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Attrition: Understanding and Reducing Turnover
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From the course by University of Pennsylvania
People Analytics
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From the lesson
Staffing
In this module, you'll learn how to use data to better analyze the key components of the staffing cycle: hiring, internal mobility and career development, and attrition. You'll explore different analytic approaches to predicting performance for hiring and for optimizing internal mobility, to understanding and reducing turnover, and to predicting attrition. You'll also learn the critical skill of understanding causality so that you can avoid using data incorrectly. By the end of this module, you'll be able to use data to improve the quality of the decisions you make in getting the right people into the right jobs and helping them stay there, to benefit not only your organization but also employee's individual careers.
Meet the Instructors
Cade MasseyPractice Professor
The Wharton School
Martine HaasAssociate Professor of Management
The Wharton School
Matthew BidwellAssociate Professor of Management
The Wharton School
The third area of staffing that people spend a lot of time thinking about
is attrition, and it makes sense.
You spend a lot of time and effort making sure you hired the right people.
You're then worried about are they in the right job,
how do we promote them, and so on.
Well, having got them there, you kind of want them to stay in the job
Certainly organizations have discovered that turnover is very costly.
Why, because of all the things that it leads to.
So what does turnover lead to.
It lead to increase hiring costs.
Okay, you've gotta replace the people.
You've then gotta train the new people in the kind of skills that the people
who left had.
And then there's gonna be a bunch of things that you can't even train.
Some of the unique knowledge that somebody had built up over years, at least months
of working there, which then has to be relearned or maybe is never reacquired.
And then, on top of that, there are the relationships that they had built up,
both with their colleagues that made the work easier, and also with customers.
And so we know turnover impacts productivity, it impacts quality, and
it impacts customer relationships.
And there have been a wide variety of studies that demonstrate a strong negative
effects of performance on work group performance and profitability.
So this is something you really want to worry about as a manager.
Of course, in order for finding out more about it to be valuable,
they need to be things you can actually do with that knowledge.
And there are when you know more about it,
you can pull the levers to reduce turnover more effectively.
So, in particular, when we know who leaves and
why, that can inform our hiring decisions.
One of the easiest ways to address a turnover problem
is by looking at your hiring.
Are we bringing in people who are likely to be leaving?
The same time we can think about what kinds of interventions we want to make
inside the organization.
Certain groups are much more likely to leave,
are there needs of those that are being unmet?
Is there something about the conditions of those jobs, either pay or
the work itself, that we can really change in order to address turnover.
Sometimes we find there are particular managers who seem to have a problem.
Either we can move them out or we can train them, and
help them think about how to mitigate and reduce that turnover.
Okay?
And more broadly the extent to which we're gonna spend time and money on retention,
figuring out who our biggest flight risks are will help us in targeting that money,
and that effort effectively.
So I wanna spend a couple of minutes just thinking about why do people leave, and
how's that going to help us understand the drives of it?
The simplest view of a attrition is obviously that people leave their jobs
when they find something else that they would rather be doing.
That' s the kind of depth of insight they pay off the academics the big bucks for.
If you think about that,
then there are two things that are really going to drive whether or not people stay.
Okay?
One is the attractiveness of the outside opportunities.
And so you will see attrition is highly cyclical.
When the economy is doing well and
there are more job opportunities outside, people will leave more.
It's also gonna affect who leaves.
Those jobs which are in high demand, where it's easier for
people to move to industries that are growing rapidly and
have a lot of jobs, those are gonna see high attrition.
And there may also be reasons that people leave,
because they just plan that they want to move on to the next thing.
So the attractiveness of those things drives it.
On the other hand the fact that something is more attractive in your current job
may say something about your current job.
So the less happy you are with the existing job
the more likely you are to move.
So things about your satisfaction today, or your satisfaction with
kind of your future trajectory It's going to tell you something about who leaves.
As you think about what it is that makes people leave.
What would be some of the things in terms of the current job that you would
think would be the most important?
Any thoughts, anybody?
Anybody? I am going
to have to start cold calling soon.
So what we see here again,
some of the correlations between how people perceive their jobs in turnover.
So, what people do in this studies, is they go out and they survey people,
how do you feel about various aspects of your job?
And then, they come back six months or a year later say, okay who left?
The truism here is of people you've managed jobs and
there's some evidence for this.
The quality of the relationship that people report with their supervisor,
the highest correlate among these different factors in terms of
correlating with turnover.
People leave when they dislike their manager,
and that we've certainly seen the data.
They're not happy with their job, they leave.
There's conflicting roles one of the things that's interesting
is the pay is not that strongly correlated with turnover.
We kinda think people take jobs and stay in jobs for money.
It's certainly true, but it has a surprising weak effect in these studies.
I'm not sure exactly where that comes from.
It's certainly, I always say this is a slide not to share with your manager.
You always want them to think unless you get a really large raise,
you're definitely going to leave.
I certainly also think when organizations mess up how they pay people,
if people feel unrewarded, and certainly if they think it's unfair,
that's a huge trigger of attrition, but it doesn't seem to be the main driver.
The other thing that I would say about these correlations is none of
them are super high, okay, so we see a correlation of 0.25.
That's a reasonable size, but
it says most people how satisfied they are with their supervisor.
It's not gonna tell you a great deal about how they leave.
On average, if we don't like our supervisor, we're more likely to leave.
There are a lot of people who hate their supervisors who are going to stay.
There are a lot of people who really like their supervisors who are going to leave,
and so, how much we like our job affects turnover but it's not the only thing.
One way to understand that is by thinking about
what actually happens when people leave.
So another way people have looked at turnover is just the process people take.
So if you think back on that moment when you walk into your boss's office and say,
that's it, I'm done, what leads up to that.
So most commonly
It's gonna be that you have another job alternative that you prefer.
And so you've compared your current job to an alternative and
you've decided I'm gonna leave.
How would you've got there?
Well sometimes somebody might of called you and just offer you a job.
And said, either a recruiter or a friend, why don't you come work here?
And you look and you said, wow that seems really good, lets do that.
You know, more commonly presumably,
you've actually done that cuz you've been searching for a job.
So somewhere along the line you decided to search for a job.
Why did you decide to search for a job?
Again, there could be multiple reasons for that.
So the most common is probably that you don't like your job, but
it might also be that you've heard that all of your friends are going and
getting great pay raises and great jobs In new firms and
you think, maybe that means I should look around as well.
There are other paths as well so some people may have said
after three year I going to graduate school, and so that's not going
to have very much to do with how they feel about their job or the alternatives.
Of course some people might just walk into the office and
say, I quit without even having thought About an alternative job.
Basic point here, so lots of different ways this decision is made and
different considerations in each of them.
And so maybe we shouldn't be that surprised,
that the satisfaction with our job and the satisfaction with our manager
drives some of our decisions to quit, but sometimes other things
happen in our lives that make us decide to move that has very little to do with that.
And so any one explanation of it's probably only gonna explain what
goes on for fairly small number of people.
And so, you're gonna there are people who love their job but quit anyway.
And there are people who hate their job but when they go out, and
compare it with alternatives they decide that there's nothing better that they
can do,and they stay.
A third way in which people think about this process of leaving,
is basically in terms of search, and so this very much comes from economics
where people think there are lots of different jobs that we could be doing,
and we're gonna enjoy those jobs to a different extent
based on how well they fit our preferences and also how good we are at them.
The catch here is that it's often difficult to know
how much we're going to like a job until we've done it, okay?
So we may have some ideas about what we want to do with our lives.
I can say for a start, I never expected to be an academic.
I always thought I was gonna be a manager, consultant,
something like that, then I actually tried those jobs.
I was like, wow, this is hard.
Maybe just studying other people would be easier.
And so we learn over time what it is that we're good at and
what it is that we enjoy, and we learn by doing.
What that means is that people move across jobs until they find one that they like,
and then they stick, and a lot of turnover reflects the search process.
The reason this is useful is it gives us some other insights into
who's gonna stay and who's gonna leave.
So, in particular, people are more likely to leave earlier in the job.
We move into a job, we decide.
Is this a good job for me?
Is this a bad job for me?
If it's a good job we stay, and after a while we've made that decision so
we're not going to change our mind.
So people tend to leave fairly early in the jobs when turnover rates highest,
people figure out whether or not it's a good job for us.
The other thing that it suggests is that turnover tends to fall
as workers get older, okay?
So early on in our career,
we don't really have a good idea of what we like, what we're good at.
We'll hop around jobs a bit while we figure it out.
Later on we've got more information.
We've tried a few things.
We're narrowing down what it is that we like and what we don't like.
And so the chances that we're gonna be in a job that isn't very good for
us are lower, and so turnover goes down.
Certainly, what you see a lot at the moment
is managers complaining about millennials.
So there's this concern that all these people, they won't stick in the same job,
they're endlessly job hopping.
What are we going to do about this?
This is part of the general trend that old people always complain about young people.
This isn't about millennials.
Millennials actually don't move jobs much more than people
of previous generations did, when they were that age.
So people in their 20s, they always move.
And so as you think about turnover, some of these considerations are ones that want
to be in the back of your mind, as you think about analyzing it.
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