Using Rhabit Data to Identify Drivers of Turnover and Turnover Intentions

Alexander Schwall, PhD

Chief Science Officer, Rhabit Analytics

This is a condensed version for web. Download and read the entire report here.

Summary

The Rhabit Analytics team investigated if voluntary turnover of employees can be predicted and potentially prevented. For this study we used the data from a mid-size government consulting organization based in Arlington, VA.

In the first analysis, we looked for relationships between employee sentiment and turnover.

We found differences in employee sentiment between employees who leave and employees who stay with the consultancy. The employee sentiment items most associated with turnover fall into three broad categories:

Autonomy over work assignments and tasks. Employees who stay with the company are 2.2 to 2.5 times more likely to score high in this sentiment than employees who leave.
Professional Growth. Employees who stay with the company are 3 to 4.6 times more likely to score high in this sentiment than employees who leave.
Recognition and Accountability. Employees who stay with the company are 2 to 2.6 times more likely to score high in this sentiment than employees who leave.

It is noteworthy that satisfaction with pay did not show differences between stayers and leavers.

We recommend three courses of action that could prevent employees from leaving:

Revise business processes to grant employees more autonomy and discretion over the projects they are working on.
Create professional growth opportunities or make existing opportunities more salient and visible.
Differentially recognize (but not necessarily financially reward) high performers and create high visibility recognition events for employee achievements.

The second analysis suggested that three clusters of manager behaviors may help retain their employees. These manager behaviors are aligned with the three themes in employee sentiment. Managers are more likely to teams with high intent to stay with the organization if they:

Delegate tasks in a way that creates empowered teams
Provide growth opportunities and actively coach their team
Recognize high-performers

We recommend evaluating manager skills in these areas (for example through Rhabit) and training low-performing managers on these skills. This could be a cost-effective and fast way to increase retention.

Research Questions

The Rhabit Analytics team sought answers to these two questions:

Do employees who have left the company think differently about their company than the employees who stayed?
Are there any specific clusters of leadership behaviors that may affect employees' turnover intention and the act of leaving the organization?

Research Question 1

Given the exploratory nature of this analysis, we selected descriptive and point-biserial correlations as the main analysis tools. Descriptive statistics were implemented in the Power BI dashboard available to the client. In the bar charts and tables below, active (i.e. employed) employees are compared to those who have left this organization. All analyses are broken down by scale (Diversity and Inclusion, Engagement, Job Satisfaction and Loyalty, Opportunity for Growth, Performance Management and Pay).

Descriptive Statistics Results

Diversity and Inclusion

For the Diversity and Inclusion scale, three items show substantive differences between active and departed employees:

I feel like I belong at this company.
My company gives out rewards fairly, based on merit and skill, not based on status.
My leaders make me feel like I am part of the group.

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Engagement

The largest difference between active and departed employees is for:

I am able to influence my project assignment.
My talents are used well in the workplace.
I have the ability to influence the growth and success of my company.
My company acknowledges me when I do a good job.

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*Identifying data has been redacted for client anonymity.

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Job Satisfaction and Loyalty

Interestingly, we did not observe large differences between the two groups for the Job Satisfaction and Loyalty Scale. The biggest difference existed for the item “I am unlikely to leave my company in the next 12 months”. This indicates that this question reflects a person’s likelihood of leaving, but only to a small degree.

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*Identifying data has been redacted for client anonymity.

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Opportunity for Growth

For this scale, the largest discrepancies existed for the items:

My projects at my company are aligned with my interests
My supervisor encourages me to participate in professional development opportunities.
In my company, I have ongoing opportunities to learn and grow.

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*Identifying data has been redacted for client anonymity.

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Performance Management and Pay

Contrary to our expectations, this scale did not show any substantive differences. The item “Given my skills, responsibilities, and job performance, I am fairly compensated.” showed only a 5 percentage point difference. We anticipated that dissatisfaction with pay would show a much larger, potentially the largest difference between groups and would be a significant driver of turnover. However, this was not supported by the data.

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*Identifying data has been redacted for client anonymity.

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Summary and Recommendations: Research Question 1

When looking across all 5 scales, three themes emerge: Autonomy, Growth, and Recognition.

Autonomy

The items “I am able to influence my project assignment.”, “I have the ability to influence the growth and success of my company.”, and “My projects are aligned with my interests.” had a strong relationship with with turnover. All three items revolve around the employees’ ability to experience autonomy over their work.

It may be reasonable to revise business processes to grant employees even more autonomy. Follow-up interviews may be helpful to clarify if the need for autonomy is stronger or weaker for more junior consultants. It seems plausible that more tenured consultants may feel that they could take on more responsibility and are ready for bigger assignments.

Growth

The second theme was Growth. The items “My talents are used well in the workplace.”, “My supervisor encourages me to participate in professional development opportunities.”, “In my company, I have ongoing opportunities to learn and grow.”, and “My talents are used well in the workplace.” are fairly strongly related to turnover. All items revolve around the employees’ ability to expand their skill set and fuel their professional development.

This theme may be thought of as an extension of the Autonomy theme: Employees at the consultancy are motivated to grow as professionals and are seeking autonomy to apply their technical expertise. It may be recommendable to review career paths at the organization and make learning opportunities as salient as possible.

Recognition and Accountability

Finally, the third theme seems to revolve around the availability of recognition. The items “My company acknowledges me when I do a good job.” and “My company gives out rewards fairly, based on merit and skill, not based on status.” showed a strong relationship with turnover. Note that “rewards” are not defined as financial rewards and that financial rewards did not emerge as a driver of turnover.

This theme completes the picture of the motivated consultant seeking growth. Whereas financial rewards may not have an effect, being seen and validated may matter to the organization’s employees. It may be recommendable to identify further opportunities to recognize employees for their work and effort.

For example, two Rhabit clients similar to this organization (consulting firms with highly trained consultants) feature high performers in their semi-annual company meetings. Winners of specific performance categories (best client support, best improvement idea, best R&D contribution) are congratulated on stage and are celebrated for their accomplishments.

The flip side of recognition is that low performers are not recognized, and therefore a differential treatment of high and low performers exists. Therefore, we recommend that the recognition is closely tied to performance.

Research Question 2: Manager Effects on Turnover Intentions

For research question 1 we looked for relationships between employee sentiment (questions in the engagement survey) with turnover events. For research question 2 we selected as independent variable a specific cluster of Manager Behaviors. While employee sentiment is important, it cannot be directly changed. Manager behavior, however, can be influenced directly, either through training or new policy.

As a dependent variable, we chose Intent to Stay (ITS). This variable is a compound score of:

I am generally satisfied with my job.
I recommend my company as a great place to work.
I am unlikely to leave my company in the next 12 months.

We selected ITS because turnover is a very noisy variable. Perfectly happy employees may leave the organization for job-unrelated reasons, and unhappy or dissatisfied employees may stay with the organization for job-unrelated reasons. Therefore, the effects of the independent variable may not be strongly related to the turnover event. An employee’s Intent to Stay may be more sensitive to managers' leadership behavior than the noisier event of turnover.

We correlated ITS with key managerial behaviors that correspond to the three themes identified in the section above. We hypothesized that Autonomy should be aligned with the manager behavior Delegating Tasks, Growth should be aligned with Coaching for Current Role, and Recognition and Accountability should be aligned with Creating a Performance Environment.

Delegating Tasks

Unfortunately, the habit Delegating Task was not assigned to a sufficient number of managers. Therefore, no meaningful analyses were possible.

Coaching for Current Role

However, Coaching for Current Role had sufficient data points to allow for a more thorough analysis.

In the correlation table below the correlation coefficient of Coaching behaviors and ITS are displayed. With two exceptions, all coaching behaviors correlated positively with ITS. It seems reasonable to assume that an involved manager who proactively coaches is a key factor in individuals’ decisions to stay with the company. This finding also echoes the Growth theme mentioned above. An involved and nurturing manager may meet the employees’ needs for professional development. Note that the correlations were -- though sizeable-- not significant at the 5% level.

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Creating a Performance Environment

Creating a performance environment captures many manager behaviors that ensure the differential recognition of employees based on their performance. However, Creating a Performance Environment did not correlate substantively with ITS.

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A follow-up analysis suggested that the general performance of the employee may be an important moderator. Specifically, a high accountability manager may only positively affect high performers whereas low performers may not like working under such a manager.

Analyses of other client data sets suggested that general performance would be a moderator of this relationship. As a follow-up analysis, a simple OLS Regression was run with ITS as a dependent variable. The interaction term Accountability * Employee Performance was included and was significant.

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A plot of the interaction term is displayed below.

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The plot can be interpreted as follows: A low-rated Employee (red line) is negatively affected by a high accountability leader in terms of their Loyalty to the organization. In contrast, a highly rated employee (blue line) will be positively affected by a high-accountability leader. This means that high accountability leaders will drive retention of higher-performing employees. However, the reverse is also true, low accountability leaders will negatively affect high-performing leaders in terms of their loyalty.

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Summary and Recommendations: Research Question 2

The analyses for research question 2 complement the findings for research question 1: Employees seek out work environments in which they can grow as professionals. Managers who provide such growth opportunities can help retain these employees. Employees also want to be recognized. We saw this theme reflected in the habit Creating a Performance Environment: Managers who hold their employees accountable (i.e. recognize high performers but not recognize low performers) are more likely to increase their intent to stay.

However, the correlation was obscured by the presence of an important moderator: employee performance. High and low-performing employees are differentially affected by this manager behavior. While high performers will display more loyalty with high-accountability leaders, low performers will display less loyalty. This is an important finding because increasing accountability will help retain the most valuable employees and failing to establish this manager behavior will lead to a higher likelihood of high-value employees leaving.

The following actions are recommended:

Evaluate if managers have strong coaching skills and offer training to strengthen these skills.
Evaluate if managers have the resources to deploy training resources with their direct reports.
Evaluate if managers are skilled in creating high-accountability teams and have the resources to recognize high-performing employees.
Evaluate if managers have the skill and discretion to address performance issues with low-performers.

In addition, we extend our recommendations to ensure that managers are trained and skilled to effectively delegate tasks and subsequently maximize the autonomy of their direct reports.

Are you ready to drive retention usings a prescriptive, data-driven approach? Rhabit Analytics partners continuous feedback software with organizational psychology to produce insights like to ones found in this report. Select a time to meet with the experts at Rhabit to learn how to get started with a customized talent management program today.