People Leave Managers,

Not Companies

Solutions for Leadership & Organizational Excellence

By Mark Ernsberger

Even in a tight economy, the costs of

replacing a good employee remain the
same.

You may be familiar with the following programs. Most of the dollars are devoted
statistic: The cost of replacing one to better compensation, bonuses, stock
employee equals one to three times the options, and work/life initiatives.
annual salary and benefits total plus the
additional cost of lost revenue that the While these are obviously important, why
seasoned employee would likely have do most organizations ignore the fact that
generated. Tougher to measure are losses improving manager leadership can
such as pre-turnover costs (lowered measurably increase employee
productivity, absenteeism), vacancy costs performance and retention? The answer:
(overtime/overtaxing existing satisfied good leadership is much more difficult to
employees), or recruiting and new hire quantify, and even more difficult to
training. address. It’s much easier to throw together
a better compensation plan than it is to
But did you know this? The number one improve leadership development. And
reason employees voluntarily leave their while most companies recognize, and may
jobs is not the company, not the work, but even measure, the high costs of turnover,
The Boss. they don’t necessarily believe that top
An obvious solution is to keep valuable leadership or managers make a difference.
employees satisfied and productive, Therefore, they very rarely make
correcting issues before they leave. And managers responsible for retention.
the cost of reducing turnover across your Emphasis is instead on productivity,
organization might be less than the cost of revenues, market share—product instead
replacing just one employee. It all centers of process.
on making managers more aware of and
more accountable for employee retention. Our experience at Farr— working with
If you’re not yet convinced that this is an organizations of all sizes across industries,
issue in your organization, here’s a crash from Fortune 100 companies to nonprofits
course on the issues from the employee over the past 47 years— is that while top
perspective, and what your managers leadership may set the norm for what the
should be doing to address them. manager rewards and punishes and how
employees are rewarded and punished, the
Managers and retention manager’s leadership style is the most
Most people agree that salary, career important influence on employee retention.
growth, benefits and job fit are leading
factors for why employees stay or leave an Manager challenges
organization. But if you ask employees, as The following are challenges facing
we have, what it would take to improve managers in regard to employee retention.
employee retention, they cite manager We can then address what managers
related behaviors: they want more should be doing.
involvement in decision making, more
appreciation, better communication, more Along with assisting in skill development,
team-building, flexible work conditions, the manager’s number one job as a leader
more autonomy and better coaching. is to stimulate employees to do their best
Nevertheless, very few companies list work. This, as any manager knows, isn’t
leadership or organizational development easy.
as a top priority in their retention

Farr Associates, Inc. 1

4194 Mendenhall Oaks Pkwy., Suite 101, High Point, NC 27265
Phone: 336-812-8050 | Fax: 336-812-8051 | www.farr.net
People Leave Managers,
Not Companies

Solutions for Leadership & Organizational Excellence

Managers must honor the goals of the with the boss that they set themselves up
business and be likeable at the same time. for failure. As in most relationships, it is
They have to reconcile the needs of top really 50/50, but since we assume the boss
management and the needs of the is getting paid more, we place most of the
employees, or the followers. Sometimes responsibility on the boss for motivation.
they’re caught in the middle. Plus, the employee bears more risk if a
relationship isn’t working out, because he
Managers are typically top performers who or she is more likely to get fired.
get promoted into managerial /leadership
jobs because they have the same cultural Finally, motivating top performers is not
mindset as the top leadership. always the most important challenge a
manager faces. It’s easy to motivate the
Top performers are usually the most highly top and the bottom 25 per cent. The
driven, but the people they manage do not middle could go either way. If the leader
have the same ambition that they have (or stinks, their contribution goes lower. With
a very small percentage do – around a great manager/leader, they could make
10%). the move into a top performer. How a
leader deals with that middle 50 per cent
Therefore, the follower’s highest possible makes a significant difference in
level may not be as high as the leader (and productivity, output and customer
the leader does not understand this, or retention—since many of these people are
appreciate this). As a result, they are the ones who interact day-to-day with the
continually on the hunt for the top 10%, customer.
which means they may be spending more
time on recruiting talent from the outside Recommendations
than developing it from within. In addition, Top management must make employee
the leader’s skill sets may not be the same development and retention part of the
as the followers, so the leader has a hard culture. But how to do it? Companies
time appreciating the contribution of the should support managers—and hold them
follower if it’s not the same as his/hers. So responsible—when it comes to retention in
getting them to perform at their max won’t the following ways:
mean much to the boss unless they can
see how the unique skills of the follower 1. Take advantage of proven methods,
can be meshed with the needs of the such as exit interviews conducted with
job/organization. voluntarily terminated employees, and
climate studies (a combination of
Personality differences and appreciation interviews and surveys involving a
and awareness of those differences also representative cross section of the
have a major impact. Even if a follower is a organization, or, if possible, the entire
top 10% performer, his or her personality organization) to get a “right now” picture
may not mesh with the leader’s. And top of why employees may be dissatisfied. If
performers are not as willing to change certain departments surface as “problem
behaviors—they’ve found a method that areas,” use 360 feedback with managers in
works and they don’t believe there’s those areas to get further details as to
another way. what role they may be playing in employee
satisfaction.
Of course, some followers add to the
problem. They may see the boss’ 2. Use this information to establish, with
contribution to a bad working relationship, the manager’s close input, a process of
but not their own. Many followers are measurable improvement. For example, if
caught in a victim mentality or are the manager gives unclear instruction and
themselves so critical and uncooperative then browbeats direct reports for making

Farr Associates, Inc. 2

4194 Mendenhall Oaks Pkwy., Suite 101, High Point, NC 27265
Phone: 336-812-8050 | Fax: 336-812-8051 | www.farr.net
People Leave Managers,
Not Companies

Solutions for Leadership & Organizational Excellence

mistakes, he or she would have to

demonstrate observable improvement in
communicating what he or she wants.
Improvement would be measured by direct
reports.

3. Provide ongoing development to help

managers become coaches, so they can be
a better motivator of those who work for
them, more adept at managing different
personality and work styles, and more
effective at balancing the needs of the
organization with the needs of its
employees.

Farr Associates, Inc. 3

4194 Mendenhall Oaks Pkwy., Suite 101, High Point, NC 27265
Phone: 336-812-8050 | Fax: 336-812-8051 | www.farr.net