2. Main Questions
What is relevant and voluntary turnover and what
are related turnover costs?
How can the risk of voluntary turnover be
estimated?
How and why do employees leave voluntarily?
What are major components of a retention
strategy?
Which measures help to effectively retain talent?
3. Common Views
People who join for money leave for money
People join companies and leave bosses
You don‘t need to care about retention if you do well
with all the rest (if everything is fine people will stay?)
Employees are free, which is fine
At the end of the day retention is all about leadership
Losing an employee leads to costs 1-2 times of his/her
annual salary
The strongest are the first to leave the company
Happy employees prefer to stay
To a certain extent turnover is good
4. Turnover
Turnover
The process in which
employees leave the
organization and have to be
replaced
Voluntary Turnover
Turnover initiated by
employees against the wish
of the company
Turnover Rate
Involuntary Turnover
Turnover initiated by the
organization (often among
people who would prefer to
stay)
Early Turnover
Voluntary Turnover during
the first few weeks/months
of employment
Number of Employees leaving the Company in a Year
Number of Employees at Midyear
100%
6. Why Do people leave
Why Low performers
Leave
Conflicts with peers
Feel no value
Job Fit issue
Don't want to be low
Good Turnover
Why High Performers
Leave
Better Jobs
Networking
“A” players Knows “A”
player
Bad turnover
7. Differentiated Turnover Rate
How much turnover in Key jobs
?
Key
Functions
High Performer/
High-Potentials
Others
Non-Key-Functions
8. Turnover Cost
Learning
Curve of
New Hire
Separation
Lost
Productivity of
Vacant Position
Old vs new
employee
Vacancy
Marketing
Selection
Hiring
Onboarding
Training
Employee Leaves New Employee
Hired
New Employee
Fully Effective
Lost
Productivity of
Other Employees
Lost
Productivity of
Other Employees
Hidden („Indirect“) Cost
Lost
Productivity of
Other Employees
Visible („Direct“) Cost
Lost
Productivity
of Incumbant
Pre-Departure Vacancy Introduction
Source: Corporate Leadership Council (1998). Employee Retention. Washington: The Corporate Executive Board.
9. Fictitious Cost Estimation
Cost per Hire
60.000
Annual Salary
of an employee
Onboarding (off-the-job)
6.000
12.000
Loss of Motivation
(former employee)
7.500
Performance deficit
(new employee)
15.000
Opportunity Costs 10.000
Σ 60.500
Productivity Losses
(colleagues)
10.000
10% of annual salary
20% of annual salary
50% less performance in the last 3
months of employment
50% less performance in the first 6
months of employment
No value creation for 2 months due to
vacant position
10% less performance of 5 colleagues
(similar salary) during 4 months
Assumptions
10. Turnover Cost
Entry Level
Service/Production Workers
Skilled Hourly
Clerical/Administrative
Professional
Technical
Engineers
Specialists
Supervisor/Team Leader
Middle Managers
Tunover cost ranges as a percentage of annual salary %
0 50 100 150 200 250 300 350 400 450
Source: Managing Talent Retention: An ROI Approach
by Jack J. Phillips and Lisa Edwards (2008)
Range
11. Individual Risk Analysis
complains, talking to peers, surveys, boss knows, recent incidents, job
refrences...
Likelihood
of Turnover
Impact
major
minimal
possible likely
Garth McGrath
Paul Paulson
Russ Rothen
Kelley Clark
Mark Myer John Shark
Paul Cummings
Rock Stewart
Tom Scott
Linda Anderson
Susan Power
Keneth Keith Carlson
Pete Peters
12. Individual Indicator of Intention to Leave
Sudden performance drop
Frequent short-term absence
Reduced social interaction and isolation
Frequent complaints
Glorify other companies
Reduced willingness to take over responsibility
Pessimism about future perspective
13. Top-Management View on Retention (not one, but
many)...What makes people leave
Source: The Economist Intelligence Unit 2008
(Responses of 1.000 executives around the
globe). The original question was: Which of the
following factors are most likely to hinder your
company’s ability to retain talented employees
over the next three years? Select up to three
(Answers in %)
15. Marienthal. The Sociography of an Unemployed
Community. Jahoda (1933) The Psychological Contract
Source: Archiv für die Geschichte der Soziologie in Österreich
Source: Jahoda, M., Lazarsfeld, P. F, Zeisel, H. (1933). Die Arbeitslosen von Marienthal. Ein
soziographischer Versuch über die Wirkungen langandauernder Arbeitslosigkeit. Hirzel.
Textile company, The entire plant got shut down in a few days.. Entire village became
unemployed.
What happen to people when they are unemployed? Observed people how they do
things when they are unemployed.
The traditional thought was that people work to make money.
16. The results of the study
Observation after un-employment?
Psychological Contract
17. The Psychological Contract (Give and Take)
Salary
Benefits
Social contacts
Tasks (something
to do)
Training
Image
Identity
Security
Values
Perspective
Performance
Creativity
Capabilities
Knowledge
Talent
Energy
Time
Health
Social Networks
Customers
Employer provides Employee provides
19. Relative Job Evaluation for one person
Some things are sure, others are not.
Risk of changing the job will depend
Certainty
of Value of alternative Jobs
Difference
alternative Job
compared to
current Job
better
similar/
worse
low high
Relevance
high
middle
low
Peers?
Location
Copmany Image
Tasks?
Perspective
W-L-B
Security
Salary
Boss?
Known but not important, unknown and important
Join a job
Retain job
22. Exit-Interview: Example: Intel
Retention Strategy
What was the main reason that you decided
to leave?
Is your new position in a different line of work
than the one you where in while at Intel?
How would you characterize your new
employer?
Would you say your new employer is better
than Intel, about the same as Intel, or not as
good as Intel in terms of:
How would you descibe your relationship with
your manager while you where at Intel?
How would you describe your experience with
Intel?
If a friend approached you and told you
he/she was looking for a similar position at
Intel, how likely would you be recommend
Intel?
Any other comments about Intel or you new
position?
Pay
Benefits
Location
Working Conditions
Job Security
Career Opportunities
Product Quality
Co-workers
Company Leadership
Company Image
24. Components of a Retention Strategy
What to do to retain people?
Target Group
Problem
Risks
Measures
Causes
What is the relevant internal target group?
E.g. particular Units, Jobs, Countries, (Key) Functions,
High-Potentials, Managers (What people are leaving?)
What are related turnover costs?
General and differentiated? Which kinds of costs are
generated? (Why do you want to retain?)
Why do employees leave the company?
What are the internal and external factors and reasons for
leaving? (Reasons, why people leave?)
Anticipating turnover and related impact
How big is the likelihood of employees leaving the company
and what are related consequences? (Future turnover)
How can employees be retained?
Which options are there to effectively retain employees?
25. Where is the Problem?
THE RISK, Individual, Group or team?
Finance HR
CEO
Marketing
Employees with a strong intention to leave
Employees without intention to leave
