This article explains the causes of high turnover in July and provides advice on how to anticipate and mitigate them.
Why do long-serving employees leave in July?
For employees whose departure date would not otherwise matter much to them, there are financial incentives to leave shortly after the end of a financial year.
Long-serving employees who are considering retirement, moving to part-time or casual work, or taking a break from the workforce for a while, often have large accruals of untaken annual and long service leave, which means a large payout when they leave.
It makes financial sense to take a payout in a financial year when total work income is likely to be lower, rather than during a full year of full-time employment, to reduce taxation. Hence, they wait until after 30 June to resign or retire, but obviously, they begin making their plans well before that.
The implication of this for HR professionals and line managers is that if they want to keep these employees, they may be able to persuade them to reconsider and stay if the organisation can meet their needs.
Another contributing factor may be that superannuation fund balances have grown strongly in recent years and are predicted to continue doing so at least in the short term. This situation may provide employees with more confidence to make “risky” decisions, such as retirement, travel, starting their own businesses, etc.
But many long-serving employees who are well short of contemplating retirement are also growing restless.
This may be compounded by the evidence that employee remuneration levels are increasing at a slower rate than living costs. Although seldom the top-ranking reason, “to obtain higher pay” remains one of the main reasons why employees leave their employers, according to various engagement surveys.
Many long-serving employees will remain loyal to their employers during difficult times for the business (either by choice or because there were no alternatives). In the short term, at least, they may be prepared to make sacrifices, including working longer hours or taking on bigger workloads. But in many cases, employers have failed to acknowledge the sacrifices and compensate employees when they were able to do so. When valued employees who have been through this situation are not acknowledged, they may realise they have other options and will be more likely to jump ship.
Identifying the signals from employees planning to leave
Older and long-serving employees often start planning their departures well in advance. If you know what to look for, you may be able to identify warning signals of their intentions.
These signals are usually subtle but occasionally quite blatant. They include:
- improved grooming and dress (if looking for other jobs)
- personal items start to disappear from workstations
- working less overtime or taking less work home
- different patterns of absenteeism and sick leave, or taking annual leave in single days
- variations in job performance – usually it deteriorates, but where the nature of the work is such that it can be demonstrated to other employers, it may improve significantly
- making phone calls away from different work stations, or on mobile phones instead of office phones
- reacting calmly to actions and decisions that you would expect the employee to be irate about, e.g. increasing workload or removing a benefit
- the “small target” strategy – the employee tends to avoid participation in decisions, meetings, etc., is reluctant to discuss issues in any detail and gives as little as possible away
- people who frequently complain constructively about things because they genuinely want things to be done better (as distinct from the “whingers”) will suddenly go quiet
- conversely, employees who are generally quiet may start to express frustration and dissatisfaction with various work issues. This may indicate that the employee is contemplating leaving but hasn’t yet made their mind up, or perhaps even hopes that someone will notice and encourage them not to leave.
In other words, watch out for CHANGES in employee behaviour, whether they are changes for the better or worse.
What to do about it
Even if you cannot stop a valued employee from ceasing full-time work (e.g. because of lifestyle decisions already made), you may still be able to find a way to retain them in at least some capacity and thus avoid losing their knowledge and expertise altogether.
The most obvious strategy is to examine your flexible work options. Those that may appeal to older employees include:
- arrangements such as “nine months on, three months off” that suit couples where one partner works and the other has retired because they can take lengthy annual holidays together
- grandparents’ leave or extended carer’s leave
- various forms of purchased leave arrangements that increase the amount of leave by reducing remuneration proportionately.
More traditional options such as part-time and casual work, contract and project work, working from home etc. may also be suitable.
Offering employees access to independent financial advice/counselling may enable them to find ways to continue working in some capacity without detriment to their tax situation or other financial issues.
If an employee has already found another job that is better paid, part-time or otherwise more flexible, evaluate whether you can match or better it's pay or work arrangements, and make a counter-offer if you can.
Maintain regular informal contact
If a valued employee begins to display some of the warning signs listed above, it's a good idea to increase your level of informal contact with him/her, but without resorting to micromanagement. Doing so provides opportunities for the employee to raise concerns or dissatisfaction in a non-threatening environment. But you must provide more than just a sympathetic ear – if issues are raised, you must make a serious and transparent effort to fix them. Otherwise the best you can hope for is to temporarily delay the inevitable.
Take a year-round approach
Proactive strategies to retain valued employees should be ongoing, not “seasonal”. For example, the end of the calendar year also tends to see a spike in turnover rates for all types of employees as they make new plans for the following year. Even the above tips, however helpful, are basically reactive strategies to try after an unsatisfactory situation has already been allowed to develop.
If employee turnover statistics have previously shown a spike in July among older and long-serving employees, strategies to deal with the trend should be built into an overall retention strategy.