open mind; the first step to becoming an exceptional leader is a willingness to recognize and work on your weaknesses.  And then take steps to improve in those areas, to grow as a leader.  Consciously address your shortcomings, seek out a mentor, attend a leadership development program.

Well, what are your thoughts?  Do you agree with me?  Or do your experiences suggest differently?  Please share your perspectives.

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