How to Avoid Employee Turnover

People are capital, knowledge is wealth; people are the carriers of knowledge, and knowledge is the essence of people; knowledge is the intangible wealth of a business, and people are an invaluable capital for a company that cannot be measured.

The former famous General Manager of General Motors, Alfred Sloan, once said: "Take away my assets - but leave me with the people in my company, and within five years, I will regain everything you have taken."

This clearly shows the importance and irreplaceability of people. It also indicates that managing the corporate crisis triggered by personnel 'transfers' is essentially about managing people.

1. Fairness

(1) Distribution according to work

Many employees leave due to unreasonable salaries paid by the company, situations like "different pay for the same work, same pay for different work." As a distribution principle under the socialist system, distribution according to work represents a fair and just method of allocation, which suits businesses perfectly.

At Henkel Company, employees' wages are determined based on their job performance, rewarding contributions accordingly. Henkel believes that a fair compensation system is a prerequisite for evaluating employees. Job performance is directly proportional to the rewards received, and wage differences are quite necessary. In addition to monetary incentives, Henkel offers various benefits based on specific employee performances, such as employee housing, meal allowances, Christmas bonuses, credit cards, etc. Practice has fully proven that reasonable salary distribution is key to motivating employees and retaining them.

(2) Corporate profits should be reasonably divided

Renowned companies worldwide have largely implemented profit-sharing, although its forms (such as stock ownership) benefit only a few shareholders. China's state-owned enterprises have only recently started offering stock options to managers and directors, but because it was introduced too late, many large-scale private enterprises have failed consecutively. Shi Yuzhu, the CEO of Giant Group, frankly admitted: "Although Giant claims to be a shareholding system, my shares alone account for over 90%... Many vice presidents couldn't endure it and left one after another..." The fall of "Giant" leaves us with many lessons, one of which is: sharing in matters of profit.

During a share reform at Legend Group (Lenovo), the 35% stake given by the Chinese Academy of Sciences was further divided into three parts: 35% was allocated to employees who made special contributions during the company's founding period, 20% was distributed to employees who joined earlier after 1984, and 45% was assigned based on future special contributions. This not only took care of the old employees but also considered the company's future development, more importantly, it retained high-level personnel at Lenovo.

People are the driving force behind a company's development, and reasonable profit-sharing can increase their enthusiasm and motivation.

(3) Appointing people based solely on talent

Ta Ishigoro, founder of Japan's Technical Research Industrial Company, never thought of letting his son take over his business. He had his own philosophy: "Family is family, business is business." Feeling the need to step down, he handed over his business to Kawa Shima Cho after 25 years of entrepreneurship. To make this transition smooth, he even shed tears to persuade his brother, who was the executive director of the company, to retire together.

Another good example is Matsushita Konosuke appointing Yamashita Toshihiko. Originally a regular employee, Yamashita Toshihiko possessed outstanding talents and accurately identified internal problems such as complacency, while being proactive in reforms. Matsushita recognized his abilities, believing him to be an exceptional individual not found within the Matsushita family. Despite objections, Matsushita promoted Yamashita Toshihiko beyond conventional boundaries. After becoming general manager, Yamashita maintained Matsushita's legacy. In his second year as general manager, the operating status of Matsushita Company quickly shifted from defensive to aggressive. In 1983, Matsushita's total profit reached 189.11 billion yen, almost double the 97.68 billion yen profit when Yamashita first assumed office in 1977.

2. Establishing incentive mechanisms

(1) Paying high salaries to stimulate employee enthusiasm

In a well-functioning company, employees receive relatively higher wages. It is the responsibility of management to pay employees high salaries, meaning making employees live happier lives is the foundation of stabilizing the workforce. Successful companies often offer the highest salaries in their respective industries. This isn't due to operational success enabling them to afford high salaries, but rather recognizing that providing top-tier compensation is an effective way to attract employees.

MFI, the UK-based furniture company group led by Derek Hunt, has been relatively successful in this regard. Hunt realized early on that many people cannot be driven solely by money; they value the realization of personal self-worth more than material rewards. Besides paying high salaries, MFI includes all employees, including cleaners and salespeople, in a departmental reward plan. Every Monday morning, the weekly profit and loss accounts are announced, enhancing employees' strong interest in work. MFI grew from an obscure small company to one with over 100 branches nationwide, becoming one of the world’s most renowned companies with annual turnover reaching £300 million.

(2) Subdividing promotion levels and structures

Unreasonable salary systems in companies are one reason for employee "transfers," but it doesn't necessarily mean that across-the-board salary increases are always attractive. Professor Dale Walker of the University of Michigan's School of Business Administration said, "People often think it's about money, but it's not always so. Employees may focus on salary for a while, but if they lose interest in their work, money alone cannot retain them."

Many employees leave because they see no opportunities for promotion. Therefore, subdividing promotion levels and structures becomes particularly important. The greatest advantage of doing so is that they don’t have to wait for managerial positions to become available before getting promoted. For example, Paul from the sales department of Hannigan Company in the U.S., due to his diligent work, was once praised by his boss and colleagues. Deep down, he longed for promotion, but unfortunately, there were no vacant positions in the company. His boss, upon learning this situation, restructured the staff, assigning Paul a special task that would take him several months to complete.

(3) Benefits granted to employees should incrementally increase, not decrease

Reducing employee benefits for any reason will completely undermine the credibility of corporate leaders and cause other adverse consequences.

Mary Kay, the president of Mary Kay Inc. in the U.S., worked for a company early in her career where, during a commission revision meeting in a certain state, the boss faced nearly 50 sales managers and announced that henceforth, their 2% commission from the company would be reduced to 1%, with the remaining 1% replaced by gifts like clocks, radios, and tape recorders. The boss emphasized that the more people they recruited and trained, the more valuable gifts they could receive. At this point, a sales manager stood up, extremely angry, and said, "How dare you treat us this way? Do you know that even your original 2% wasn't enough? You halve our commission and give us these worthless things—do you think we're idiots?" After saying this, he stormed out of the office, followed by other salespeople, leaving all 50 of them. The boss had to fly back to headquarters early, and over the weekend, he revised the sales commission method, restoring it to the original 2% commission method, which was warmly welcomed by attendees from another region. However, none of the salespeople from that state returned.

(II) Providing employees with a good working environment

A suitable, safe, harmonious, and pleasant working environment is something everyone dreams of and is also one of the conditions that promote employee engagement.

Henkel is a chemical enterprise that, to improve the quality of its employees' working environment, specifically provides air-conditioned fresh air for employees, along with showers, and offers all employees a rich lunch every noon;

To ensure employees feel secure, the company has established numerous highly secure standard facilities managed by specialized departments, such as medical and factory security teams. The company regularly checks safety equipment, measures environmental pollution, water quality issues, noise levels day and night, and conducts free annual health check-ups for employees. All these measures indirectly contribute to the company's stable development.

(III) Providing employees with ample development space and opportunities for expression

1. Regardless of salary or position, there is always a cap. If a general manager performs well and the company lacks a higher appropriate position to promote him, the company should provide him with development space and opportunities to showcase his talents, such as encouraging him to start his own business, providing funds, technology, and other support, or implementing a shareholding system, using the allure of shares to attract and retain employees.

2. Not overstepping authority

Many capable enterprise leaders can handle the work of several people. If a leader assigns responsibilities to subordinates, corresponding power must be delegated. Whether or not to delegate power is an important measure of a leader's art of using people. If a leader insists on handling everything personally, does not delegate power, or frequently interferes after delegating power, it will inevitably lead to management chaos. On the other hand, subordinates will lose enthusiasm due to lack of necessary trust.

Pierre Cardin has a keen eye for talent. For instance, when setting up Maxim's Restaurant in Beijing, he sent two full representatives, each with unique characteristics. To show full trust, Cardin stipulated that anything signed by both representatives simultaneously would have the same effect as if signed by Cardin himself. Facts proved that Cardin's approach was correct, and the two performed exceptionally well together.

(IV) Establishing strict management systems and adopting modern marketing concepts are fundamental guarantees for maintaining stable corporate employees

1. Operators should embrace the concept of "total participation in operations." Wu Bingxin, President of Sanyu, once summarized his 15 major mistakes by saying: "Many grassroots departments squander without limit, siphoning off substantial advertising fees, taking kickbacks..." This reflects low employee competence, but perhaps more importantly, the idea that "the company belongs to the boss, not to us employees" is at play. Treating symptoms requires addressing root causes. Why do grassroots employees of Sanyu think this way? What role does the company play here?

The "World 500" companies generally follow the "total participation in operations" concept, believing all employees are operators. "I am the big boss, and my employees are small bosses." Employees working in such a "sharing prosperity and adversity" environment will work hard and won't constantly think about jumping ship.

2. Specialized human resource management

Enterprise development depends on people, and human resource management is the most critical link among all management processes. Successful or large companies typically establish a human resources department internally, assign dedicated personnel to manage and monitor human resources, and provide the impetus for enterprise development.

3. Need a capable "boss"

Whether or not the "boss" is capable directly affects the morale of some talented employees, leading to reasons for their departure.

Mary Steele, head of the Human Resources Department at Sun Investment Company, said: "We haven't fully realized the impact of retaining a group of old managers who contribute little to the company, hardly knowing how to develop or mentor new employees and motivate them. They might be one of the reasons why high-performing employees leave." Therefore, Sun Company is gradually transferring them to non-management roles where commissions are earned. In such roles, poor performance becomes evident, and they receive only corresponding "compensation."

Companies must have a capable "boss," and these bosses should have some capable "little bosses," as this is one of the significant factors inhibiting employee turnover and triggering corporate crises.

4. Have a good strategy when discovering employees preparing to jump ship and possibly take company secrets

Once, the owner of the American International Management Consulting Company, McCarthy, discovered a senior employee planning to leave and take some clients, files, and confidential information handled by him. McCarthy spent about two weeks protecting himself, then sent him on a one-day trip to Detroit. During this time, the company changed all locks, retrieved his files and records, and immediately dismissed him upon his return. McCarthy's wisdom saved the company from a "disaster."

5. Take measures to prevent competitors from poaching

As mentioned earlier, people have five needs. If a company meets these five needs of employees, it prevents competitors from finding opportunities, thereby safeguarding its own employees and eliminating potential crises caused by employee turnover.

6. Restrict certain behaviors of departing employees

Abroad, post-employment behaviors of employees are often constrained by laws such as contract law and employment law, and there are also unwritten industry norms between peers, such as prohibiting involvement in the same industry for a certain number of years after switching jobs. Additionally, the original company compensates for losses incurred by the manager during this period. This practice is worth emulating.

(V) Companies must earnestly implement "people-oriented" management

An enterprise is composed of people, and whether it's operation or management, it should be people-oriented. Ancestral Chinese scientist and entrepreneur Dr. Wang An founded the world-renowned "Wang Laboratories" in Boston, USA. After over 40 years of arduous struggle, it now employs over 30,000 people, expanding from an initial investment of $600 to over $3 billion, earning him honor, status, and a fortune of $1.6 billion. In terms of human resource management, he believed that a company is made up of people, and whether each employee's enthusiasm can be unleashed determines the company's rise and fall. In his work, he implemented different management styles based on employees' types, characteristics, technical expertise, and living needs: he regarded engineers and scientists designing and researching products as the soul of the company, giving them special treatment to show respect, even being particular about word usage, avoiding terms like "hire"; for creative technicians, even if they had intolerable errors or flaws, arrogance, or conflicts, Wang An would still build good relationships with them, making them understand that the company best understands and appreciates their contributions. This approach motivated employees, allowing Wang An's company to achieve many excellent results.

1. Fully trust subordinates

Trust is the source of strength, the foundation of retaining employees, and the guarantee of enterprise development. Masataro Kamaya originally worked at General Motors in the U.S., but Kiichiro Toyoda, the founder of Toyota Motor Corporation in Japan, saw his extraordinary talent in sales and invited him to take charge of automobile sales at Toyota. Deeply moved, Kamaya gave up a待遇 4/5 better than Toyota's and joined Toyota's sales department. Due to Toyoda's immense trust, Kamaya devoted all his efforts to car sales. After Toyoda passed away, Kamaya, to repay the Toyota family, recommended Toyoda's eldest son, Eiji Toyoda, to learn sales skills. He treated Eiji like his own son, teaching him through words and actions, caring for him thoroughly while maintaining strict requirements. Under Kamaya's careful cultivation, Eiji quickly advanced from deputy president to president of Toyota.

2. Love employees

Loving one's employees is the essence of being an operator. Only when an excellent entrepreneur makes employees recognize their own value and possess sufficient confidence can resonance be achieved with employees, allowing the business to develop.

Takashi Tsukamoto's secret to Toshiba's success was "loving employees." In his 70s, he visited all Toshiba branches nationwide, sometimes even traveling overnight by train to personally inspect the site. Even on Sundays, he would visit factories, chatting warmly with security guards and duty personnel, establishing deep bonds with employees. He once said, "I love interacting with my employees, regardless of who they are. I enjoy talking to them because I may hear many creative ideas and gain great benefits." Once, during a visit to Toshiba's Himeji plant, he encountered heavy rain. Upon arriving at the factory, he spoke with employees standing in the rain without an umbrella, inspiring them and repeatedly emphasizing that "people are the most precious." The employees were deeply moved, surrounding him attentively listening to every word. After speaking, Takashi Tsukamoto was drenched. When he was about to leave by car, female workers surrounded his vehicle, tapping on the windows and shouting, "President, be careful not to catch a cold! Take care of your health! Work harder. Rest assured, we will work hard!" Faced with this, Takashi Tsukamoto was moved to tears and loved his employees even more in his subsequent work.

3. Listen to employees' opinions or suggestions

Mary Kay's working style provides a good example. In her company, employees can directly appeal to her regarding grievances or difficulties, and she will definitely find time to meet them, listen carefully to their conversations, and help solve their problems. She has accepted and adopted many employee suggestions. This practice greatly stimulated employee enthusiasm and intelligence, allowing previously ordinary employees to stand out under her assistance, becoming capable individuals under Mary Kay's leadership.

The president of Sony Corporation, Morita, has always maintained close collaboration and communication with colleagues. Morita almost daily dines with his subordinates and often chats until late at night. One day, he noticed a young man looking gloomy and unhappy, so he encouraged him to speak his mind. After a few drinks, the youth finally opened up: "Before coming to Sony, I thought it was a wonderful company, an enterprise I would willingly contribute to. But in reality, junior employees like me can only serve our local supervisors. He represents Sony, but he's incompetent, and everything I do must go through him. I'm very disappointed." These words rang like an alarm bell in Morita's ears, realizing that many employees in the company might share similar thoughts. Thus, he launched a weekly newspaper within the company, publishing vacant positions in advertisement form, allowing employees to find jobs they consider themselves competent for, fully utilizing their abilities and enthusiasm.

However, truly thinking like Morita is rare, and acting like him even rarer.

4. Understand employees

Understanding is a desire inherent in humans. Once understood, people feel immensely comforted and willing to pay various prices.

As mentioned earlier, Wang An was very skilled in employing people. Once, an engineer studying logarithmic calculators told Wang An that the company's work plan conflicted significantly with a summer vacation rental agreement he had made months ago. After hearing this, Wang An immediately expressed that if the logarithmic calculator disrupted his personal plans, he could use Wang An's villa for vacation. This action deeply touched the engineer, who not only did not go to the villa but also sacrificed his entire vacation for the research project.

5. Care for employees

The greatest desire of people is to receive sincere concern and attention. If entrepreneurs genuinely care for employees, they can achieve the effect of employees being willing to risk life and limb for them without hesitation. Caring for employees should be approached from two aspects: caring for employees' families and caring for the employees themselves.

(1) Caring for employees' families

Mary Kay deeply understood that family is the pillar and backup force for employees. In 1983, she learned that the brother of a mechanic in the company had terminal cancer, so she wrote him a letter and attached a poem, encouraging him to stay strong and face death bravely. Mary Kay's actions deeply moved the mechanic and his family. This mechanic once said, "My family is my support. Since the president cares so much about my family, I will dedicate myself entirely to work to thank the president."

(2) Caring for employees themselves

Arthur Levy hired a dynamic young man named Bill to develop closed-circuit television. As soon as Bill started, he immersed himself in the lab and worked continuously for a week. During the most intense period of work, Bill stayed in the lab for over 40 hours straight, having food delivered by others. After a phase of work concluded, Bill slept for a whole day and night. When he woke up, the first thing he saw was Levy sitting beside his bed. Levy held Bill's hand and said emotionally, "I'd rather not do this business than lose your life. Few researchers live long, but I hope you can moderate yourself. Your effort is appreciated, and even if the research fails, I won't blame you." These words greatly transformed Bill's mindset. He no longer worked merely for his salary or personal sustenance but viewed developing new products as a common endeavor with Levy. Within half a year, closed-circuit television was successfully developed, opening broad prospects for Levy's company's further development.

During Arthur Levy's early entrepreneurial period, facing severe financial shortages, he hired Dr. Rosen, a renowned physicist and discoverer of the electronic scanning tube, to research a new type of cathode ray tube. Dr. Rosen admired Levy, considering him far-sighted and decisive, especially appreciating his usual care for scholars. This stemmed from Dr. Rosen's own experience. Although Dr. Rosen was a distinguished physicist, he was terrified of darkness and thunderstorms. One night, during a fierce storm that caused a power outage and plunged the house into darkness, Dr. Rosen trembled in fear, curling up in bed. Levy braved the storm to enter Dr. Rosen's room, holding and comforting him softly. The storm lasted all night, and Levy stayed with him throughout. From that night on, whenever Levy needed him, regardless of the hardships, Dr. Rosen would voluntarily come to his aid.

From this, it is clear that stimulating employees' enthusiasm and building good interpersonal relationships does not require excessive effort or lavish rewards. Genuine care can make employees sincerely obey your leadership and willingly work hard for you. "A worthy person will die for someone who understands them" conveys exactly this meaning.

6. Be mindful of the attitude towards employees who make mistakes

Japanese Electric Company adopts the method of "priming but not firing" for employees who make mistakes, allowing them to make up for their faults and balancing merits and demerits. Once, the head of the intelligence department provided incorrect market information, causing the company's leadership to make wrong decisions and resulting in significant economic losses. The general manager thought: the head of the intelligence department might have made a "misstep," committing an error due to temporary negligence. If he were dismissed, it would ruin a person. Thus, he called the head of the intelligence department and informed him that action would be taken regarding this mistake but did not specify what it would be. For a period afterward, the head of the intelligence department worked diligently to compensate for the losses caused by his error, making many crucial contributions to corporate decision-making. The general manager felt that the head of the intelligence department was competent in his role, and the previous error was just an accident. He called the head again and explicitly informed him that his contributions were significant, warranting commendation. However, since the previous issue had not yet been resolved, the merits and demerits canceled each other out, resulting in neither commendation nor punishment. Both the head of the intelligence department and other employees were satisfied with the general manager's handling.

Appropriate methods should be used when dealing with employees who make mistakes, avoiding rashness or hasty actions to prevent unnecessary losses to the company.

7. Do not easily negate an employee's talent

Do not let differences in age or education cause differences in attitude or value judgments. Promotions should be based on employees' attitudes, actions, knowledge, skills, and adaptability. Also, do not hastily judge an employee's capabilities within a short time due to their lower adaptability.

The crises triggered by personnel "transfers" are numerous. Due to differences in corporate management methods and strategies, the ways to manage them vary. However, one thing remains constant: when companies suppress personnel "transfers" and manage crises arising from them, they should respect employees, be people-oriented, and have their own understanding, unique insights, and flexible approaches to handling crises.