Why Employees Actually Leave (Hint: It's Not Money)

Yesterday I had the opportunity to enjoy a quite good HR.com-sponsored webinar led by Leigh Branham, founder of Keeping the People, Inc., and author of The Seven Hidden Reasons People Leave. Leigh has been researching employee engagement and retention best practices for the last two decades and shared with the webinar participants his findings from deep analysis of employees included in the Saratoga Institute study (which included 20,700 surveys from employees in 17 industries, and 4,500 verbatim comments).

While I have eight pages of notes from the webinar I’d like to share with you, I’ll attempt to boil it down to the main points most likely of interest to compensation pros.

A significant gap exists between why managers think employees leave and why they really do.

This screenshot from the webinar states the facts, but the why of the story is most interesting to me. When asked why this discrepancy is so pronounced, Leigh mentioned 3 reasons:

1. Far more employees (53%) leave for “push” factors (bad manager, poor culture, etc.) than employees who leave (10%) for pull factors (better opportunity, spouse relocation, etc.).
2. Managers don’t want to believe they’re at fault.
3. In exit interviews, employees don’t want to burn bridges by being honest about why they’re leaving, so they’ll say the new position offers them more money.

Layered on top of this are conflicting survey results depending on source. For example, asking employees who are not yet actively searching for new job why they might consider leaving often leads to a far greater response of “better pay or compensation.” But if you ask employees in an exit interview – those already out the door – why they did leave, and the instance of “better pay” as a response drops dramatically.

Better pay alone or more perks cannot fix the problem of employees how feel undervalued and unrecognized.

Leigh shared 10 ways employees feel devalued, all of which point to soft skills and poor management, not necessarily to poor pay structures. Being ignored or, conversely, being micro-managed are just as detrimental to employee engagement and retention. Globoforce’s Fall 2012 Workforce Mood Tracker showed that 61% of active job seekers are dissatisfied with the recognition they receive at work while 78% of employees who were recognized within the last six months report “I love my job.” Simple recognition and appreciation – frequently, specifically and from anyone in the organization – is critical to creating an engaging work environment and culture.

Pay and benefits are growing as areas of concern in recent years.

In the last few years, Leigh has seen an increase in the incidence of reporting pay and benefits as a significant issue for employee engagement (increased form 12% five years ago to 19% last year). This isn’t surprising as employees saw their pay cut or frozen and benefits removed. As Leigh put it, “We tend to value things that have been taken away.”

Lessons Learned

1. Create survey instruments or methodologies that deliver more reliable information. Leigh recommends having exit interviews conducted by third parties as employees are more likely to be honest in those scenarios. Conduct regular stay interviews to catch employees who may be near a “tipping point” decision to leave before they get there.
   
   
2. Respond to the reality of today’s workforce, not the experiences of the past. A great deal of research and experience shows that boomers and traditionalists don’t require (or at least say they don’t) the level of recognition and feedback Gen X and millennials need. Indeed, 71% of Gen X employees say they would appreciate more time off than a pay increase (which makes sense as they are the “sandwich” generation trying to balance the needs of both children and aging parents). Managing to the needs of the Gen X and Gen Y is critical and, ultimately, helpful for all.
   
   
3. Restore benefits and pay as quickly as possible. The job market is opening up and employees who have been on the fence in years past now have many more options. As Leigh pointed out, only 29% of employees who were actively seeking new job opportunities said their decision to leave caused them to give less effort. Nearly half said they cut their effort somewhat or a great deal. And these disengaged, actively seeking a new job employees can be in that mental state of unproductivity for months or even years – while still on your payroll. It’s time to restore pay levels and benefits as rapidly as is fiscally responsible, or any profits made through continued pay and benefits cuts rapidly disappear due to disengagement.

What causes you to disengage at work? The last time you changed jobs, what was the major factor “pushing” or “pulling” you out the door?

As Globoforce’s Head of Strategic Consulting, Derek Irvine is an internationally minded management professional with over 20 years of experience helping global companies set a higher ambition for global strategic employee recognition, leading workshops, strategy meetings and industry sessions around the world. His articles on fostering and managing a culture of appreciation through strategic recognition have been published in Businessweek, Workspan and HR Management. Derek splits his time between Dublin and Boston. Follow Derek on Twitter at @DerekIrvine.

Comments

[Dan Walter]

Pay doesn't create culture. Culture makes pay work.

I really appreciate when others share what they have learned. Great summary of a complex topic.

[Jeffrey Haynes]

Good points - I agree that pay is way down on the list of why employees leave.

In my opinion though, the comment about exit interviews is too little, too late. I think her point about "stay" interviews is closer to the right path (and tons of fodder for another blog entry!) but I believe that proactively addressing engagement through surveys, predictive modeling and analytics is the way to go.

[Ben Martinez]

Powerful article and it's really true. Although I love my present job yet I'm leaving soon after 20 years of dedicated public service because managers seem to be detached from reality and only looking for their own interest instead of the good of the entire TEAM. They seem to embrace a dogmatic, unfriendly, and punitive-focus policies that make employees feel unrecognized and undervalued. These realities although present never hinder me or slow me down from doing what is best for my clients and from going forward to best serve the general public. So I rest my case.

[Derek Irvine, Globoforce]

Dan, great perspective. I'll have to use that in an upcoming post (full credit given, of course).

[Derek Irvine, Globoforce]

Jeffrey, I generally agree with you that exit surveys are too little too late (one of my favorite studies in the last year showed that exit surveys were the number 2 way HR measured employee engagement).

However, in this case and from this perspective, I agree with Leigh. I think employees are more honest, when conducted by a third party, about why they're leaving.

[Derek Irvine, Globoforce]

Ben, yours is a tragic and all too common scenario. It's great and commendable that you remain fully engaged, even though you have one foot out the door. Your organization is clearly losing a star player for want of simple acknowledgement and appreciation.

[Laura Schroeder]

The pie graph says it all!

[Derek Irvine, Globoforce]

Laura, the age-old "the pen is mightier than the sword" falls to "the chart is mightier than the pen."

Then again, "a picture is worth a thousand words" has been around at least as long. Perhaps I should have left my post to just the pie chart and had the shortest and "tightest" blog post of my career!

[E. James (Jim) Brennan]

Nothing really new here, but it is better documented, well said and quite worthy of continual repetition. Just remember, the reality will NOT deter managers from continuing to point as pay as the optimal preferred solution, because it deflects blame and builds their power; so you still have to get past that obstacle (http://www.compensationcafe.com/2010/08/first-you-eliminate-pay-as-the-solution.html).

[Derek Irvine, Globoforce]

Jim, I'm glad you commented. I should have linked back to your post in mine. This is a very important point and one that shouldn't be forgotten or, worse, intentionally ignored.

[E. James (Jim) Brennan]

Didn't mean to diss your post in any way, Derek, because it truly is an excellent reminder of a common fallacy. Attributing turnover to pay deficiencies is instinctive and will continue as long as bad bosses exist.

[Derek Irvine, Globoforce]

Not a diss at all, Jim. I couldn't agree more with your latest comment, too. Laziness, unwillingness to be introspective, arrogance -- all contribute to bad-boss syndrome, especially in this case.

[UK pension in USA]

It is a good post and I am agree with the writer that both manager and employs always differ with other and they do not like each other.