Why turnover still plagues employers

As an HR leader, Heidi Hauver has never thought that turnover is a bad thing.

What’s important is how an organization embraces turnover, says the vice president of people experience at ShinyDocs in Ottawa.

“Turnover is going to happen, it is just a natural form of business as people navigate through on their own journey,” she says.

“We have to embrace turnover differently. Our talent pool is getting smaller and smaller, not bigger and bigger.”

Hauver recalls a conference years ago where a California company handed out boomerangs to employees who were leaving, indicating the valuable workers were welcome to return.

“When someone is leaving an organization, if you can keep that door open to that person, they may actually come back. And they know the company by then, they've just gone and enhanced their skill set: Why wouldn't we welcome people back?” she says.

“We need to continue to develop our talent pools, not just for people that have never worked for us, but having an alumni program, where we welcome people back and we enable them to spread their wings somewhere else.”

Costly problem?

However, a recent survey suggests employee turnover is becoming a costly problem that continues to plague Canadian employers.

More than one in three (35 per cent) say turnover has increased compared to last year — up from one in four (24 per cent) who said the same thing in 2021, according to the results released by Express Employment Professionals of 504 hiring decision-makers.

This churn costs companies an average of over $41,000 each year (including the cost to rehire, lost productivity and more). But one in 10 hiring managers (16 per cent) say the cost can run as high as $100,000 or more per year.

So, what’s the bigger reason for people leaving?

• better pay or benefits offered elsewhere (36 per cent)
• employees feeling overworked (33 per cent)
• retirements (30 per cent)
• increased workplace demands (29 per cent)
• better perks elsewhere such as summer Fridays and unlimited vacation days (28 per cent).

For companies who are seeing an inordinate number of employees exit the organization, the biggest reason might be a toxic culture, according to research by CultureX, an employee insight firm, looking at 1.3 million reviews on Glassdoor.

Competing with pay

Employers will always be willing to pay top rate for the highest-producing individuals, but it inherently has to tie back to the bottom line, according to Brent Pollington, owner of an Express Employment Professionals office in Vancouver.

“I've gotten more competitive with my base pay. And I've also created a very open and transparent skill, aptitude and accomplishment-based scale that creates incentives for internal employees to understand what the benchmarks are, and requirements are.”

It also helps Pollington to better understand how their contributions tie into the overall success of the business from a revenue standpoint, he says.

This approach first started with a client who was hiring for industrial positions and wanted to pay above-market rates to bring the best people in. The conversation then became: Who are the best people, what determines if someone is better than another?

“So what we did was we said, ‘OK… let’s say the industry average is 25 bucks an hour and we're going to pay 30, what requirements does someone have to have in each of these boxes? And the beauty part of it was we identified five key areas... and each of these areas, we determined, were worth two bucks an hour, so the baseline employee would be worth 20 bucks, the top- line person is $30,” he says.

In addition, the company could hire people at $20 or $24, depending on their skills or qualities and where they fit on the benchmark.

“The problem for a lot of companies is they bring people in on the baseline and they train them, but they maybe don't have a clearly defined path. And that, in itself, results in turnover, because the person gets a call from another company,” says Pollington.

Roughly half of workers want their employer to share how much everyone within their organization is paid, according to a recent survey in the U.S.

Pay just one factor

However, pay is just one factor, says Hauver, and often people say they’re leaving their employer because they want better pay or better benefits when there are underlying reasons.

“Money is important but it often is not the main reason someone is going to be looking or willing to take the call of an external recruiter. And I think employers really need to start leaning in — being curious and connecting with their team — so that they can help be part of the solution, to really understand and meet the needs of our team.”

Yes, aligning with the market to provide competitive salaries is important, says Hauver, but these days, employers and HR need to be more creative and innovative, she says.

It’s about asking: “What can we do to create a really cool environment where we pay market competitive — maybe we're not paying the most competitive or the top of the industry, but we pay well — plus we offer this incredible environment where maybe we're remote-first and we're really keeping our people connected; we provide great opportunities for development and promotion; we offer amazing, very inclusive benefits that enable everyone in the family unit to get the support they need; enhanced mental health benefits; and more time away from work; [and] support with professional development.”

It's about the whole package, says Hauver.

“Am I going to be able to grow and develop in this organization? Do I have someone that, for better or worse, has my back? Who is going to be championing me along the way? Am I going to be able to work on great work?”

Nearly three-quarters (73 per cent) of employers say that employees with financial stress are less productive and that it is important to offer benefits that will reduce that stress (76 per cent).

Benefits that resonate

The Express Employment survey also highlights the appeal of better benefits and perks when it comes to turnover, but to make the best of their budget, it’s important for employers to understand what staff want, says Hauver.

“You need to have them be part of that solution of identifying what matters to them,” she says, such as giving back to the community or having time away from work.

For example, HR may think an RSP program or employee stock ownership plan (ESOP) is a good idea, but often companies don't take the time to verify if this would be appreciated by the workforce, according to Hauver.

“’Would you like us to invest in an RSP program? Or would you rather us use that money somewhere else?’ Your unique team will direct you accordingly. Because when you roll that program out, you want good ROI on that investment; you want people who are happy about that.”

Pollington knows this too well, having rolled out a team-based bonus that failed to land as expected.

“We had 10 employees that were part of this goal, and… there were seven different wants of the team: there was time off of work, there was money, there was vacation, there was leaving early, there was autonomy — everybody's motivated by different things,” he says.

“So I think employers that are willing to innovate had better understand what high-functioning, high-performing employees want.”

And there are newer types of benefits to consider, says Pollington, citing one employer that has in-house social workers to help employees combatting external challenges, or a mental health and wellbeing app where companies can regularly check in with workers for data on how they’re doing, and try to help navigate that.

“It's becoming an issue that employers are taking on because they have to — otherwise, they lose the race for talent.”