Case study: up to 14 % less employee turnover through employee engagement analytics.
Introduction
In the Netherlands there is an unprecedented tight labour market with an unemployment rate of only 3,4%. Especially in sectors like IT, healthcare and construction it is so hard to fill in vacancies that this is starting to become a real threat to the growth of the economy (Source: CBS.nl). This means that in the future companies might have to turn down new orders simply because they cannot find the right people for the job. A tight labour market is not just a problem for the Netherlands, also countries like Germany and Poland report a tight labour market that is threatening growth.
Finding the right talent, labour market communication, job interviews, negotiating contracts and the training of new employees is always a costly endeavour. Most companies invest a lot of time, resources and effort in developing an effective recruitment strategy. But not that many companies think about a strategy to avoid good employees leaving the company. While in a tight labour market, naturally, your competitors will try to get your best employees to jump ship.
Losing your best people to your competitor is extra costly. You will have to find somebody new, if you can find anyone at all. You will probably settle for a less talented candidate, which you will first have to train and by the time they get up to speed they will get offers from your competitors. The point is: decreasing unwanted employee turnover is just as essential as recruitment and a way to compete more effectively in this tight labour market.
Case study: up to 14 % less employee turnover through employee engagement analytics.
One of our european customers with 10.000+ employees is experiencing an increasing tight labour market for specific function groups. For certain positions, the ratio between employees and vacancies is 1 in 17. They lose talent to their competitors regularly and it is becoming almost impossible to find new, qualified and talented people. Scorius has been measuring employee engagement on a monthly basis for this client, collecting large volumes of in-depth data about the employee experience. Clearly employee engagement is a factor related to employee turnover. If people are highly engaged with their work and company, they will not be tempted to leave their highly appreciated job for a new adventure.
For this client, Scorius has designed a new way of collecting high quality employee engagement data. Through automated randomised sampling, each month, a different sample of the company receives a short mobile survey. The survey consists of a base set of engagement questions, covering 16 topics that remain the same over time. On top of this base set, questions can be added temporarily about recent developments. For example, questions about culture, behaviour or attitude towards change programs. Another option is that in-depth questions are added about one or more of the 16 base engagement topics. Data has been collected for two years. Using smart technology all the survey data gets anonymised automatically, name, etc., is deleted but data like function group remains. By adding encrypted unique coding to each survey, we can still track anonymised responses over time. The client only receives aggregated outcomes to ensure privacy regulations. Here you can read more about the Scorius engagement monitor.
The survey outcomes of a set of 72 people that left the company on their own initiative was compared to a control group of 750 that did not leave the company. Statistical tests were done to look for significant differences and regression analysis was carried out to start building a model to predict flight risk.
Outcomes
Leavers scored significantly lower on all 16 engagement topics. Leavers scored up to 22% lower on several of the engagement topics. And leavers also scored significantly lower over time. The closer they got to the point where they actually left the company the lower their scores became.
The sixteen engagement topics were used for a regression analysis that led up to 14% explained variance. This means employee turnover can be reduced with 14% if the engagement in both groups would have been the same. This was a relatively small sample size, with a bigger sample size explained variance will probably increase.
Furthermore, the outcomes show which of the 16 engagement topics has the biggest impact on turnover. We will not share the exact outcomes because they provide our client with a competitive edge. We can share however that out of all the topics, salary had the least impact. So basically, people do not leave your company because they can make more money elsewhere.
Based on these outcomes we can start to predict flight risk. Teams that start to score below a certain threshold on specific engagement items will develop a significantly higher flight risk in the future. Furthermore, we now know which engagement topics the company can best invest in order to decrease employee turnover.
Conclusion predict employee turnover
First of all, we now know for sure that employee engagement and employee turnover are related. We also know that investing in people and employee engagement will lead to less people leaving your company. By measuring employee engagement every month, we can predict which teams or function groups have the highest flight risk and we can determine what can be done to decrease employee turnover.
An explained variance of 14% may not seem very high. But if turnover drops by 14%, the cost savings run into the hundreds of thousands of euros for many organizations. We don’t come across many companies that have a solid strategy to decrease employee turnover. Companies that do will have a significant competitive edge in today’s tight labour market.
