Show Filters

Top Results

Combating Turnover Using People Analytics


Using HR Data to Identify and Retain Critical Talent

An Introduction to a Common Problem

Companies in competitive markets face a multitude of challenges related to their critical talent. Chief among these challenges is high turnover rates for in-demand and skilled employees. If left unaddressed, this kind of employee turnover can lead to deteriorating service quality, a disengaged workforce, and poor financial performance.

Before we go on, let’s talk about employee turnover. In any given year, leading researchers believe as many as one in three employees will voluntarily move on to other opportunities. While some voluntary turnover is healthy, a potential turnover rate of that magnitude is alarming. Consider that the hard and soft costs of turnover equate to approximately one-third of the departed employee’s salary, and you see how quickly the true cost of turnover adds up.

The Math Behind Turnover

Take a hypothetical 15,000-employee organization with a 20% turnover rate. It costs $4,000 to fill a position, which equates to more than $12 million in hard costs alone3. Given that soft costs—such as lower service quality, reduced productivity, and lost knowledge1—account for two-thirds of the total cost of turnover, this company’s significant turnover rate is costing the organization $36 million per year!

Your Organization’s Critical Positions

While turnover across the board can be costly, the impact turnover can have on your critical positions is even more significant. What do we mean when we say “critical positions”? These positions are often key drivers of operational and financial performance filled by high-value individuals with specific technical or functional skills. Oftentimes, these positions are in high demand and are both challenging and expensive to fill. So rather than the cost of turnover being around 33% of the salary of a given position, organizations could be looking at figures closer to 40% or 50% for critical positions.

Figure 1: Examples of Critical Positions in Selected Industries

Healthcare Electric Power Higher Education Retail 
  • Registered nurse
  • Cardiothoracic surgeon
  • Research engineer
  • Clinical staff
  • Grid system operator
  • Instrument and control technician
  • System engineer
  • Leadership (provosts, presidents, VPs)
  • Financial officer
  • GM or store manager
  • Regional or district manager
  • Sales associate

To combat increased turnover in these critical positions, organizations often take a broad, unfocused approach to retention with limited insight into core issues. Not surprisingly, these attempts to increase employee retention tend to fall short of expectations. While it may not seem immediately apparent, digging deeper into already existing HR data is a great first step in developing meaningful solutions to retain critical talent.

Data Is Taking on Increasing Importance

Leading HR organizations are harnessing the power of employee data to solve their most challenging issues, including the loss of critical talent. Figure 2 outlines the data that can be analyzed to uncover turnover trends and drivers.

Figure 2: Examples of Relevant Data Types

Examples of HR Data Examples of Operational Data
  • Employee demographics
  • Talent acquisition (e.g., open requisitions, time to fill, pre-hire surveys, signing or retention bonuses)
  • Turnover/separation and exit interview
  • Employee engagement
  • Performance management
  • Total rewards
  • Employee relations incident volumes
  • Scheduling/payroll
  • Cost of turnover by job type
  • Customer satisfaction scores and their revenue impacts
  • Business operations
    • Productivity
    • Product quality
    • Monthly recurring revenue
    • Order processing time

With these data, organizations can answer key questions, such as:

  • What are the key drivers of critical employee turnover?
  • What are the key characteristics of tenured critical employees? What makes them successful?
  • Does critical employee turnover impact customer satisfaction, retention rates, and/or other business operations metrics?

With a clear understanding of the key drivers of turnover, we can develop targeted strategies to improve employee retention—ultimately improving overall organizational performance.

A Real-World Example Brings It to Life

As discussed in “Diving Deeper into RN Turnover,” ScottMadden recently helped a 14,000-employee healthcare system delve into the drivers and impacts of registered nurse (RN) turnover across their nine hospitals and affiliated practices. While nursing turnover was a known challenge, the organization had not explored cross-functional data analysis or statistical modeling to help drive RN hiring and engagement strategies. Findings included:

RN Turnover was correlated with Patient Satisfaction

Every organization is different. However, as you can see from the findings above, analysis of a combined data set that includes HR and operational data can reveal meaningful insights. The insights can then be leveraged to establish focus areas and develop pilot initiatives—many times with compelling business cases. As an example, increasing first-year nurse retention and addressing turnover challenges with part-time nurses might look something like this:

Questions for Key Focus Areas; Potential Initiatives

HR has access to an incredible amount of valuable data. By looking through the lens of people analytics, HR can inform, design, and lead critical initiatives to make a difference for patients, employees, and the organization as a whole.

If you are facing high turnover rates with a critical position, contact us today to access more resources and discuss how you can make a significant impact. ScottMadden has been helping clients create and implement impactful solutions for their most challenging problems for more than 35 years.

[1] To Have and To Hold, SHRM, 2019.

[2] To Have and To Hold, SHRM, 2019.

[3] Calculating the True Cost to Hire Employees, ADP, 2016.

Let’s Work Together

We don’t solve problems with canned methodologies. We help you solve the right problem in the right way. Our experience ensures that the solution works for you.

Related Insights