Employees quit bosses, not jobs

Yesterday, I wrote about the costs of toxic employees, but it turns out worse than toxic employees are toxic bosses. In a meta-analysis of dozens of reasons why people quit their jobs, Alex Rubenstein and his colleagues summarized their findings with the title of this post.

To be fair, that is not the only conclusion they reached, but it is an important one. To cut a long story short, they looked at the results of dozens of research papers that measured the correlation between individual factors and the likelihood for an employee to leave her job. Below, I have summarized the top three factors for four different categories.

Reasons for people to leave their jobs

Source: Rubenstein et al. (2017)

Overall, the three most important drivers of voluntary employee turnover are job fit, the rewards offered by the firm (these are rewards outside of pay and bonus which are measured separately), and job embeddedness (i.e. the social network and connections an employee would lose by leaving the company). No surprises there, really.

What is more interesting to check are the drivers of employee turnover that are heavily influenced by executives and managers. Finding employees that are the right fit for the role and creating a network for newcomers to feel welcome in the firm are key here. But note how important the leadership style is for employees. It is a significantly more important driver for employee turnover than pay, job characteristics, and personal characteristics like age, tenure and the number of children a worker has. They say that people with a mortgage and kids in school don’t change jobs, but if the leadership is bad enough, they will. And no money in the world will be enough to keep them.

My message for executives is thus: Make sure you select managers to run your company that have a positive leadership style and get rid of abusive and bad bosses. Your company will perform much better because you increase productivity and save costs by lowering voluntary turnover.

And my message to investors is thus: Ask company management to disclose their voluntary turnover rate. This is in my experience the single best predictor of company morale and future profitability. A company that sees a steady or sudden increase in voluntary employee turnover will become unprofitable quickly and will lose a lot of institutional memory that is hard if not impossible to replace.