Why a good economy can be bad for business

A stronger economy can be a double-edged sword when you're a business owner. On the one hand, greater productivity and jobs added means more people are living comfortably and able to take care of their families' needs. It also affords them an opportunity to "seek out greener pastures," as the old saying goes, able to earn more or pursue a position they've always wanted.

It's the latter of these good economic consequences that can be stressful for company owners, as job turnover can be anathema when your workers are doing a great job in their daily performance.

Employee turnover is up
By several indications, more Americans are on the employment hunt, not because they're out of work but because they want to see what else is out there. Indeed, around 5 percent of workers leave their current positions per month, according to a recent survey conducted by the ADP Research Institute. And of those who seek alternatives, it's voluntary more often times than not (between 60 and 70 percent).

More than 2 million jobs were added to the economy in 2017, according to the Labor Department. The employment growth trend seems to be continuing so far this year, with over 300,000 jobs created in February alone and the amount of joblessness holding at a healthy 4.1 percent.

Turnover may be normal, but it can create headaches for business owners, especially when the roles quality workers leave are fundamental to the company's success.

"It has always been important for employers to minimize turnover, but it is more critical now than ever before given the current state of labor market," warned Ahu Yildirmaz, co-head of the ADP Research Institute. "Unemployment is at a 17-year low, and job switching is at a record high. If employers can use data to identify flight-prone employees and understand what's driving their departure, they will have an important advantage in a highly competitive market for talent."

Stagnation common cause for workers quitting
Exit interviews can help in this regard, but the reasons why people "job hop" can be wide-ranging. A recent poll conducted by Glassdoor found position stagnation – where workers don't feel like they're going anywhere – to be one of the more common rationales for employees quitting.

Sometimes, workers leave because of poor management, or showing a lack of empathy. Writing for Inc., employment adviser and executive coach Marcel Schwantes says employees need to be recognized for their accomplishments, and when they aren't, it can lead to hard feelings. Managers who do this "dismiss the value of their people and see them merely as cogs on a wheel," Schwantes wrote.

Regardless of why workers clean out their desks, turnover is expensive. As reported by Wrike, it sets businesses back an estimated $160 billion a year combined.

There's no silver bullet to preventing your best workers from pursuing a different direction in employment, but by being aware of the signs, you may be able to change their minds. Here are a few of the classic indications, determined by researchers from the Universities of Florida, Utah and Arizona State referenced by Wrike. The study's principal investigators refer to them as "pre-quitting behaviors":

Loner behavior
If your key employees have always been team players but then suddenly stop, there's likely a reason.

Reduced enthusiasm
This can be difficult to gauge, but a lack of initiative (e.g. routinely showing up late for work) is a tell-tale sign that your workers may feel like what they're doing just isn't cutting it anymore.

Reluctant to making commitments
Tough tasks require your employees to apply themselves, something that they may not feel inclined to do if their days are numbered.

Productivity diminishes
When workers no longer have an incentive to produce, diminished drive can make itself apparent in their performance, or lack thereof.

A business's success is like a jigsaw puzzle – all the pieces have to fit to thrive. At Hudspeth Law Firm, we can help you fill in the missing spots by focusing on your goals and designing workplace programs that can help foster retention. Since our founding, we're committed to achieving positive results. Our breadth of services is comprehensive, including strategies on how to keep your business thriving in both bad and good economic times. 

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