A well-known UK Financial Services company were experiencing high levels of early employee turnover. The recruitment team worked hard at advocating the employer brand and finding great talent, but nearly 30% of their new hires chose to leave in their first year of employment. When compared with an overall employee turnover rate of 18-20%, it was clear there was something going awry in the early part of the employee journey.
This is not unique to the financial services company; it is an issue experienced by many employers. A degree of early turnover is expected and natural, but the challenge is to keep it at a healthy level. Early employee turnover is problematic for a host of reasons:
- The obvious impact is financial.Cost per hire varies by organisation and role type but according to research by Oxford Economics and Unum, the average cost of turnover per employee (earning £25,000 a year or more) is £30,614. So having to fill the same vacancy more than once is going to have a significant financial impact.
- There are indirect costs too. The time and resources needed to hire, onboard and train a new person is an investment on which we get very little return when people leave during their early tenure.
- Team cohesion and performanceis negatively affected by frequent membership changes. Someone coming in, leaving and then a new person coming in results in a team being in perpetual ‘Forming’ mode where trust and productivity are sub-optimal.
- It can be brand damaging. People talk about their experiences of the companies they work for and their conversational reach is expanded by social media and platforms such as Glass Door.
- Risk existsbecause when we employ people, we give them access to intellectual property or commercially sensitive information. The more people that have that information and then leave, the greater the risk of it being compromised.
Early Employee Turnover Drivers
One of the common reasons for elevated levels of early employee turnover is a misalignment between the employee’s expectations of the employer and their actual experience of the employer.
When we are recruiting, we are selling our organisation to potential hires. We present it at its best, understandably. We don’t intentionally mislead people about the organisation (usually) but we want to sell the merits to candidates we would like to join us and we could easily over-sell, mis-sell or tell the candidate what they want to hear.
The problem is not always down to over or mis-selling, it can be due to the reputation of the organisation’s brand. The Financial Services company was part of a wider group of companies, and it was a well-known, credible, global brand. The brand did a lot of the heavy lifting in attracting candidates, but the mundanity of the day-to-day work involved did not line up with the exciting corporate brand and so people left feeling somewhat cheated. There was nothing wrong with the work or the environment, it just did not quite line up with the corporate brand.
Another recurring reason is the onboarding experience (or lack of it). Starting a new job, in a new organisation with a new manager and a new team is one of the most exciting but tricky work transitions there is. It is often an emotional rollercoaster, with highs of excitement and novelty, and anxieties around uncertainty, feeling like we do not know what we’re doing and wondering if we have made the right decision.
A well thought out and robust onboarding process will go some way to smooth out the emotional bumpiness of being the new person on the team. There are three psychological needs of new starters and if we onboard people with these in mind, we are likely to create stronger engagement:
Confidence. People want to know they have made the right decision and the more they feel like the role and the culture is what they expected, the better. People often experience disappointments when simple things are not taken care of during those early weeks and months such as not having the right equipment, training, or an absentee manager.
Clarity. Knowing what is expected of us is the foundation for performance and a sure way to give us certainty and control over what we are doing. A lack of clarity can feel deeply uncomfortable for someone wanting to make an early impact and demonstrate their worth but if they don’t know what or how, they can feel aimless.
Connection. We are social creatures, and we have a strong need to belong to a group. We want to form connections and indeed it is vital for us to perform and when we do not feel that sense of belonging, we become disengaged.
4 Steps to Tackling and Preventing Early Employee Turnover
- Measure it. If you are not tracking early employee turnover already, it is a useful metric to have. Comparing the rate of turnover in the first 6 or 12 months with overall turnover will be a good indicator of whether your attraction, recruitment and onboarding practices are working or not.
- Be balanced. Generally speaking, employers don’t set out to intentionally mislead prospective candidates or lure them under false pretences, but they do sell themselves in order to compete and attract great talent. Being really clear on why people love you as an employer and using that to attract and engage people but with a honest level of balance will give an employer credibility and a new team member the confidence that they have made the right choice and that they’ve done so because they had the right information.
- Onboard robustly. When onboarding a new team member, being cognisant of the variety of emotions they will be experience will lead to designing and delivering a smoother onboarding experience. By giving new people clarity of how they make an impact and helping them form crucial connections, they will feel a sense of purpose and belonging more quickly. A simple, practical action that will support all three of the psychological needs of new joiners is to have line managers spend good quality time with their new people, regularly in the first three months. It is not a big ask but delivers better engagement and early retention.
- Be curious. Seeking out insight from new starters and leavers will give critical insight into employees’ experiences. Comparing the feedback of starters and leavers and spotting any anomalies or patterns can give interesting information as to how peoples’ expectations are lining up with their lived experience. If feedback tells you the reasons for joining were career or professional development and then reasons for leaving are career or professional development, it could point to a need to address employer brand and attraction strategies.
If you are experiencing early employee turnover and would like to learn more about how MI-Say can help you understand why, please get in touch with joanne@mi-say-com.stackstaging.com to arrange a conversation.
