Addressing Attrition

CFOs in Singapore seem to have an attrition problem, but they do not seem to be doing much about it.

A recent survey of CFOs in Singapore indicates voluntary turnover (or “people quitting,” to put it simply) is higher within their function than they would like it should be. Across their staff they say attrition is about 10% annually, though when broken down by speciality, some functional areas see turnover rates approaching 40%.

It’s great to get new blood in an organization, but there are limits. After a while, when you start losing corporate knowledge, you are liable to see performance drop. New hires are expensive to recruit, and they take a few months to get up to speed, further reducing your overall performance. Since the CFO’s team is generally viewed as a cost-center, the prospect of increasing costs and reducing performance should be a red flag.

CFOs seem to see that red flag waving, as 99% of them indicated they will take steps to reduce attrition. But as the researchers dug down into specifics about what those CFOs would do, it does not seem like they are doing very much. Very few do exit interviews to understand why their employees are leaving, and only about a third conduct regular salary reviews to ensure compensation is appropriate for the position (and in a time when roles seem to change a lot, it’s important to make sure salary keeps pace with your expectations for your employees). There seems to be little effort to create an appealing work environment, or to help employees develop in their career. So what are these people doing?

Well, there’s a good chance they are simply offering more money when an employee comes and says “I quit.” Of course, by that time, it’s pretty late; the problems that drove them to leave have clearly not been addressed. There’s a common belief that money solves all problems, but studies going back decades have shown that, beyond a certain point, compensation takes a back seat to other incentives such as pride in one’s work, continuing development, or a balance between one’s professional and personal lives. Frankly, retention starts with recruiting, so by being transparent about your expectations for a role in the hiring process, you are more likely to hire someone who actually wants to work that way; if you wait until they say they are leaving before you think about retention, you have waited far too long.

As you see the challenges these leaders are experiencing, look at your own team and ask where the retention challenges might be. Don’t wait for something to go bad, but instead, devise a retention strategy that links to your recruiting strategy (and, for that matter, to your performance strategy and your learning strategy) and do your best to avoid a problem before it ever pops up.