One-hundred percent to 150 percent: that is the estimated cost of turnover as it relates to an average employee’s base salary. So, if you hire for a position that has an annual salary of $100,000, and that person leaves, it will cost you up to $150,000 simply to replace them. It only takes seven of these employees leaving to leave a dent to the tune of $1M in your financials.
The salt in the wound is that churn can often be dramatically reduced by making small changes to the work environment. Even setting aside five minutes each week to get staff feedback could surface morale and motivation problems that you could have solved before they escalated – and cost you money.
How so, you ask? Well, let’s dive in.
Wouldn’t it be incredible if everyone you worked with were fully immersed in their work and were enjoying a high level of engagement and job satisfaction? Where everyone were so attuned with their current state and hyper-focused on doing an excellent job that they performed at a level beyond your expectations, all while exuding happiness, confidence, and open communication?
Although this might seem like a far-fetched workplace fantasy, this type of environment is entirely attainable. The problem is that many organizations, small and large, do not provide the employee feedback needed to give their employees the confidence to drop into such a state.
Rather, managers fall back on quarterly reviews that give a blanketed picture of an employee’s progress, which is far too infrequent and broad for any employee to learn, grow, hone their skill, and build confidence.
To elevate their employees to a higher state of productivity and wellness, “Managers need to step back and take a look at each person’s job to identify where that person falls in relation to four elements [challenge vs. skill, anxiety vs. boredom]. If people are bored, they are not in flow. There is no tension, nothing new, and nothing exciting to keep their interest,” says Mihaly Csikszentmihalyi, the author of Flow in a Fast Company article.
Managers need to facilitate consistent weekly one-on-one feedback to make sure every employee reporting to them can identify issues before they surface. Lack of inspiration, lack of trust, little incentive to work hard…whatever the problem, nipping it in the bud will save you millions in the long term.
Friedrich Nietzsche once said, “I’m not upset that you lied to me, I’m upset that from now on I can’t believe you.”
Trust is so integral to our relationships and business, yet we often take it for granted. It expedites communications, which in turn expedites decisions and inherently expedites the speed of business. Thus, trust creates speed.
Beyond that, trust helps to minimize bureaucracy, meaningless processes, and micromanaging that can inhibit innovation and slow growth. It is by building and cultivating a culture of trust that organizations can create high-performing teams.
But how can five minutes of taking in employee feedback each week create trust? “In a company, high trust materially improves communication, collaboration, execution, innovation, strategy, engagement, partnering, and relationships with all stakeholders…In a low-trust relationship, you can be very measured, even precise, and people will still misinterpret you,” says Stephen M.R. Covey in his book Speed of Trust. By incorporating weekly feedback sessions into your workflow, you create a culture of trust that will not only allow you to advance at a faster pace, but will keep you from being bogged down by miscommunication and misunderstandings.
Real-time business intelligence and operational intelligence are integral to the success of your company. Just as it is important to have access to real-time metrics around sales and conversions, it is equally important to have near-real-time access to information about problems within your organization.
Waiting for an employee’s quarterly review is too late. By then, any issues would have been long forgotten, brushed under a rug, or resolved in a shoddy and amateurish way. By reacting quickly, in real time, around problems as they occur, you will help maintain a state of flow and trust within the team and throughout the organization. A quick review of a poor performance done this week will help to quickly heal any wounds before they worsen. Don’t “save it for later” or turn a blind eye to even the smallest of issues; react now, today! The solution could be as simple as providing the employee with some constructive criticism on how to perform better.
Just as the foundation of lasting trust can be built quickly with a concerted effort, it can take very little time to be dissolved. This means that, as a leader, you must be dedicated to creating a climate of trust each and every day.
Creating flow, growing trust, and reacting quickly are simple steps that will lower employee turnover, help with motivation and inspiration, and add significant incremental value to your organization.
As leaders, we often lose sight of the forest for the trees, or – in this case – we lose sight of our employees for the company. It is essential to remember that any organization is based on people, who have basic human needs that need to be respected and acknowledged – no matter how professional the setting.
Even five minutes of open feedback each week can help you connect with your staff on that very basic human level that is so often forgotten. In turn, you’ll be rewarded with an engaged, productive workforce – and your bank accounts will thank you, too!
Guest author David Hassell is the CEO of 15Five, a software company focused on producing transparency and alignment in organizations through structured, efficient, and effective communication practices. He has been named The Most Connected Man You Don’t Know in Silicon Valley by Forbes.