Employee turnover is on the minds of American employers lately. The percentage of employees initiating a separation from an employer, known as the “Quits Rate” at the Bureau of Labor Statistics, has been rising since 2011. Since 2016 it has equalled the Quits Rate since before the Great Recession. While that is a great indicator of health for the American economy, it is a strain on companies.
It is easy to understand why employee turnover is a problem. Along with the considerable costs to recruit, evaluate, hire and train employees, there are hidden costs. For the customers, there is a decreased relationship with service level impacts and losses in responsiveness that can lead to lost revenue. For the other employees, there is an increased workload, lowered productivity, and lowered team morale. If a company responds too slowly, there can be a ripple effect with the increased turnover that can be challenging to outrun.
So why does turnover happen? There is a robust field of study to combat this problem. A Google Scholar search for “employee turnover” finds 774 publications in 2017 alone, and it is only March. Frequently these publications statistically model indicators such as autonomy, task significance, perception of organizational support, skill variety, career advancement and salary. Relating this much information to your own organization can be daunting.
A great way to operationalize this knowledge at your own organization is with the process improvement tools of the DMAIC journey employed in Lean Six Sigma methodology. Lean Six Sigma is a proven performance improvement program to improve customers’ experiences and lower costs through defining customer needs, identifying root causes to chronic problems, and implementing countermeasures that directly address those root causes. Here is one approach to applying the five phases of Lean Six Sigma DMAIC to employee turnover.
Define Phase — First identify the magnitude of the opportunity available to the organization. What are the impacts to the strategic plan and total costs of employee turnover? This can be critical to encourage management to allocate sufficient resources to the successful completion of the project. This is also the appropriate phase for discovering the voice of both internal and external Customers. In this case, what are the expectations of customers, management, team members, and new hires with regards to turnover, recruitment, and hiring.
Measure Phase — In this phase you discover the baseline level of the problem. This starts with examining the monthly turnover rate, recruiting, and hiring over the last few years. Is any headway being made? Is it a recurring cycle? This is also the time to mine existing exit interviews for data concerning reasons for exiting the company. It is entirely possible that this data will be unevenly collected and reported. At the end of this phase, you should have a list of potential root causes that are the largest drivers of turnover at your organization.
Analyze Phase — Armed with your list of potential root causes, the next step is to obtain a stronger dataset that provides both closed-ended questions that lend themselves to statistical testing, and open-ended questions that allow the respondents to speak freely for their reasons for leaving the company. It is also helpful to interview retained employees to get a feel for their opinions about morale-affecting entities such as hiring and training practices, management support, autonomy and work-life balance. A third-party interviewer may be necessary to get the most open feedback. This survey instrument will lead to statistically valid responses and proven root causes that directly apply to your organization.
Improve Phase — The next step is to brainstorm appropriate countermeasures to the identified root causes. This can be done with a cross-functional team of dedicated representatives from management and the work force. The team must be open to the data received from the Analyze Phase. To be successful, they must drop preconceived ideas and listen to what the respondents are saying. The countermeasures need not be complicated and costly. The level of organizational engagement in the recruitment, hiring and initial training steps will make huge differences in future morale. Hiring the right people who know what to expect and are trained for the rigors and stresses of their new position can make huge differences down the road.
Control Phase — The improvements must be documented, trained and institutionalized in the final phase of the project. The rate of turnover, recruiting and hiring must be monitored and reported monthly. The exit interview process must be appropriate, useful, and rigorously applied. If improvements aren’t maintained, management must get involved to investigate the regression of morale. The company may want to institute an employee-led committee that can find ways to creatively boost morale, celebrate accomplishments, and develop positive attitudes.
There are many reasons contributing to any company’s turnover problem. The few, significant drivers of employee separations will differ by situation. A structured problem solving effort is a great way to discover your vital few root causes of poor employee morale and set you on the path of continually improved turnover rates.
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Author: Michael Stamp
Michael Stamp serves as Vice President at Juran. In this capacity, he specializes in Continuous Process Improvement, Lean Management and delivering a variety of quality programs to corporate clients. Mr. Stamp has over 25 years of experience and is an outstanding change agent who can identify opportunities, develop focus and provide strategic and tactical business solutions.
Mr. Stamp’s core competencies include Process Improvement, Operational Streamlining, Data Science, Special Project Management, Training & Coaching, Cost Reduction, Multi-Site Operations, Quality Control/Assurance, Policy & Procedure Development, Leadership Development & Culture Transformation and Statistics.