Carrots, Not Sticks

Judge said the classic model forecasts that turnover is a function of 1) the desirability of movement and 2) the ease of movement. There is less the company can do to affect the ease of movement, which is a function of the labor market and the degree to which an employee is able to relocate. However, the primary factor driving the desirability of movement is job satisfaction.

Companies that want to reduce turnover, therefore, should look at the satisfaction level of their employees, and find ways to improve it.

“Many organizations think this is all about pay,” Judge said. “While employees often complain about their pay, we find the two factors most important to job satisfaction are: a) satisfaction with the work itself (how interesting, enjoyable and challenging is the work itself); and b) relationships (satisfaction with supervision and coworkers).” In his work with the trucking industry, for example, Judge has found that drivers who have a good relationship with their dispatcher are much less likely to leave.

A short list of questions for organizations to ask themselves, said Judge, includes: Do employees feel their work is important? Does it give them a chance to learn new skills? Do they have flexibility and autonomy to make decisions?

Costco, Starbucks, Kohl’s and Whole Foods are a few examples of companies that have been successful in improving retention. “These companies operate in a service industry where turnover is typically quite high. Yet these companies beat the odds by taking a developmental approach to their employees,” Judge said. “They consider the work environment, invest in training and provide a culture that people find attractive.”

His main piece of advice for HR directors? “Measure job satisfaction accurately and scientifically. Study which elements of job satisfaction are driving turnover in your organization, and then focus on those elements,” he said. “Not only will turnover decrease, you will see other benefits from having a satisfied workforce. You don’t have to spend a ton of money on this, either.”

Well-being at work

Associate Management Professor Matt Bloom looks at turnover from the other side of the coin — the employee’s perspective. Bloom, who researches extensively in the area of well-being at work, recently wrote an article, “Want a happy office? Here’s what you need to know,” published on The Conversation website. In the article, Bloom cited a Gallup study showing that 80 percent of workers don’t like what they do all day.

That level of dissatisfaction, Bloom said, shows that there is clearly something more that people want from their work experience. Based on his research, he said the answer comes down to relationships, engagement and authenticity.

In short, this means for employees to feel good about their work, they want strong relationships with colleagues, as well as customers and clients. They also want to feel fully engaged — “able to bring their fullest and best selves” to the job at hand, as well as authentic, which essentially means “able to enact one’s deeply held values and strongest beliefs, especially those beliefs related to transcendence, spirituality or religiosity.”

“Being fully authentic requires that we be true to ourselves, expressing those most important, even sacred, dimensions that are our essence,” wrote Bloom.

These are profound areas that may seem difficult to address. Authenticity in particular, said Bloom, is less well-understood by business leaders than relationships and engagement. Nevertheless, he presented a case study of a Fortune 500 company that considered engagement and authenticity in designing a solution to reduce turnover.

The health-care company employed 3,000 customer service representatives in five large call centers, where annualized attrition was about 50 percent. The representatives each had to have in-depth knowledge of the company’s extensive slate of complex products and offerings. Further, the job had a steep learning curve, and becoming fully competent could take up to four or five years. It was clear that the company needed to retain individuals for more than five years so as not to lose precious intellectual resources.