How Can I Uncover Why Employees Are Leaving Beyond Just a Compensation Survey?

Hi, I am a student doing my MBA. At present, I am doing a summer job for a logistics company. The company is facing huge attrition. It has asked us to conduct a compensation survey to find out where it stands in terms of compensation, assuming that compensation is the reason why employees are leaving the company.

Please tell me what else, apart from a compensation survey, should I do to study the reasons for attrition in the company.

JOAN

Joan,

I'd strongly suggest to you that although compensation may be a factor, there are obviously other issues at work here.

First, look at the direction of the company. Is it well-managed? Is there proper communication between the leadership and the subordinates? Are the employees valued for their contribution, and are they able to achieve goals? Are each of the employees goal-oriented?

Next, assess where the leadership of the company is steering the business. Do each of the employees see where their individual efforts are contributing to the good of the whole? Is there any opportunity for advancement?

Finally, look at the compensation package as it compares to equivalent positions in the industry. I once had a situation where a government project was paying three times the amount of money my client was able to pay in the marketplace - we were competing for the same employee base. It was impossible to move the pay scale of the client to match, pay for pay, the government project payment scale.

We learned, very quickly, that every aspect of compensation is not tied directly to money payments. A sense of self-worth and a sense of accomplishment are strong drivers in the marketplace.

Email me directly with some of the answers to the questions you must have, and I'll attempt to assist you as I'm able.

Cheers!

Alan Guinn, Managing Director

The Guinn Consultancy Group, Inc.

Hello Joan,

I am a student doing my MBA. A worthy study in my opinion.

I am doing a summer job for A LOGISTICS CO. The company is facing huge attrition. What do you consider huge? Our clients consider anything over 10% to be too high.

It has asked us to do a compensation survey to find out where it stands in terms of compensation. That is easy to do. How many job applicants withdraw their applications after they learn what it pays? What percentage of new hires quit or get fired before their first scheduled pay review? What percentage of employees quit or get fired after their first pay increase?

Assuming that compensation is the reason why employees are leaving the company. Why do we assume that?

Tell me what else, apart from a compensation survey, should I do to study the reasons for attrition in the company.

Hire an outside firm to conduct interviews with former employees about 60 days after their last day. Former employees must be reassured that their former supervisors will not see their responses.

Unless your company is really unusual, compensation isn't the reason for their huge attrition rate.

Be aware, managers seldom see themselves as the reason their employees quit.

Too often, management tends to "throw money" at the problem. If your compensation/benefit package is fair and appropriate for your business/industry, it should be left alone.

Obviously, compensation is one factor in attrition. Others are lack of respect/appreciation; recognition of job performance (one "attaboy" goes a lot farther than $$$); job has lost interest, employee no longer challenged; passed over/ignored for promotion; personal problems, at home/at work, and the like.

I suggest that you institute an "exit interview" process. Current employees who are contemplating leaving should be handed a survey and envelope before they depart. If no response after two (2) weeks from the departure date, a follow-up letter/postcard should be sent. Employees who have left should be sent a survey, with a stamped return envelope, addressed to "Consultant", PO Box xxx, your town, your state.

Using this approach, employees will feel that a neutral third party has been retained to analyze the responses and make appropriate recommendations to management and will be more willing and forthcoming in their views/opinions.

The survey should address crucial issues such as communication (from & to the supervisor; from & to upper management); training; recognition; culture; environment (working & physical); job stress/responsibilities; work v home life (balanced?), and the like.

The final comments on the survey should address:

"What would you change?"

"Rate the Company's benefit and compensation plans:

A. Better than most.

B. Same as most.

C. Worse than most.

D. Have no idea."

Hi Joan,

In my opinion, compensation factors don't contribute much towards attrition unless there is severe exploitation and the company is not adhering to industry standards. We need to look at the following areas:

1. What kind of work are the employees getting? Is it worth doing? The quality of work really matters.
2. Quantity of work in comparison to compensation. I've seen many IT companies where insufficiency of work is a cause for attrition. On the other hand, employees could also be overburdened with work.
3. What is the scope of self-development in the company?
4. How well are the roles and responsibilities spelled out?
5. Give a deeper look into the transparency in its policies and procedures.
6. Is there enough challenge in doing the kind of work they are doing?
7. The structure of the organization also needs to be relooked at.

Above are some of the areas that you can look out for.

Thanks

Well, we were thinking of conducting an exit interview of people who have left our company to find out the reasons for high attrition. However, I was wondering what kind of questions to ask them other than "why did you leave the organization?" Can anyone help me out with it? Can a job satisfaction questionnaire be addressed to them? Please help.

Hello Joan,

Is management prepared to act on what they'll learn from a post-exit interview? It might be beneficial to hire an outside firm that conducts post-exit interviews. This way, former employees can be assured that their former supervisors will not have access to their comments linked to their identities.

Hi Joan,

The work culture of a company should be strong. Employees leave the company for various reasons, such as lower pay, lack of recognition, limited opportunities for knowledge enhancement, office politics, lack of a professional approach, fringe benefits, stress, and more. The brand name also plays a role in employee retention. Therefore, compensation alone will not suffice; you need to address the aforementioned areas as well.

Regards,
N. Neelam

If we study the national corporate scene today , we will find an increasing number of Indian organizations are constantly trying to become and project themselves as truly “world class knowledge companies” (few have already set the benchmarks ) through which they are trying to constantly enhance “the self esteem” of their employees.

As the struggle for reducing the employee attrition rates in the knowledge-based organizations intensifies, the rise in methods to increase the self esteem of the employees can well be the answer for HR executives all over the world .The few measures to raise the self-esteem of the employees suggested are :

Recognizing the contributions of outstanding achievers will induce others to try hard .

Criteria for selecting outstanding achievers should be transparent .

Effective HR measures in the areas of training ,career development etc, equip the workforce better on the professional front and also increases their self-esteem .,confidence, morale and motivation .

Excerpts from Jerry Minchinton's “52 WAYS OF RAISING YOUR SELF-ESTEEM” are also very relevant :

Focus on your strengths and not on your weakness .

Others should be treated as equals, regardless of their status in the society.

Be positive . Master the art of positive thinking .

Don't worry much about impressing others, they are probably trying to impress you .

If you are relaxed you are more expected to come out better .

Try to accept and appreciate the yourself as you are .Remember if you underestimate yourself others will do the same to you .

The need of the hour is not only to enable the employees to grow in the ‘learning organizations' the concept of which, is fast attaining celebrity status in this age of “knowledge economy” but also to take care that the employee has substantial growth in his “self-esteem” without which ,I fear, all the retention policies of the organizations will meet a sorry fate .

AR Sai

Hi Joan,

I am from the BPO industry. The major attrition my industry faces is due to better prospects in other industries and within the same industry. Better prospects can involve not only compensation but also the type of role the person will be playing, designation/grade level, facilities provided to the employee, recognition of performance, and professional life.

The next major cause of attrition occurs due to medical and personal background reasons. Personal reasons include employees getting relocated because of parents/spouse/kids, and family issues (90% of which affect females).

Regards,
Robert

Hi Joan,

This is an ongoing process. The company can evaluate their attrition through the following ways:

(1) Exit Interviews: Start and implement a structured process of Exit Interviews (not just a formality) to understand why people are leaving. The responses to the structured questionnaire should be compiled and analyzed every month.

(2) Conduct an Employee Satisfaction Survey (ESS) for all employees to understand which areas they are dissatisfied with. The broad areas which can be assessed are - Compensation, Work Environment, Benefits, Job Content, Management, Peers, etc.

Regards

Hi,

I have just completed MPMIR and I have done a project on "Retention of High Performers in the Call Centre Industry". The findings were not only about compensation, but also about career growth, non-biased performance management systems, and the relationship between team members and team leaders. Through Employee Satisfaction Surveys (ESS), you can find out what employees think about their company, whether they are happy with the policies, procedures, etc. Conducting exit interviews can also provide valuable insights.

I hope this information will be helpful to you.

Regards,
Vanita Kadam

Dear Joan,

You can check if there is an exit interview format and what reasons have been mentioned in that format for leaving the company. You can also investigate in which department people are leaving more and speak to the department head about the same.

Cheers

Hi Joan,

Some of the things required, other than compensation survey, are:

1. Competitor Strategy: Check whether competitors are deliberately poaching your employees.
2. The HR environment of the company: Is there too much stress on the employees?
3. The market image of the company: Does the company have a good market image?
4. The financial strength of the company: Is the company paying salaries on time? Is it providing sufficient cash to vendors at the time of booking? The industry standard is 70% advance and 30% on delivery.
5. Is the company able to deliver goods on time? It does matter as customers tend to dismiss staff, which demoralizes them.
6. Most importantly, check where these employees are going. Mostly, they follow a leader, i.e., an old employee who has quit and joined another firm. This individual might be poaching your employees, as their loyalty might lie more with the leader than with the company.

Check this out... more depends on the actual company and market scenario.

Ajmal Mirza
mirza_ajmal@yahoo.com

Hi all,

We have been facing a similar condition in our organization. I have been with my organization, a recruitment firm, for 8 months. The work handled here is top-notch, but the attrition rate is very high.

To provide an example, when I joined, there were 6 people who started with me. Within 3 months, 4 of them had left the organization. Within 1 month, 5 new recruits had joined, but within 3 months, 4 of them had also left.

This situation arises because a significant amount of time is spent training new recruits, who are freshers. They tend to leave within 3 months, so by the time they are fully operational, they decide to quit, resulting in minimal revenue generation.

Please help.

Thank you.

Hi Deepti,

The major problem with the recruiting firm is that most of the employees consider it to be the stepping stone for their careers and can be seen in most of the recruiting firms.

The reasons being:

1. The employees are constantly in touch with the recruitment market and are aware of the available opportunities, compensation rates of the market.

2. The recruiting firm is generally a private firm, private limited firm with direct involvement of the director/proprietor. Most of the employees are not able to cope up with the direct remarks of the proprietor.

3. Generally seen, no proper training, induction is given, so the employees are not aware of what the other departments, employees are doing and what is their importance to the organization.

4. In smaller firms, loyalty programs are not implemented, and the employees don't see much career growth there.

If your organization can solve the above problems, it can reduce the attrition rate. Some of the suggestions are:

1. Give sufficient freedom to eligible employees.

a) Let them handle an account, sector by themselves. That would cultivate the sense of ownership, and that itself should help to reduce the attrition rate.

b) If you are not sure of the employee's capability, give him/her a smaller project, i.e., a single recruitment event to handle and show his/her performance.

2. If possible, create achievable incentive systems for each department and give some awards (like a party at some pub, etc.) that should make the employee feel that he is performing well and at the same time bind him with the other employees during partying.

3. And most of all, recruit employees who would not leave the organization (like people having family issues). Generally, married ladies would like to work in proximity to their homes. That would reduce the chance of their looking out for other jobs.

This means a change in some practices at the organization, but it may be worth the effort.

Ajmal Mirza

Email: mirza_ajmal@yahoo.com