Perhaps one of the biggest problems for employers during the ‘great resignation’ has been turnover, but do they know the real reasons why employees are leaving?

If the totality of your efforts is limited to one department within your organization, good luck finding real success in hitting your goal as taught by our guest, Dick Finnegan. He helps companies such as Siberian banks, African gold mines, multinational corporations including Caterpillar, and even the CIA cut employee turnover by 20% or more. He is a sought-after keynote speaker, author of five books, and CEO of C-Suite Analytics and The Finnegan Institute.

What you will learn:

➡️ The real reasons causing employee turnover

➡️ Details of initiatives and program development over the years

➡️ How Caterpillar was able to significantly cut turnover by 47%

 

Listen to "Cutting Turnover By 20% Or More" on Spreaker.

The Real Reasons Causing Employee Turnover

Cutting turnover is typically associated with your HR department, however, Dicks's approach suggests that operations should actually be tasked with assessing and improving employee retention. He explains two ways to cut turnover:

  1. The one size fits all approach is commonly used by HR professionals which can include conducting surveys and focus groups along with increasing salaries and benefits.
  2. Driving retention through first-line leaders is the ideal approach because based on Dick's research, the number one reason employees leave is based on how much they trust their boss.

Although this may not be the case in every situation, it is a surefire one-on-one solution that has been proven pre and post-pandemic, as mentioned in one of Dick's five books, which details 25 different studies sharing the same results. The pandemic shifted the labor market as it gave people time to rethink the way they work which is why the "one size fits all approach" does not work, and each situation should be taken one at a time instead.

As mentioned, the level of trust an employee has in their boss is the biggest factor contributing to high turnover, but it's not the only reason. Today's economy reflects a historically low unemployment rate of 3.5%, yet there are still 10 million open jobs and a voluntary quit rate of 35%. The workforce of today is 6 million people shorter than it was at the start of March 2020 and here's why:

  • 1 million passed away
  • 2 million prematurely retired
  • 2 million moms chose to stay home with their children
  • Additional people leaving the workforce include those licensing their own business or side gigs that don't require certification such as driving for Uber/ Doordash, dog sitting, babysitting, etc.
  • The declining birth rate
  • Millennials/ Gen Z comprise 51% of the workforce - On average baby boomers remain in the same job for 8 years and 3 months compared to millennials, 2 years and 9 months, and gen Z, 2 years and 3 months
  • Increase in substance abuse rate

These impacts piled onto one another are a cause for major concern considering all predictions point to this continuing for a long time or even worse...forever! So how do we combat these challenges and prepare for the future?

Dick invented a concept that every business leader should be putting into effect, 'stay interviews', which has developed many variations based on each individual situation. This concept came to life as Dick was working with a professor when he thought to himself, "if the number one reason employees stay or leave is how much they trust their boss, we have to develop an interactive way for leaders to build trust with their teams". When were talking about the manufacturing industry more specifically, those first-line leaders are in the form of supervisors. If they are expected to manage a diverse team of people, you should not assume they are going to build productive relationships; you need to teach them how to build trust with their team.

Details Of Initiatives And Program Development Over The Years

Prior to conducting stay interviews, Dick requires specific training to be completed in order to effectively drive down turnover. Leaders are trained on asking five specially curated questions based on proven research, which are to be put into practice using four skills. These four skills include listening, taking notes, probing, and taking responsibility.

Reducing turnover takes a team, HR can't do it alone. Dick's model for reducing employee turnover is comprised of five components:

  1. Dollars
  2. Goals
  3. Stay interviews
  4. Forecasts
  5. Accountability

The end game of these five components is to convert the turnover into dollars. This is where your finance department comes into play. As Dick kiddingly says about finance, "You come to work each day trying to find the quarters in the couch, you're looking for ways to shave expenses increase revenue, you're looking at the same data all the time, when the biggest loss, the biggest expense is down the hall in HR." And without proper training, there's no one to blame.

Now that you have a finance issue combined with an HR issue, this gives you leverage to move it up to operations. With all this data Dick's model helps him to study turnover and break it down into various charts to create two goals: one for all turnover and another for new hire turnover. Once you overcome the new hire turnover battle, you've won the war.

Stay Interviews

As said previously, stay interviews are conducted one on one between a supervisor and an employee. On occasion, Dick is asked if he can train HR to perform stay interviews. As a reminder, the number one reason employees stay or leave is based on how much they trust their boss. With that in mind, the answer is always no, because it is the supervisor who should be the one getting trained.

The average manufacturing facility can expect this process to be completed over the course of 60 days. Once all leaders are trained to perform stay interviews a schedule is developed and implemented from the top down, meaning the plant manager goes first in order to have their employee interview experience. When Dick and his team return at the end of the 60 days it is time to assess the data based on the results of the stay interviews, at which point a plan is developed for solving retention.

How Caterpillar Cut Turnover By 47%

Turnover does not discriminate. It does not matter if your company is a mom-and-pop shop or a large corporation, it can impact anyone. Even a heavy equipment manufacturing giant such as Caterpillar. So let's look at how Dick's strategy helped reduce Caterpillar's employee turnover rate by 47% from start to finish:

Starting from the weakest point, Dick personally visited one of Caterpillar's toughest factories in southern Missouri where he got to know the plant manager, plant team, and the HR executive. This is where he started putting his process into action, beginning with the cost analysis of finance and HR to determine how much money they were losing, and determining here's how much they can save cutting turnover by 20%+. Turning all this data into charts enabled Dick to lead the executive team to buy into costs and establish retention goals. The leadership team was prepped and trained on how to conduct stay interviews while being reminded of the goals that they will be taking responsibility for. At the end of the 60 days when Dick and his team reconvened with CAT leadership, the response was incredibly eye-opening to the point where they were able to drive turnover down by 47%!

Closing Thoughts

Here's a little perspective for you - how many leaders expect they're the topic of discussion at the dinner table of their employees? Whether you expect it or not, your employees are talking, about you, and what they say may not always be good things. Whether employees choose to stay or go is not only based on career advancement or increased pay, it is about how you can solve their day-to-day issues. By building one on one relationships your employees will go home feeling good and sharing positive stories resulting in cutting turnover by 20% or more.

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