Business · HR

Can Great Leadership Make Employees Want to Stay?

Image courtesy G CACAKIAN | Flickr

Turnover rates for entry-level positions in the United States can prove incredibly high, with some statistics quoting well over 50 percent in the first year. Recent research, however, has called into question the usual explanations for these high rates, which generally include low pay, boring work, poor working conditions, and inflexible hours. Instead, researchers found that the problem lies in bad leadership, especially among the managers to whom people in these positions report directly. This is yet another reason why leadership training is one of the most important aspects of a solid employee retention program.

Yet, while great management can make people want to stay in their positions, can it actually prevent them from quitting? The answer is “no” according to a new study published in Harvard Business Review. Great leaders may help keep individuals in an upper-level position, but they don’t necessarily reduce a company’s turnover rate. According to the new research, most people quit because of opportunities that arise at other organizations, not because they are disgruntled with their direct, or even indirect, managers. In other words, good management can convince people to stay, but it doesn’t necessarily convince them not to go when a better opportunity comes along.

The Relationship between Retention and Leadership

Part of the problem lies in the fact that the top employees consistently receive offers from other organizations. Headhunters and recruiters are constantly looking for leaders in a particular field and will not hesitate to reach out to a promising candidate that is already happily employed. While great management plays a key role in keeping employees happy, it is not enough to counteract a position that is significantly more rewarding than an employee’s current job.

Image courtesy G CACAKIAN | Flickr

In reality, the best employees are much sought-after because of great managers that help them build a professional network and push them into achieving more. Excellent leadership skills create excellent employees, and other organizations will take notice. Then, the question becomes, “What keeps employees from saying ‘no’ to these outside offers?” The key to lower turnover rates may depend primarily on factors outside of leadership, but this doesn’t mean that leadership is unimportant in developing an engaged, talented team.

To lower turnover, business leaders need to focus on the key retention mechanisms that they have set in place. Retention depends in large part on personalized benefits that meet an employee’s individual needs. If an employee feels that the company has really bent over backwards to meet his or her needs, that person will probably hesitate to take another offer at a company that might not be as accommodating.

Health benefits are key, but companies should also take other benefits into account. Another key retention mechanism involves simply talking to employees. Too often, business leaders assume that employees are happy if turnover is low, but they cannot be sure of this unless they regularly conduct one-on-one interviews with employees. These interviews often point to the retention mechanisms that could keep top performers in their positions.

Taking Advantage of Uncontrollable Turnover

No matter what employer does to minimize turnover, people will still leave to advance their careers. In today’s increasingly connected and mobile world, people often change jobs every few years. The upside of this fact is that companies develop large alumni networks over time, and these networks can be leveraged to find excellent replacements for departing employees.

Image courtesy Joe Phillipson | Flickr

Excellent leaders take strides to build relationships with former employees and turn the alumni network into a strategic constituency. The researchers behind the Harvard Business Review article pointed to this alumni network as a key takeaway from their findings. If it is impossible to stop all turnover and great leadership does not reduce turnover rates, then companies need to focus on developing and maintain relationships with employees who choose to leave.

To develop a strong alumni network with the potential to benefit the company, companies must prioritize the offboarding process. The article emphasizes the importance offboarding practices designed to build bridges and highlight the positive experiences of working on the company.

Perfunctory exit interviews that show no investment in the employee or the experience will not create the types of relationships needed for a strategic alumni network. The researchers recommend that managers lead exit procedures and focus on the employee’s value to the company. The entire offboarding process should reinforce the desire to maintain a relationship, even if though the employee is choosing to leave.

A strong alumni network means that employees may return in the future after gaining new skills and experiences elsewhere. In addition, alumni may act as external recruiters for the company and recommend some great candidates. This network can also help form strategic organizational relationships, among many other benefits.