I've read numerous articles in the last month regarding a coming wave of turnover that is predicted to hit companies if an economic recovery starts to materialize. The line of reasoning is that if employees have been treated poorly (from their personal perspective) during the economic downturn, they will be looking to make a move upon the long-awaited recovery. The premise is that they’ve only remained with their present employer because there were no other options. When new opportunities begin to emerge during a recovery, many will express their dissatisfaction by heading for the door.
Dr. John Sullivan, a professor at San Francisco State University, wrote a recent article that summarizes the problem in this way:
“Study after study has confirmed the notion that many employees would have left their employers months/years ago had the option to do so been viable. The economic downturn, combined with the mortgage crisis, has forced many frustrated, disappointed, and unmotivated employees to stay put. The trend is not a new one and is consistent with past downturns.
While turnover rates are at an all-time low, they most certainly cannot be taken as an indication of a firm’s status as a desirable place to work.
Just as in years past, when job opportunities become more prevalent, employees will exercise their right to demonstrate just how much they appreciated the treatment they received throughout reductions in force, furloughs, clumsy mergers, travel freezes, and budget cuts. The level of animosity among many will render most traditional retention approaches ineffective.
Some studies indicate that as many as two-thirds of employees are ready to go. Unfortunately, few corporations are preparing today to handle the dramatic increase in voluntary terminations that will come tomorrow.”
Of course, Dr. Sullivan is looking at this issue from a workforce-at-large perspective. However, many of the same principles apply to real estate businesses. There is a lot of dissatisfaction among real estate agents. In their minds, they’ve been forced to make a great number of sacrifices over the last several years, and numerous agents believe their company and their manager were at least partially to blame. If a person has this mindset, it doesn’t take much to convince them that the grass is greener in a new organization.
Dr. Sullivan goes on to suggest that the first step to solving or lessening the impact of a problem is being able to measure factors that lead up to it becoming a reality:
“Retention metrics in most organizations begin and end with overall turnover by period. Absent are metrics that measure the business impact of turnover and specific goals to mitigate predicted impact. If your retention function doesn’t measure and report these five key metrics, chances are your efforts are under-managed:
•The cost of turnover. Reporting a percentage turnover rate seldom excites executives, but converting that turnover rate to a dollar impact on business performance can establish the visibility on talent issues needed to transform a good recruiting function into a great one.
•Top performer/key employee turnover. Often called regrettable turnover, this measure prioritizes the jobs and individuals based on the degree to which their leaving hurts the firm.
•Competitor win/loss ratio. This metric is simply the ratio of the number of top performers you have successfully recruited away from a competitor compared to the number of top performers who voluntarily terminated to join a competitor. If a top performer quitting goes directly to a competing firm (vs. retiring), it raises the costs because it hurts the firm while aiding a competitor.
•Preventable turnover. If turnover is occurring for silly or preventable reasons, the percentage of cases where that is true needs to be reported and fixed.
•Percentage of 'at risk' employees. The best firms proactively identify high-priority individuals who present a high risk of leaving during the next one or two years. Reporting the percentage of target individuals at risk alerts managers, helping them put into place proactive programs attacking retention issues before they get out of hand."
As we’ve discussed in the past, you can’t improve what you can’t measure. If you start by measuring the impact turnover has on your organization, the strategies to minimize that impact will start to become evident.
The good news in all this is that many of your competitors may not see this coming. When your competitor’s agents start to gain some confidence in the economic recovery, make sure that you are well positioned to receive them with open arms…
Editor's Note: This article was written by Ben Hess. Ben is the Founding Partner and Managing Director of Tidemark, Inc. and a regular contributor to WorkPuzzle. Comments or questions are welcome. If you're an email subscriber, reply to this WorkPuzzle email. If you read the blog directly from the web, you can click the "comments" link below.
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