Retention is first and foremost a bottom-line imperative. There are a number of costs, both direct and indirect, associated with replacing a departed employee. Direct costs include recruiting new employees (advertising and/or the use of a staffing firm), interviewing time, administrative work associated with processing new hires, and training. Indirect costs can include missed deadlines, loss of organizational knowledge, lower productivity while new hires “get up to speed,” and the loss of client relationships. While estimates vary on the average total cost of voluntary turnover, anywhere from 1/3 of the employee’s annual salary (U.S. Labor Department) to 1.5 times the employee’s annual salary (Hewitt Associates), the dollar amount is significant. Therefore, it is in an employer’s best interest to continually examine why workers leave and what could have been done to retain them.

If recent studies are any indication of what’s to come, more and more companies will be struggling with turnover in the coming year. Spherion, a staffing and human resources consulting firm, issues a monthly employment report in which they track what percentage of the workforce plans to look for a new position in the next 12 months. Over the last few months, the report has consistently found that anywhere from 35-38 percent of employees intend to seek new employment in the next year.

This should come as little surprise. Stories of growing worker dissatisfaction abound in today’s headlines. The most recent example comes courtesy of the Conference Board. Their study, “Discontent in the Workplace: Take This Job and…,” finds that only half of all Americans are satisfied with their jobs, down from nearly 60 percent in 1995 with a mere 14 percent “very satisfied” in their current position.

On a macro level, the reason so many employees are interested in switching jobs is no mystery. The Conference Board cites a myriad of reasons for growing dissatisfaction in the workplace, all of which can impact retention: compensation, benefits, no room for growth, overwork. On a micro level, however, why a particular employee at a particular organization leaves can be trickier to explain.

More often than not the difference between keeping and losing an employee is about relationships. According to a long-term study by the Gallup Organization, the No. 1 factor influencing employees’ length of tenure is their relationships with their immediate supervisors. This also should come as little surprise. Middle management has the most direct impact on whether an employee looks forward to coming into work or dreads it.

For example, a recent Workforce Management article examined how pharmaceutical giant Bristol-Myers Squibb addressed its turnover problems. The company conducted an employee preference survey to gauge the relative importance of such things as compensation, benefits, work/life balance, etc. They then compared the survey results of employees who later quit with those who remained.

The findings of the study echoed those of the Gallup survey. Employees consistently listed relationships with their direct supervisors as most important in determining their levels of satisfaction and engagement. Not surprisingly, these relationships were also the single biggest predictor of who remained with the firm and who went elsewhere. Employees that liked their supervisors were more likely to be satisfied with their jobs and tended to stay. Conversely, employees who had a negative impression of their supervisors were more likely to be dissatisfied and the most likely to leave.

In short, there are no one-size-fits-all solutions to turnover problems. Improving retention begins with soliciting feedback from employees. Be it through exit interviews, employee opinion surveys, employee focus groups, 360 degree reviews or a combination of these assessment tools, employers must have some vehicle for collecting workers’ opinions. Once a mechanism for soliciting employee feedback has been instituted, employers must make a good-faith effort to deal with quality-of-management issues – be it through management training, coaching or changes to the management team.

We have long talked about the six core components, or Building Blocks, of a strong workplace culture. These are:

  • Trust, Respect & Fairness
  • Open Communications
  • Rewards & Recognition
  • Learning & Development
  • Teamwork & Involvement
  • Work/Life Balance

While top executives are the key to setting the tone for an organization, it is of the utmost importance to ensure that these essential qualities are embodied by your middle management. Regardless of what kind of culture you aim to create through your policies and programs, it is the day-to-day interaction between your supervisors and front-line employees that will best determine the retention (and productivity) of key talent. Executives are instrumental in shaping an organization’s culture, but it’s frontline managers and employees who must internalize and live it.