Why Are Your Employees Leaving?

Marlon Mai March 21, 2014 4 mins read

Losing talent can often be a double hit. Not only does it weaken the firm itself, it also strengthens competitors.

Turnover at the highest levels can take with it entire teams, while at the middle levels it can mean the exodus of large numbers of subordinates. When core workers quit, they take with them significant experience and skills. At best, turnover will leave the company bruised; at worst, it can mean the end of the company itself.

1. Salary and benefits

“Money isn’t a panacea, but having no money isn’t an option.”

The importance of remuneration in a market economy cannot be stressed heavily enough. Especially for those at the base level of the market economy, wages are king. Regardless of seniority, however, everyone places importance on this factor to one extent or another. Not only are salaries the financial foundation on which workers survive and develop, they also reflect a company’s appraisal of value of a particular employee. If someone is offering twice your price, you can talk about corporate culture and room for development all you want—it’s not going to make a difference.

If someone is offering twice your price, you can talk about corporate culture and room for development all you want—it’s not going to make a difference. In these circumstances, corporate culture and emotional ties pale in comparison to the allure of monetary incentives. Take for example Xu Fengyun, who multiplied his previous salary by twenty when he moved from TCL Group to a French company. Turnover as a result of low wages is especially noticeable at state-run enterprises. Traditional state-run firms are seeing their talent slip away to both multinational corporations and private, domestic companies. The high salaries offered by these two types of company draw huge numbers of employees away from state-owned companies, reducing the traditional firms to mere training bases for ambitious workers looking to trade upwards.Turnover as a result of low wages is especially noticeable at state-run enterprises.

2. Corporate culture

Corporate culture includes two main facets:

  • the “hard” system
  • the “soft” culture

 

If the company is able to design a system which encourages and rewards outstanding workers, the firm will not be plagued with serious turnover. On the other hand, if the system is overly egalitarian and poor workers are treated the same as outstanding ones; or there isn’t an objective, reasonable and fair incentive structure; or for every person actually working there are two standing around watching and three messing things up, then the company will have trouble retaining the necessary talent.

if the corporate culture is autocratic, ossified based on seniority, or nepotistic, workers will be turned away.In the same vein, if the corporate culture is autocratic, ossified based on seniority, or nepotistic, workers will be turned away. A boss who is overly strict, inflexible, critical or insulting will have the same effect. Companies with poor management or corporate culture frequently experience high turnover. In terms of system, state-run enterprises that place too much emphasis on egalitarianism fare poorly, driving many workers away. In terms of corporate culture, many private companies display substandard performance. In these cases, the boss’s will supercedes all—even the law—leaving many workers with no choice but to resign.

Salary and corporate culture are the basis for retaining workers. Regardless of rank, a worker will decide to leave if they are unhappy with either of these variables. Of course, different people will place different degrees of emphasis on these factors. More senior professionals place less importance on salary and more on soft environmental considerations such as culture and development, while workers at the bottom levels pay more attention to wages. Nobody has any patience for a substandard workplace culture.

A company must ensure it has a corporate culture and wage level that is commensurate with standards and is able to attract and retain talented workers. This may be high salaries, which encourage workers to remain a while longer before considering jumping ship. Or it may be the beneficence of the company’s management, which lends a homey air to the workplace and makes workers who place importance on atmosphere and interpersonal relationships unable to tear themselves away. If both of these factors are substandard—low wages and bad management—the company will have to count on a miracle if it hopes to retain workers

It is extremely important for companies to understand the reasons for employee turnover, and to adopt the necessary measures to prevent and reverse it. When the flow of workers leaving the company from all levels becomes a flood, management must take immediate and objective stock of the situation.

Marlon Mai's picture
Managing Director | Finance & Accounting, IT, Sales & Marketing Recruitment
mmai@morganmckinley.com