Excellent customer relations and low employee turnover usually co-exist, according to research (the Complaints Excellence research progam in the UK is the most recent research to confirm this). So, how do you identify why people leave and implement changes that will help to preserve your most precious business advantage - your trained people? Jim Garrett, VP, Human Resources with retail giant Toys ?R? Us, shares his insights

One of the biggest challenges facing businesses in the U.S. over the next few years will be ensuring that employees are satisfied and thereby minimizing turnover. Why? Because the challenge of finding quality employees to replace them is already daunting and is likely to become increasingly more difficult and costly. (Editor?s Note: Jim?s analysis applies equally well to the UK and other countries, where a buoyant economy leads to employers reporting difficulty in recruiting and retaining good quality people).

We are enjoying the greatest period of economic expansion and full employment that most of us have seen during our lifetimes. Unemployment is hovering near 4% nationwide and is substantially lower than that in many areas of the country. In a short time, the first of the baby-boom generation will begin retiring.

The scarcity of quality replacements for them will mean that locating and hiring new employees will take longer and cost more than ever before. Finding good new employees in this environment will be both time-consuming and increasingly costly. The increasing complexity of jobs due to technical innovations and ever greater specialization will require more extensive, and expensive, training than ever before to make new employees fully productive. Some studies have shown that it is already not unusual that the total cost of turnover within a particular position to a company can easily exceed the annual salary of the position that is turning over.

Given these circumstances it would be much wiser to focus attention on investigating the sources of employee dissatisfaction. Determining the sources of your employee?s unhappiness and taking steps to remedy the problems is a much smarter investment in the long run. In so doing, you will be able to avert future turnover, save money, retain a better, more satisfied work force and be better able to provide the levels of customer satisfaction that you need to keep your business healthy and growing.

So what are some of the tools you can employ to increase the flow of information that you need to monitor turnover, maximize employee satisfaction and improve retention? Listed below are some of the more commonly used methods.

MBWA
Management By Walking Around. Spend some time in the work area, on the sales floor, in the shop, in the customer service department, in the call center, talking to your employees and finding out what is on their minds. What is going on in their personal lives? Do they have child or elder care needs that aren?t being met by the Company?s benefits programs? Is there something the Company could do to shift benefits expenditures to meet changing needs? Are they struggling to get to work on time due to rigid schedules conflicting with childcare or other home life issues? Could you adjust the schedule to ease those concerns? Is flextime a possibility?

Don?t use the time as an excuse to check up on what they?re doing - use it to check up on what they?re feeling! Make notes about the issues they raise and try to address those that can be addressed to help create a better work-life balance for them.

Open Door Policy
Let your employees know that if they have a problem that is bothering them, every supervisor is available to hear their concerns. They should feel free to approach their managers without fear of retribution and voice their concerns without having to make an appointment or send a written request. Let them know that the Company values them and is concerned for their welfare.

Make yourself, and encourage your supervisors to make themselves, accessible to your employees and really listen to their concerns. Empower supervisors to address issues as they come up and, within the limits of company policies, make adjustments where possible to resolve individual problems. The supervisor may not always be able to solve a problem but if your employees know that they are willing to listen and make a concerted effort to assist them if possible, they will be happier overall and you will learn more about situations that are bothering them.

Exit Interviews
Too many companies either do not spend time in conducting exit interviews or do so in only a cursory fashion. Often the attitude is that the person has already resolved to leave and you?re not going to be able to change his or her mind, so why bother?

Well, the reality is that 90% of the time you are not going to change the individual?s mind about leaving. By the time that they?ve become dissatisfied, resolved to leave, gone to the time and trouble of interviewing with another employer and received a job offer, you?re probably not going to change their minds.

But that is not the only, or even the primary reason to conduct an exit interview. The real value in conducting a thorough exit interview is in learning what it was that caused the employee to become dissatisfied and taking steps to correct a problem that could cause other employees to leave for the same reason in the future!

Well-executed exit interviews can be your single best source of information about what is bothering your employees. Obtaining this information is not an easy process and it cannot be accomplished by simply asking why they?re leaving and accepting the answer that is given at face value.

There are many reasons why an employee may not be entirely candid in identifying his or her reasons for leaving. First and foremost is the fact that, in many cases, he or she may not realize the real reasons for the departure on a conscious level. The most common initial answer given will be that they have obtained a better job, paying more money. That will be an honest response in most cases but it will not tell you what you need to know about why the employee decided to leave. After all, how many people leave a good job to accept a worse offer, paying less money?

Most leave because they perceive things will be better somewhere else. And in most peoples? minds, a better job includes better pay. That?s only logical. But the job may not be paying appreciably more money and you need to know more about what makes it a better job in the employee?s eyes. The information that you?re after goes deeper than the initial, surface answers and can only be obtained by inquiring about the reasons that the individual began considering quitting in the first place.

It is important that the person conducting the interview be outside of the chain of command in which the departing employee worked. This helps to ensure that there will be no reluctance to bring information forward for fear that it will implicate or reflect poorly on the interviewer. It is also important that the questioner is a trained interviewer who will ask probing, open-ended questions that will elicit some insight into the conditions that troubled the employee. Most often, the best person equipped to conduct the interview will be a member of the Human Resources department.

The interviewer needs to carefully probe the reasons for the resignation. "What do you expect to be different at your new place of employment?" "What were the things that you found most frustrating here?" "How did the job differ from what you thought it would be?" "What changes would you make if you were in charge?" "What was the last specific incident or problem that you remember that caused you to begin looking into the possibility of a new job?" "Tell me about the training that you received." "Tell me about the supervision that you received." "What Company are you going to?" "What will be your new job and duties?" "How much will you be earning with the new Company?"

All of these questions can provide you with insights into what the individual found wanting in the job at your company and what he/she perceives will be an improved situation at the new company. You may not get a straight answer to all of these questions. But if you ask enough questions of this nature, and probe the answers with additional questions when the initial response indicates that there is more to be learned, you will be able to get a fair picture of what the employee perceived negatively about the job or the Company.

Third Party Exit Interviews
Some individuals are reticent to be candid in exit interviews with Company personnel. There are many reasons for this including concern about references, not wanting to burn bridges, etc. In an effort to overcome the reluctance to speak candidly, some companies engage third party firms to conduct the interviews and provide the information to them. These firms often wait as long as 3-6 months to conduct the interview in an effort to overcome the reluctance to speak candidly. They believe that allowing the candidate time to settle into and become secure in a new job can increase the willingness to speak candidly and openly about the environment at the prior place of employment.

Follow Up Questionnaires
A variation on this theme is the use of a follow-up questionnaire that is forwarded to the individual?s home asking for responses to a number of pointed questions about the individual?s tenure with the former employer. Toys "R" Us uses such a questionnaire, dubbed the "Stop Turnover Questionnaire", in addition to an exit interview at the time of departure.

The questionnaire is typically mailed to exempt employees who resigned voluntarily, by the Human Resources department 30-90 days after the departure. It appeals to the former employee to respond to the questions in order to improve the working environment for the colleagues he or she left behind by identifying areas that can be improved from the point of view of the departed employee. It can be answered anonymously or the former employee can volunteer their name.

The questionnaire asks some of the same questions as the exit interview but also asks the candidate to rate their satisfaction with such things as benefits, working hours, supervision, training etc. The Company typically obtains a 25-30% return rate on these questionnaires. They have found that some of those who are reluctant to speak candidly at the exit interview will respond very openly in writing after some time has passed. In fact, many candidates are so anxious to help improve matters for their former associates, they attach multiple pages of free form feedback to the questionnaire explaining their own dissatisfactions and offering suggestions for improvements. Many even volunteer their names and phone numbers and encourage the reader to call if additional information is needed!

A Complaint Channel
In addition to an open door policy, it can also be useful to provide a formal channel that an employee can appeal to if he or she is not satisfied with the response of a supervisor to a question or complaint. Toys "R" Us provides this opportunity to its employees and call it the "Let?s Talk" process.

Employees are first directed to attempt to resolve complaints with their immediate supervisor. If they are not satisfied with the response, they can escalate the complaint to the supervisor?s supervisor and so on up the line. The company provides an 800 telephone number that employees can use to escalate complaints once they need to reach someone outside of their own working location.

At each stage of this process, the employee can expect to get a response to the issue that they are raising. They are always asked if they have spoken to the appropriate individual in the chain of command and, if not, are referred back to that individual before the complaint can be escalated. After they have exhausted all other sources in their direct chain of command, as a last resort, they can appeal to the office of the Vice President of Associate Relations.

This process does not always result in the employee obtaining what he or she is seeking. It does, however, ensure that they get an honest response to an honest concern. Sometimes the problem is resolved in their favor, even overruling an immediate supervisor?s decision at times. If the problem is not resolved in the complainant?s favor, it ensures that he or she receives an explanation of why the problem cannot be resolved as they would like.

Monitoring and Reporting Turnover
One tool that is used by many companies is reporting of turnover statistics. Too often however, this is not used as effectively as it can be. In order to get a true sense of what is going on in your company, obtaining a report of total turnover is not sufficient. You need to break turnover down into meaningful groupings and analyze the information to identify trouble spots within the company.

Certainly, reporting separately on non-exempt and exempt turnover is useful. Beyond that, reporting on different work groups within these classifications such as individual contributors, supervisors, managers and executives, can provide you with more useful information. Looking at turnover by ethnic group, by tenure with the company, by gender, by supervisor or by geographical location can tell you even more. The more finitely you can analyze the data, the more chance you have of identifying problems with specific groups or locations.

Analyzing percentages in isolation will not tell you much. You need to compare turnover to other relevant situations in order for it to reveal any problems. This might mean comparing different groups within your own company, comparing locations where similar work is performed or comparing your turnover to that of competitors.

It is possible, for example, that you could find your overall turnover of exempt personnel to be at an acceptable level but that the rate of turnover for supervisors is twice as high as that for individual contributors, managers and executives. You?ll want to investigate why this might be the case. Or you might find that turnover in your plant in Ohio is twice the rate for similar plants in New Jersey, North Carolina and Texas. Why? What is causing that disparity? Analyzing the anomalies between similar groups of employees will help identify situations that bear further investigation and possible action.

Employee Attitude Surveys
Many companies conduct periodic surveys of their employees? attitudes towards a wide variety of practices within the company. While some firms have been known to do this using their own internal resources, it is generally viewed as more effective if conducted by a third party firm specializing in this area. They are able to recommend specific questions and forms of questions to address to differing constituent groups within the company. They are equipped to receive and effectively analyze the information returned, can offer comparative data for your industry, and can best assure your employees of the confidential treatment of responses that will encourage them to provide honest, candid data.

In the first use of such a survey, the data obtained can be used to compare your situation to that of others in the same or similar industries. Once you have conducted such a survey, however, it also provides you with a baseline for comparison in future surveys to determine if measures you?ve taken to improve employee satisfaction have had the desired positive effect.

Regular Performance Discussions
Few people typically think of performance discussions and reviews as a turnover prevention tool but they can be one of the most effective devices a company can employ. One of the frequently cited reasons that employees give for dissatisfaction with their jobs is poor communications and not having a good sense of where they stand.

Most companies do some sort of formal performance review once a year. If you are seriously concerned about retaining your employees, more frequent discussions should be encouraged. Many companies now do two formal reviews each year. This ensures that the employee gets a sense of where he or she stands so any developing problems can be identified and corrected before they get out of hand.

Going beyond even that level of communication, supervisors should be encouraged to provide performance feedback informally on a regular basis in the course of observation of on-the-job behavior. Give them immediate feedback when they?ve done something well. Point out to them (in private of course) when they have done something incorrectly and be sure to tell them how to do it right in the future.

It must be emphasized that the value of all of these sources of information is in analyzing it, identifying problems and taking corrective action. Obtaining the information and doing nothing with it is only a waste of time, effort and money. Use the data obtained from these sources as a focal point in management discussions to improve conditions and react to sources of concern. Make positive changes in internal conditions that will help you preserve your key employees.

Finally, be aware that there is one additional tool that can provide a valuable return even if you choose none of the analytical tools listed above: supervisory training. One of the most frequently cited reasons given by employees for leaving their positions is treatment by the immediate supervisor. It is one of the top five reasons given for resignations across all industries and all economic levels.

If there is one action that will yield the greatest return in decreasing turnover and increasing retention, it is training your management to listen to their employee?s concerns, to try to resolve them in good faith and to treat their subordinates with respect at all times. If a manager is unable to resolve an employee?s problem or has a personality conflict with a particular employee that he or she cannot resolve, they should be trained to bring that issue to the next level of supervision for resolution.

Managers who do not act in this manner should be reprimanded and if unable or unwilling to change, should be dismissed. They are a liability to you. If a supervisor is abusing your valuable human resources, the cost to your company in real terms will often be much greater in the long run than it would be if they mistreat physical resources. The return that you will get from effectively training your supervisors and holding them accountable for treating their employees with respect and fairness will far outweigh the cost of the training itself.

Editor?s Notes: As you may have noticed while reading this article, and as has been highlighted in the past by research linking employee and customer satisfaction (the Harvard Business School work on The Service Profit Chain, for example), many of the techniques described by Jim in this article can be applied to improving customer satisfaction and reducing customer ?churn? as well as employee churn (conducting exit interviews with customers, for example.)