Turnover rates are reaching record levels at many firms. But many managers aren’t paying much attention to turnover because, in the corporate world, most turnover reports are barely scanned. And even when they are read, the way that most turnover numbers are presented simply don’t drive managers to act. And that’s a huge problem because the fundamental reason why you provide turnover metrics is to get managers to proactively act to rectify their biggest turnover problems.
It’s a mistake to simply rely on one-dimensional raw numbers and data charts to drive action on turnover. A much superior approach is to use what are known as heat maps to make the most severe areas of turnover visually easy to spot and then by also quantifying the impact of the turnover in dollars (because money is what managers really care the most about).
Heat Maps Quickly Get the Attention of Decision-makers
Heat maps are widely used throughout corporations and the military to make problem areas more visual. But despite their wide use, they are seldom implemented in HR.
Heat maps use colors to identify and draw your attention to the “hot areas” where the biggest problems are occurring. Visual heat maps can be developed by almost anyone using Excel.
Most heat maps use a stoplight coloring approach, where red indicates the biggest problem areas and green indicate low or no problems. They add great value because instantly the viewer’s eyes are drawn to the red clusters or circles, which are areas where immediate action is needed. A single “business unit turnover” heat map is a starting point to reveal where in the firm the highest volume of turnover is currently occurring. But you can also segment your heat maps to reveal clusters of turnover that are occurring in specific interest areas, including:
- By geographic region
- By individual manager
- By the cause of the turnover
- By performance level or those designated as “regrettable turnover”
- By job or job family
- By level or salary grade (hourly, salaried, managers, and executives)
- By experience level or years of tenure
- By gender or diversity group
By adding a heat map visual you make it easier, faster, and more likely that your target executives will see specifically where their major turnover problems are occurring. But more importantly, you also increase the chances that these executives will be alarmed and that this elevated level of concern will make them more likely to take immediate action. Incidentally, if you find that heat maps are effective in getting your managers’ attention in the area of turnover, also consider using them in other performance problem areas including productivity, innovation, absenteeism, costs, safety issues, and if you care about it, employee engagement.
The Most Impactful Turnover Heat Maps Are Predictive
The most commonly developed heat maps reveal historical or current turnover issues. However, if you have predictive analytics that are forward-looking (which are essential for preventing future turnover), these heat maps can be even more effective. Because by being forward-looking, they alert managers about the areas where there is a high risk of upcoming turnover. A predictive heat map can alert managers about changing trends in the causes or the location of upcoming turnover. I have found that you can further increase the likelihood of a manager taking action if you quantify the dollar impact of turnover.
Show Them the Money by Quantifying the Tremendous Costs of Turnover
It should be no secret to anyone in HR that the language of business and especially senior executives is money. All significant positive business results like sales, profit, and production value and all negative business results like the loss of a major customer or inventory loss are quantified in dollars. By using this common denominator of dollars, it makes it quite easy for executives to directly compare the impacts of successes and failures that occur in completely different business areas.
So HR executives shouldn’t be surprised when, for example, they present a turnover number of 21 percent to executives and they get little reaction. Why? Because the 21 percent number doesn’t reveal the dollar cost of the turnover to the company. So if you really want to get the attention of executives, convert turnover percentages into their dollar impact.
An illustration: I was invited to attend an executive meeting at a large nationwide retail discount clothing chain where HR presented the fact that the turnover rate among store managers was 40 percent. That one bit of data had literally no impact on anyone in the room. However when the COO mentioned that on average, whenever a store manager left, the store sales at that property went down an average of $1 million over the next year, everyone noticed. They did, too, when everyone in attendance realized that they had lost 220 store managers that year, which meant that the total losses due to turnover in one position alone (i.e. store manager) were $220 million. This firm was struggling that year so that $220 million number was significantly higher than the firm’s total profit that year. After that data was presented, everyone wanted the problem solved immediately and there was no mention of the costs involved in solving it.
Before you begin calculating the total dollar impact of turnover, be aware that most firms dramatically under calculate it by a significant amount. Start off by working with the CFO’s office to develop a process for accurately calculating the total costs. This is critical, because any dollar amounts independently calculated by HR, in my experience, won’t be considered credible by executives. Avoid simply calculating the cost of recruiting replacement employees, because recruiting costs are actually a minor percentage of the total cost. Do however include:
- The cost of lost revenue or production because the position was vacant
- The cost of any negative customer impacts
- The lower performance and the higher error rate that a new hire will have until they eventually reach the performance level of the departed employee
- The cost of company secrets that went with your employee to a competitor
- The costs of other employees that the departing may take with them
The cost of losing a top-performing employee that works in a revenue generating, customer contact or innovation job can easily reach five times their annual salary.
Additional Tips for Getting Managers to Take Action on Turnover Problems
In addition to heat maps and quantifying turnover in dollars, there are several additional ways that you can spur managers to act on turnover issues. They include:
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- Including comparison numbers increase the likelihood of action — providing “isolated” turnover numbers (i.e. our turnover rate was 21 percent) has very little impact on managers. This is simply because, without a comparison number, they don’t know whether the revealed turnover number is too high. If you really want to get their attention, add a comparison phrase like, “the average turnover rate in our industry is 8 percent” or “our firm’s turnover rate just last year was just 11 percent.” In this example, the comparison numbers show that the turnover rate has nearly doubled at their firm in the last year and that compared other firms in the industry, the current turnover rate is outrageously high. Obviously, the most powerful comparison number that you can provide is next year’s forecasted significantly higher turnover number.
- Showing a linear trend line helps managers visualize a growing problem — If you’re not ready to produce heat maps, consider adding a simple trend line that shows with a simple line that the turnover rate will continue to grow at a significantly higher rate. A simple visual line will by itself further increase your chances of getting the attention of the managers who have a sharp increase in their turnover trend line.
- Measuring and rewarding managers for retention –whatever you measure and reward will get a great deal of attention. So measure and reward individual managers for retaining their most effective and high-value employees. However, avoid the mistake of including losing poor-performing or redundant employees in your turnover calculations.
- Widely distributing ranked turnover metrics can increase embarrassment — consider widely distributing ranked turnover metrics by individual. When managers know that they’re being compared to others, they act quickly to get off the bottom part of any ranking.
Before you start or update any turnover effort, realize that there are four basic goals relating to employee turnover and retention. The first is to identify where turnover is occurringm and the next goal is to identify the causes of turnover. The third goal is to make managers fully aware of both the current and any upcoming turnover problems, and the final goal is to get managers to take the correct actions that have proven will eliminate the underlying causes of the turnover.
With those goals in mind, realize the common errors with most retention programs. I have been developing corporate retention solutions for nearly 20 years and I am constantly disappointed in the way that most corporations handle turnover. Beyond missing one of the goals, the most common major errors include not being a data-driven function; ineffective processes for identifying turnover causes; failing to get managers to pay attention to turnover/retention; and providing across-the-board turnover solutions when personalized retention solutions and plans are required.
Among these major problems, the easiest one to solve is getting managers to pay attention to turnover and retention. Because with a combination of heat maps, quantification efforts, comparison numbers, trend lines, and distributing metrics, you can get a manager’s attention almost every time.
So I urge those involved in retention to stop assuming that their job is done when they report their turnover numbers to managers. Because in my view, they have failed if they don’t get individual managers to first take notice of the severity of the problem and then to take action to implement the most effective retention- and turnover-related actions.