A recently published study by the Achilles Group highlights a key issue faced by many businesses. When top level executives at small to medium sized businesses were asked to identify the biggest business challenge they face, 40 percent said that finding and retaining the talent necessary to sustain and grow the business was the number one issue.

Another survey by Authoria, a human capital and performance management firm, found that 76 percent of executives in companies with 100 to 2500 workers were concerned about retaining and developing talent. In 2003, the percentage concerned about talent was 24 percent. This is a direct reflection of the dwindling labor pool of qualified workers that is only going to get worse in the coming years.

In a benchmarking study by Development Dimensions International (DDI), the following statistics were quoted:

  • The turnover rate for non-management workers was almost twice as high as for management workers (19.3% vs.10.3%). It is more difficult to retain frontline and professional staff.
  • Turnover rates are increasing.
  • There is a moderate correlation between job satisfaction and intent to leave a job. Employees who feel neutral or dissatisfied with their jobs are twice as likely to leave.

In the DDI report, these were the top five reasons employees stated for leaving their most recent positions:

  1.     Quality of relationship with immediate supervisor
  2.     Ability to balance work and home life
  3.     The feeling of making a difference
  4.     Level of teamwork and cooperation with coworkers.
  5.     Level of trust in the workplace.

When HR professionals were asked the same question, they thought that advancement opportunities and compensation were the top two issues. They ranked items 3 through 5 on the employees’ list 19th through 21st. This points out the need to make sure that the correct issues are being addressed in dealing with turnover.

Organizations that are serious about improving retention need to develop a formalized retention strategy. The key to having an effective strategy is to fully understand the real reasons that people leave. While compensation is important, the data suggests that more qualitative factors also need to be addressed.