There is something noticeably alarming going on in the North American labor market. 2021 saw record streaks of employee turnover and walkouts, the highest on record according to the U.S. Bureau of Labour Statistics.[1] This phenomenon is aptly named the ‘Great Resignation,’ and companies are keen to understand why this is happening and to avoid losing valuable talent.

Finding and hiring the best talent to ensure organizational continuity is still a focus for companies, but the focus on talent acquisition is now being shifted to retention.  HR leaders and CEOs need to do everything possible to continually assess flight risks and develop immediate plans to identify and keep key employees.

Who is at risk of leaving?

Research firms like Visier Insights have used data to understand the recent trends and help companies assess their potential risk for turnover. It turns out that “tenured, experienced professionals, and more women than men show a dramatic increase in resignations compared to the pandemic-ridden year 2020.”[2] Couple that with the findings from Gallup showing that 48% of the working population in the United States is actively job searching, and there is no wonder companies are worried about the effects of a turnover tsunami.

What are the real costs of turnover?

Rising resignations are a concern on multiple fronts, in particular the direct costs to companies. According to Gallup, the cost of replacing an employee is very high – up to two times their salary or more, depending on the position.[3] And the costs don’t stop there. There are also the indirect costs of lost productivity and the effects of increased workloads and having to hire third parties to complete work. At the same time, there are administrative processing costs. There are also costs associated with the impact on motivation and culture from losing team members and the intangible costs of losing the institutional knowledge of key long-term staff when they exit.

Should companies panic?

Regular employee turnover and attrition are part of organizational lifecycles. Companies expect a certain number of routine exits and plan accordingly. What is concerning about these recent trends and leaving HR and leaders scrambling to find solutions is how to avoid unnecessary or avoidable turnover.  So yes, companies should be worried and take the necessary steps to understand the underlying currents in their workforce. 

Why are employees leaving?

Typically, a large number of employees cycling in and out of jobs is a signal of a healthy economy. But since 2020, when COVID-19 changed the landscape of life and work, companies must now look more closely at why employees are leaving. The Society of Human Resources Management (SHRM) summarized its findings nicely by saying that employees are moving on from their existing companies and jobs due to pay/recognition, work-life balance, and workplace culture.[4]

Overall, SHRM and Visier Insights list the following as key reasons why employees are resigning:

  1. Recognition: The desire for better compensation and recognition for work.
  2. Burnout: Being asked to take on more work or work faster and a lack of work-life balance, especially among employees in a leadership position.
  3. Workplace Culture: Overall employee experiences and issues that affect engagement and satisfaction.
  4. Desire to Learn: Opportunities to learn new skillsand for more training opportunities.

Added to that is the rising prevalence of remote work, where employees are no longer restricted to applying for jobs in their direct geographical area or physically going into an office.

In short, employees want to feel recognized and appropriately rewarded. They want to know their company cares about and acts to better their personal and professional well-being. They want to align themselves with teams and companies who share their values, and the rise in remote work means they have more options for alternative employment. Depending on an employee’s immediate pain points or options, any of these drivers can send your best talent straight for the door.

What can companies and HR do to avoid unnecessary turnover?

Companies cannot address all aspects of turnover by next week; however, they can take specific immediate actions to get the ball rolling. But companies must understand why employees in their particular sector and organization are staying and leaving and make a plan tailored to that information.

Look for the outliers in performance, engagement, and potential data:

Instead of relying on average scores and ratings from performance reviews, engagement surveys, or pulse surveys, companies need to look at the outliers in their data. These folks will be the ones of interest and will highlight blind spots. For years, companies have looked at ‘good’ satisfaction rates and given themselves a pat on the back. But now, and with many tenured employees eyeing options, companies need to get very granular and assess the performance, potential, and engagement of specific employees and groups to identify the most valuable team members, understand their risk of leaving, and actively avoid it where possible.

Having a centralized system for job-skill reviews and performance measurements, pulse & engagement survey data, and career assessments can help companies track the real-time measures and health of talent. This information will allow them to identify high-potential (valuable) staff more easily and work to actively retain them.

Check-in with staff immediately & regularly:

It seems obvious that the easiest way to gauge if an employee is at risk of leaving is to ‘ask,’ but many managers and companies still struggle to make the time and forge the channels for effective employee conversations. Some managers are not equipped to conduct effective discussions or have the mandated time to do so, and many companies still struggle to launch and assess vital engagement and satisfaction surveys. In addition, companies who have done away with formal performance and skills ratings are now finding it challenging to quickly identify their top talent and plan for skill and succession gaps.

HR should use this time to collect as much employee data as possible from surveys, performance reviews, and personal one-on-one interactions with staff. These touchpoints can reveal insights that will help leaders understand what is working, what isn’t, and what can be changed to avoid losing employees unnecessarily. If employees are looking for more training and skills, be prepared to offer it. If employees find it challenging to manage their workloads, consider restructuring or investing in resources. If employees are demanding flexibility, consider unwinding legacy policies to see what can be accommodated, especially when it comes to remote work. If employees find they are not adequately compensated for their work, revisit your compensation structure. Your competitors are likely doing all of this.

Look at culture & rewards:

Companies cannot typically do anything about employees who have already left; however, they can ensure they don’t repeat any of the same mistakes with new employees. They can also work to ensure existing employees see the changes they are asking for. For example, revisit compensation and rewards structures and be prepared to align them with the market and what employees deserve. Recall, it costs double an employee’s salary to replace them, and it is much easier to keep an existing employee than it is to find a new one. Next, listen to what employees are saying about perceived culture and teams and empower managers to actively find solutions.

In terms of physical policies that can affect culture, COVID-19 forced many employees to get situated working from home, only to be called back with sometimes little transition or reason by companies. With many companies accepting hybrid or completely remote work options, the employees who gained an appreciation for working from home may consider a rigid in-office policy a reason to look for work elsewhere. Determine the perception of workspace and place and revisit your policies addressing underlying concerns that may render rigid policies unnecessary.

Most employees do not expect a perfect atmosphere but want their fundamental fiscal, physical, mental, and professional needs met. COVID-19 pushed companies and leaders to pivot and make unprecedented decisions about their teams and policies. The ones who acted with a purely business mindset without regard for employee well-being and satisfaction will have more work to do to remedy the cultural damages done, but it isn’t impossible. Culture cannot be transformed overnight, but it starts somewhere and usually acknowledges that it should be a priority.

Employees will continue to leave their jobs searching for greener pastures, and companies will continue to battle to attract and retain top talent, but COVID-19 has changed the nature of employee retention altogether. Companies that can easily identify their top talent and invest in actively developing and retaining them will see the greatest results. Also, HR teams who continue to push for effective performance, engagement, and development practices will help ensure this data is woven into corporate decision-making moving forward.





9 Reasons You Should Be Using the Nine-Box: Download Your eBook

Is your company on the lookout for better ways to analyze performance and potential talent data?

Download Your Free eBook: 9 Reasons You Should Be Using the Nine-Box

Effective talent identification, succession planning, and development planning are challenging for many organizations. It involves analyzing a lot of data to make critical decisions that affect many individuals and the company’s future.

In this eBook, we explore the top nine reasons why your company and HR team can start using the nine-box as a powerful tool in effective talent identification, employee development planning and so much more.

Engage Employee Performance & Development Year-Round with emPerform!

Book a live demo to learn more about emPerform’s interactive nine-box talent matrix, included with our award-winning performance management software.

Book your live demo of emPerform.

Scoutiung Leaders - Ships

Ensuring a company’s long-term survival and prosperity is the underlying driver of any business; however, identifying and developing effective future leaders remains one of the most pressing issues facing companies today. Even when companies claim to have a well-armed lineup of groomed candidates available to step-up when called, the reality is that many new leaders fail spectacularly, being either ill-equipped or ill-prepared to handle the role. Although there has yet to be one perfect proven model for identifying and developing leaders, there are some assumptions and approaches that will surely fail a company. There are also ways to look at leadership potential from multiple angles in order to better the odds of identifying the right talent to lead your company well into the future.


Dangerous Assumptions to Make When Identifying Future Leaders

When it comes to identifying top talent, leadership potential, or planning for succession in an organization, it is often assumed that high performers and leadership candidates will simply make themselves known. After all, this is what we are used to. From piano recitals to city marathons, the exceptional few tend to stand out on their own so why wouldn’t this be the case in a company?

This laissez-fair assumption reminds me of a term I heard years ago: the Brazil Nut Effect. This phenomenon was noticed by distributors who transported cans of mixed nuts. They noticed that when the cans were opened after shipping, the Brazil nuts would somehow always be on the very top. Although the vessel contained 4-6 varieties of nuts, the larger Brazil nuts would always make their way up, ready to be chosen first. This had nothing to do with the order of packing, but from a proven scientific process called granular convection, where smaller particles shift under larger ones when shaken, forcing the larger particles (in this case nuts) to the top. I have always loved this analogy as it implies that time and motion will just make things happen. Sadly, when it comes to choosing future leaders in an organization, companies would find themselves failing if they simply relied on the Brazil Nut Effect.

Unfortunately, high performance doesn’t always correlate with leadership potential. A CEB report noted that less than one in six high performing employees also possess potential. If a company used performance alone as an indicator of potential, they would be left with a future leadership team that might be coming up short 83% of the time.

So why not let employees navigate their own ships and claim their career paths? After all, if employees have the desire and ambition to lead others, they will surely make it known right? This would also be a faulty and dangerous assumption for a company to make. Your future leaders might not be shouting it from the rooftops. If your managers are waiting for employees to declare their own succession plans in a meeting or comment on their development objectives in a performance review, you could be waiting forever. In fact, a Forbes article noted that less than 5% of employees know what they want to do and where they want to be in 5 years! The reality is that employees might not be aware of the career paths available to them or their intrinsic set of skills and characteristics that would make them great leaders.

This all means that companies need to be proactive and tactical when evaluating their bench strength and identifying future leaders within the organization. Not only do they need to actively seek out individuals with the potential to grow, but they also need to scout from multiple angles to ensure all of the pieces will add up to successful leadership.

Scouting Your Future Leaders from All Angles

Gone are the days of relying on annual performance reviews scores, single leadership aptitude tests, or manager intuitions for honing in on your company’s potential leaders. These methods simply do not account for enough of the factors needed for an employee to become a good leader. If you were to search for ‘identifying leaders’ or ‘leadership qualities’, you would be bombarded by thousands of lists and articles that claim to have found the right mix of characteristics and skills that make up a great leader. I have personally read hundreds of these articles and although they differ in their approach and prioritization, they have some underlying similarities.

When looking for potential leaders who are more likely to succeed, companies should seek out employees who demonstrate these five traits:

  1. Are competent in their abilities
  2. Care about the company
  3. Have the desire to lead
  4. Have the ability to execute
  5. Are willing to keep learning

But how do you scan your workforce for these leadership beacons? It will take a bit of time and effort but it is possible if you approach things from multiple angles.

Performance Appraisals: Although flawed appraisal processes have left many companies with little faith in the idea, when done correctly and often, performance appraisals can act as a great gauge of job aptitude and competence. If employees are given job-specific goals to achieve and are evaluated on position-centric skills, companies can use the results of these appraisals to gauge competence and the ability to execute and multi-task – factors that make for great a leader. Many companies are also using appraisals as a way for managers and employees to discuss career planning and paths, giving both parties the opportunity to identify and express interest.

Self-Assessments:  Just like appraisals, when approached correctly and frequently, self-assessments give employees the chance to take an active role in their job development, goals, and career planning. Employees might add achievements or objectives not considered by managers, giving companies a way to identify employees who are interested and capable of going beyond their role. Self-assessments also offer the opportunity to gauge an employee’s accountability and willingness to learn. No employee is ever perfect. Strong leadership candidates own their shortcomings and are willing to learn and adjust in order to improve. When employees are given the green light to show their vulnerability, a company can quickly identify potential leaders with the flexibility for continual learning.

360° Reviews & Peer Input: A big part of successful leadership that is almost always overlooked is the ability to execute from a people-perspective. You could have position superstars move into a leadership role and fail if they don’t possess the skills needed to engage, motivate, and communicate properly with others at all levels in the company. In a 2017 post, Leigh Branham came to the conclusion that ‘loss of trust and confidence in senior leadership’ was the number one reason why employees quit. The old adage is in fact true – people leave people not companies. Companies need leaders who are able to form relationships, care about their team, can communicate extremely well, and are respected by those around them. One of the best ways to identify these is to ask others. 360° reviews allow companies to go beyond a single manager’s opinion, by gathering input from clients, peers, and even other managers. The result is being able to peel back the onion on an employee’s interpersonal skills and communication abilities in order to hone in on those rare individuals with technical and people skills.

Engagement Surveys: Companies want leaders who can see beyond their own role, are committed to the success of the organization, and offer practical solutions, instead of taking a back seat. Overall, future leaders need to care about the company – a lot. Engagement surveys are a great way to ask the questions that help determine if an employee truly cares. Employees who are confident enough to go against the grain, ask questions, propose solutions, and express knowledge and interest outside of their core position have the potential to become great leaders. Not only will their passion be infectious to their teams, it also indicates they will fight for the longevity of the organization.

Combining the results of appraisals, self-assessments, 360° input, and surveys in reports or a dynamics nine-box talent matrix, allows companies to identify outliers from multiple angles – increasing the odds that employees who stand out, are better candidates for leadership positions.

Fighting to build a strong leadership team will remain a top priority and challenge for companies. Being able to identify employees within the company who have the potential to grow and lead is step #1. While there are no sure-fire methods for identifying future leaders, it is possible to implement measures that will look beyond traditional assumptions, in order to help organizations find the rare and valuable employees who can succeed in a leadership position.


Why do high-performing employees matter to the success of your company? If you answer by saying they produce more, or process more units of work per hour or per day, that may be true. But it’s not the whole answer. Great performers don’t just crank out more widgets per minute or respond to emails faster than other employees. PyramidGreat performers actually lift the entire team by resetting standards of behavior and productivity and generating a ripple effect that can influence everyone in your workplace.

Here’s how. Read More