For instance, in a workplace with low overall engagement, recognition and praise have no effect on reducing turnover. But in a company with moderate to strong engagement levels, teams that report they receive adequate recognition have 19% less turnover than teams that say they don't receive enough recognition. "It's likely that employees perceive recognition as authentic when the overall culture is supportive -- and inauthentic or even confusing when the culture is miserable," says Harter.

The research revealed a similar pattern when it comes to discussions about an employee's progress. In low-engagement workplaces, these discussions don't have much effect on turnover. But in moderately to highly engaged workplaces, teams with employees who report they have discussed their progress with their manager in the past six months also report 19% less turnover. Harter says this is probably because "In cultures where engagement is low, progress discussions turn into performance evaluations. But when the team is engaged, progress discussions actually do what they're meant to do: help an employee to progress."

The Q¹² element "I have a best friend at work" can have a particularly important relationship to retention, depending on the quality of the work environment. In a negative culture, best friends may leave together; teams with many best friends have 8% more turnover than those with few friends. In a moderately to highly engaged atmosphere, friends stay together, and turnover is 18% less per year for teams with many best friends, in comparison to those with few best friends.

None of this is a surprise to Anna, the woman who quit her job after 19 years. "The last time someone talked to me about my progress was six or seven years ago, when [the last manager] left," she said. "I'd be scared to death if the [manager] there now wanted to talk to me." The best friends issue hasn't yet applied to Anna; she says most of her best friends are at her old job, and none of them have yet resigned. But praise? "We understood praise to mean continued employment. If you weren't getting fired, you must be doing okay," she says.

Red flags

Employees may choose to work for a company for high-minded or practical reasons. But many opt to work in a role that gives them an opportunity to do their best. Harter's research found that turnover is lower in work units in which the manager adjusts jobs based on individual talents and strengths and actively removes unnecessary barriers. Perhaps it's the opportunity to do what one does best that explains this arresting number: Organizations that select people who psychologically fit their jobs can reap significant gains in retention. In these companies, 20% to 40% fewer managers and skilled or semi-skilled employees quit than in companies that don't select for talent.

That's likely what kept Anna in her job for nearly two decades. Though she says the work environment was awful, her job let her do what she did best to the point that she's renowned for it in her professional circle. "[The manager] doesn't really know what I do," says Anna, "and that probably kept him from telling me what to do. That helped a lot." Ultimately, the negative work environment drove Anna to resign.

One of the best predictors of turnover is whether an employee has had opportunities at work to learn and grow. Harter's research team found a telling fact about people who strongly agree with the Q¹² items "There is someone at work who encourages my development," "In the last six months, someone at work has talked to me about my progress," "My supervisor, or someone at work, seems to care about me as a person," and "At work, my opinions seem to count." Workers who strongly agree with these four items were twice as likely to say they have opportunities at work to learn and grow. What's more, 92% say they plan to be with their companies a year later.

The costs of turnover

The U.S. Bureau of Labor Statistics has found that the U.S. voluntary turnover rate is 23.4% annually. It's generally estimated that replacing an employee costs a business one-half to five times that employee's annual salary. So, if 25% of a business' workforce leaves and the average pay is $35,000, it could cost a 100-person firm between $438,000 and $4 million a year to replace employees.

It's going to take a considerable amount of money to replace Anna. "A new person will have to learn the job, prove herself or himself [in the industry], and learn to recognize the subtleties of the job. And that will take time. Meanwhile, the backlog will grow," she says. Anna estimates it will cost her organization $45,000 to $150,000 to replace her, and that money certainly wasn't in the budget.

Not all turnover is bad; new blood is healthy, and new employees can bring fresh ideas to their companies. But losing a valuable employee costs a business in time, money, and stress to other employees. Like all unnecessary blood loss, it should be stemmed whenever possible.

Sadly, too many managers have tied all tourniquets around the wrong limbs, yet they're wondering why their teams keep bleeding. The beauty of Harter's research is that it shows companies where to look for problems. The value of the research is that it gives clues to how those problems can be corrected, if managers have the courage to fix them.

Copyright Ó 2008 The Gallup Organization, Princeton, NJ.  All rights reserved.  Reprinted with permission.  Visit The Gallup Management Journal at http://gmj.gallup.com/

Article from The Gallup Management Journal