Episode: How to Solve Your Turnover Problem

Michael Hyatt: Hi, I’m Michael Hyatt.

Megan Hyatt Miller: And I’m Megan Hyatt Miller.

Michael: And this is Lead to Win, our weekly podcast to help you win at work and succeed at life. Today we’re going to show you how to solve a problem that plagues many businesses: turnover.

Megan: This is a really big problem, because when you have turnover in your business, whether it’s really high or if you’re running a small business, even just a few people every year, it’s expensive. It’s expensive to recruit people the first time and train them and get them up to speed, but when they leave, you lose momentum on projects, you disrupt the goals you’re pursuing, and honestly, it’s demoralizing for your culture, and there’s a real ripple effect that you have to do cleanup on, not to mention the hiring of the replacement.

Michael: This is the kind of thing that makes entrepreneurs rethink their vocation. It’s like, “Does it really have to be this hard? Maybe I should just go back to work for ‘the man.’”

Megan: Yeah, this is where you say, “Where do I go to resign?”

Michael: Exactly.

Megan: And it can feel like, honestly, you’re the only person committed to your vision, that you’re struggling to keep people and you’re also struggling to keep the vision of your company alive, and it just doesn’t seem to catch on. You’re like, “What’s going on?”

Michael: Well, today we’re going to give you three steps to retaining your top talent, but before we do that, let’s bring Larry on. Hey, Larry.

Megan: Hey, Larry.

Larry Wilson: Hey, guys. Great to be here. I just wanted to let you know this will be my last day.

Megan: I thought you were serious for a second!

Michael: Just for a half a second.

Megan: I had a little heart palpitation. Don’t leave!

Michael: You can’t quit; you’re fired.

Larry: What’s the root cause of turnover?

Michael: I think it’s a lack of vision. I think that unless people feel connected to a bigger, better future, then life becomes almost trivial, and then all the workplace politics and all of the little challenges of doing the work are the kinds of things that flush people out of the business, but if they’re connected to co-creating a future, it’s a completely different thing.

Megan: Your culture, which is often the glue of your team, really comes straight out of your vision. You are not going to have an amazing culture if you don’t first have a compelling vision. It’s just impossible. So then, if you lose those two things, if you don’t have vision that then informs your culture, then all of a sudden people kind of get stuck on secondary issues, like compensation or…

Michael: Lack of engagement.

Megan: Yeah, lack of engagement or the precise points of their job description or they’re not happy with their growth path or things like that. They get stuck on the little things, and then, all of a sudden, you have a lot of competition in the market, especially the market we’re in. It’s very difficult for other companies to compete with you if you have an amazing, compelling vision and a culture to match it, but if people are left with no vision and all there is are just the deal points on their employment agreement, you’re in trouble.

Michael: This is especially important for leading Millennials. I’ve never met a more mission-focused, vision-oriented group than Millennials. It’s not that other demographics don’t have that, but Millennials in particular… If you don’t engage them on the vision level, they get bored and disruptive, but if you do, they work like none other. We have a company full of Millennials, and I wouldn’t trade them for anything in the world. I think they do a phenomenal job. We still have to beg them to take time off. Our turnover is very low, but they’re motivated by the vision, by the mission of the company.

Megan: Right. So often, when you start losing people, you certainly have a lack of vision, but also it’s just not clear. It may not be that you don’t have any vision, but it’s not clear. It’s also that you’re not communicating it. Maybe, as the CEO or the business owner, you wrote it down one time like five years ago, but you didn’t share it with your team or you shared it once with your team, and now only half the people are there who were there five years ago when you wrote it, and they just don’t understand what their role is in the vision. They can’t see themselves as a key contributor with a role that has meaning in creating that future that’s part of your vision, and that’s when you start losing people.

Larry: Staffing, like just about everything else in business, boils down to vision. Other companies can match your compensation and your perks, but they cannot match your unique vision. So, we’re going to talk about the three steps that every leader can take to improve retention, and they all center on vision. Step one: clarify your vision.

Michael: For the purposes of this discussion, let’s say you have a vision. You have some view of the future, some general sense of where your company is going, but the question is…Is that vision clear? For it to be clear, one of the most important things it has to be, in my view, is written down. If you don’t have the discipline to write the vision down, you may think it’s clear in your own mind, but you’re not going to be able to communicate it in a compelling way.

Megan: It’s kind of like a game of “Telephone.” You may have it, as a leader, in your mind, but if you were to ask five of your staff members what the vision of the company is, guaranteed, they’d be all radically different.

Michael: That’s right. So writing it out and, in fact, writing it out in a specific format, where you’re talking about your vision for your team, your vision for your products and market, your vision for the impact you want to have on the world… All of those things are important. This is why I also think it’s often a waste of time when you talk about vision to try to come up with what I think is more aptly termed a slogan.

You know, we’re trying to get this down to some little pithy sentence that’ll motivate us and really encapsulate what it is we’re trying to create in the world. No. You need more clarity than that. I think that’s largely a waste of time. If you can come up with some amazing sentence that would describe the future you’re trying to build, great, but leave that for the slogan. You have to get more detailed than that.

One of the best ways to clarify your vision is to use what I call a vision script. This is the term I use in my new book The Vision-Driven Leader, which will be out in a few weeks. In it, I talk about how to create this vision script. Basically, it’s a document that ends up being two, three, maybe four pages long, so it’s not a vision statement. I think people spend a ton of time, largely wasted, trying to boil down everything they see for the future into some kind of pithy statement that’s clever. If you can do that, great, but honestly…

Megan: That’s really a tagline.

Michael: Yeah, that’s really a tagline, and it’s probably going to be pretty ambiguous and subject to interpretation and, more likely, misinterpretation, because it doesn’t have enough specificity. If you’re going to build a house, I have to give you more than a sketch or more than an idea. I need a full set of blueprints that shows what I envision, and a vision script does that. Specifically, you’re going to talk about four different components that make up the vision script.

You’re going to be talking about your vision for the team. Pick a period, like maybe three years into the future. What do you envision for your team and for the culture you’re trying to create? Secondly, what about the products or the services you’re going to offer? What do you envision three years hence? By the way, we found that about three years is about the right number when you’re thinking about vision, about three years into the future. It’s hard to have clarity beyond that. For some businesses you need it, but for most people, about a three-year vision is great.

Then vision about the sales and the marketing. In other words, how do you deliver the product or the service to the marketplace? What does it look like? What do you envision? Then, finally, what’s the impact…the impact you’re going to have financially but also in non-financial terms? Now, we don’t have time to get into all this, and my book goes into great detail about how to create a vision script, but I do want to give you a couple of hints for doing this.

First of all, stand in the future. Literally, project your mind into the future and imagine what you see. Imagine for your team what it looks like. Imagine what it looks like for your products, sales and marketing, and what it looks like for impact. State it in the presence tense, and write it down. Thoughts disentangle themselves passing over the lips and through pencil tips. If you want to get clear, force yourself to write it.

This doubles up as a communication tool as well, because once you get it out of your head and onto paper, it can be objectified and discussed and debated and argued and, more importantly, communicated. So, let me give you an example of a statement, which is part of the vision script, for each of these four areas.

For example, at Michael Hyatt & Company, one of the things we’ve said in terms of our vision about our team is we’ve said, “Each of our employees is able to spend the majority of their time at work in the Desire Zone.” The Desire Zone is where they have passion and proficiency. That’s our vision for our team three years hence.

Or another one under Team: “Our employees have the flexibility to be present for their family during the workweek as needed so they’re able to attend important school functions, doctor’s appointments, and the like.” That’s us envisioning the kind of team culture we have in the future. Here’s one for Product. We’ve said, “We understand that our ultimate product is not the content itself but the transformation the customer experiences by means of our product.” That’s a statement under the Product category as part of our vision script.

Megan: You can start to see how, if you’re an employee and you’re listening to this, you could get really excited about it. This is a big story you want to be part of and you can start to see yourself in. You can imagine what your life is like. You can imagine the impact of your work, and that is a humongous retention strategy.

Larry: The takeaway here is that nobody can follow a fuzzy vision, and it’s not going to motivate anyone. So, make your vision clear by making it concrete and specific. Just one last question on this for both of you. About how long is our vision document?

Megan: Three pages, I think.

Michael: Yeah. I would say (and I say this in the book), it ought to be three to four pages. Again, you’re not trying to compress it into some pithy statement that encapsulates all you envision about the future. It has to be more than that if it’s going to function as a blueprint for creating that future.

Megan: Yeah, it needs to be specific enough. Really, the other thing that happens when you have a vision script like this is it serves as a filter. You and your team will know if the things you’re considering are in alignment or out of alignment with the vision you have committed yourself to, which is really helpful.

Larry: So, step one: clarify your vision. Step two: communicate your vision.

Michael: The first thing we have to say here is that most leaders under-communicate their vision. Even if they have a vision, even if it’s written, they’re not communicating it as often or as frequently as they need to. I might have given this example in another episode, but I remember an executive coach telling me in the midst of the recession… When I said, “I am tired of talking about the vision,” she said, “When you’re at that point, you’re about half done.”

And Andy Stanley says this. Vision leaks. In the midst of the daily battle, when you’re really struggling with a customer complaint or trying to get this product to market on time, you forget the vision. You lose context. You lose the long-term picture of where it is you’re trying to go, and that’s one of the principal roles of leaders: to remind people. It’s connecting the dots, how your small actions today connect to a larger vision of where we’re going together.

Megan: You’re kind of like a lighthouse. You’re in the storm, and you’re not sure where you are, and that lighthouse, or that vision, is what helps you get home. Let me just say a few things about how we do this practically at Michael Hyatt & Company. This has changed over the years, but this is how we’re doing it now.

Certainly, at our annual meeting, this document is something we read. That may sound boring, but I can tell you that our team loves this. We try to do it with enthusiasm, almost like a dramatic reading. It’s like they come to that meeting, and they want to know, “Where are we going, guys?” They’re excited to discover that. “How has it changed since last year?” By the way, we look at this on an annual basis, and we true it up to how things change, because it does change over time.

The thing we’re now doing is that we break those four categories of the vision script up, and on a quarterly basis, we are not only reading the vision script in its entirety, but we’re going to do a deep dive into each one of those components. For example, we’ll start with Team. In the first quarter, we’ll go deep on our vision for Team and why we have said what we have said there and really share in depth the vision we have for our team and our culture.

Then we’ll move on to our Product in the second quarter, and the content/product team will go deep into our vision around product lines and all of the things we have planned and really get the team jazzed, because one of the things that happens when you grow is that people outside of your departments may not really know what’s happening in other departments.

The finance team may not know a lot about the product lines we have or that we’re working to develop in the future. They need to be aligned around that, because they’re supporting it on the back end. When people understand the full context, they really feel like they are part of something big. So, that’s how we’re doing it right now, and I think it’s going to be fantastic.

Michael: Again, I want to emphasize, you can’t do this too much. Just because you’ve announced it at one point… This is not a one-and-done thing, because you have new people coming into your business. You have people going out of the business. People are forgetful. People lose context. We just have to keep reminding… That’s one of the principal jobs of a good leader: to remind people of where it is we’re going, where all this is leading. Where does all this activity go?

That’s also what creates engagement and what reduces turnover, because if people feel like their daily actions matter, that it contributes to a larger vision, then all of a sudden it makes sense. There’s that classic story that was told… Larry, you may know the source of this, but it happened apparently in medieval Europe somewhere. They were building a giant cathedral, and somebody walked up and said to some guy who was laying brick, “What are you doing?” Do you know that story?

Larry: Yeah, I do know the story. I don’t know the source either.

Michael: The guy says, “Well, I’m laying brick. It’s pretty apparent. I’m just slapping bricks together here and putting the mortar between them, and so forth.” He asked another guy, “So, what are you doing?” He said, “Well, I’m building the wall.” Finally, he asked some other guy, “What are you doing?” and he said, “We’re building a cathedral.” He had the entire vision. The question is…Are your people laying bricks or are they building cathedrals?

Larry: The cost of not communicating vision is pretty high. According to a recent Gallup Workforce Panel study, 51 percent of employees are actively looking for a new job at any point in time.

Michael: Whoa!

Megan: That’s sobering.

Larry: The cost of replacing somebody, as you know, is quite high. According to one estimate I’ve seen, it costs an employer about 20 percent of that position’s salary to hire, recruit, and onboard a replacement.

Megan: I think that’s really low, in my experience.

Michael: I do too.

Megan: That feels like about what you’d pay to recruit that position, but then you have to think about the opportunity cost. What you have lost, probably, leading up to that person leaving was a lack of productivity, sideways energy…

Michael: Lack of engagement.

Megan: Yeah, lack of engagement. So you lost things there. Then there’s a hit to your culture that has a cost in terms of efficiency and productivity and morale, and then you have to find a new person, which has direct and indirect costs, and onboard them. In my experience, it takes three to six months before a new employee is fully up and running in their new role and contributing at the level that you hired them to. I mean, this is costly.

Michael: You need to communicate regularly, but here’s what’s even more important: you have to have a communications plan for the vision. In other words, it’s not enough to look yourself in the mirror and say, “Oh, yeah, yeah. I have to communicate more,” because you’re probably not going to do it. You have to build it into your systems.

For us, it’s at our quarterly training. We get the entire team together once a quarter. It’s at our annual meeting. We have designated times on the calendar when we’re not only communicating the vision but revisiting the vision, revising it with the executive team, looking at it with the leadership team, rolling it out to all of the employees.

Megan: As a part of strategic planning.

Michael: That’s right. And then just continuing to revisit that on a rhythm so that we never lose sight of it. If you don’t do that, you’re going to lose sight of it. You’re not going to remind yourself enough unless you just happen to stumble across a podcast that says, “Oh yeah, you have to talk about the vision.”

Megan: It’s kind of like reminding yourself to look at your goals or keeping your goals visible. If you just hope you’ll remember it because it’s important, you won’t. You have to actually develop a discipline, a rhythm around that visibility so that you don’t lose sight of it. It’s even more important at a corporate level.

Michael: Good parallel.

Larry: The key takeaway is that communicating the vision is an ongoing responsibility for the leader. So, step one: clarify your vision. Step two: communicate your vision. Step three: connect people to your vision.

Michael: This is really the personnel challenge. You have to show people how their job fits into the whole. In other words, every job matters. Really. Every job matters, but it’s up to us, as leaders, to be creative enough and take the initiative to say, “Here’s how this fits into the bigger role.” I have to be able to talk to Jim Kelly, my executive assistant, and say, “Jim, what you’re doing today is not just administrative work that takes something off my plate, but this really matters. This frees me up to do something that leads to the vision.” You have to connect the dots.

Larry: Jim understands that. That’s why your schedule is so hard to crack, Michael.

Michael: True enough. I think also assuring people that they have a place in the vision and that their work matters and here’s exactly how it matters. Periodically, you have to remind people how that piece of the puzzle fits into the entire thing you’re creating.

Megan: It’s particularly important for more supportive aspects of your business, like finance or operations or things related to supply chain, you know, things that are a little more disconnected from the front-line part of your business. Like, the marketing team, the product teams, the executive team are probably all pretty clear on how they’re contributing to the vision, because they’re hands-on, making new stuff and getting it to the customers, but the people who are processing transactions or planning meetings or things like that… It can feel really disconnected, so you really have to think through…

When you’re processing a transaction in the accounting department, how does that matter? Well, we never get to get our products to the customer unless you’re doing that. The transformation we’re trying to effect in the lives of our clients and customers is only possible because you’re processing those transactions. It’s only possible because you’re making a way for people to enter our programs practically, because you’re watching our profitability and making sure that things are properly allocated and that we’re spending wisely and investing wisely, things like that. You do have to connect the dots, though.

Michael: I want to say one other thing about how you communicate to people on your team, depending on how different the vision is from your current reality and depending on the history of your company. First of all, you have to respect the past. Whenever you’re introducing change that’s going to result in change for people, it unsettles a lot of people. Now, some people thrive on change. I happen to thrive on change. Megan, I know that’s the case for you. Larry, I don’t know about you.

Larry: Not so much.

Michael: So, for people who don’t thrive on change… And vision is all about creating change. You don’t need a vision if things are going to just be the status quo. You only need a vision if you’re going to change things, but you have to respect the past, because everything you want to change was once a brilliant solution to a problem that existed before. So if you’re going to dismantle that, you have to respect it first. The second thing is it’s helpful when you’re rolling out a vision to your team to remind them about what’s not going to change.

Megan: I think that’s really true. This is something I’ve learned from you, especially as we’ve initiated change in our company, maybe big announcements at our annual meeting or something. Our natural orientation, the two of us, is like, “This is awesome! They’re going to be so excited to learn about what’s coming,” and you’re like, “Actually, not everybody may be excited to learn about what’s coming.”

So, to always present your messaging, when you’re communicating vision or anything significant, from the perspective and the concerns of your team is really critical. Don’t sell it to your team like you would sell it to yourself, because they’re not buying the same thing. Their security is wrapped up in what you’re going to share. Their sense of identity is in their work. There are so many things that if you disrupt it could be threatening to them. I’ve really learned that from you, from a communication strategy standpoint, and I tell you what, when I’ve gotten in trouble, it’s because I have ignored that.

Michael: People need a foundation that’s not moving. Then they can process all kinds of change. If they know what’s not going to change, that the foundation is going to remain constant and that there’s a lot of good stuff we’re going to continue with into the future, then they can process the change and metabolize it more easily.

Larry: Well, there’s actually some research that backs this point about connecting people to their passion. In a study of 21 companies that consistently rated on the top lists of best places to work, and there are several of those major lists that come out each year… Each of these companies was in that top 10 for four years in a row, and they said one of the best ways to retain employees was to help them identify…this is the word they used…their calling, to show how their deepest aspirations connect to the work they’re doing every day.

Megan: Interestingly, I was listening to someone recently talk about how our culture has changed over time and where identity comes from. In the past, you would have a lot of identity from living in the same place as generations of your family. You would have a lot of identity in your family, in your faith, in your church community. As things have changed over time, one of the biggest reasons people are dissatisfied at work or having mental health issues is because so much of our identity is centralized now in our work.

It’s not in our relationships. It’s not in our history. I mean, it is in our relationships in the context of work, but it’s like there are so few things left as we’ve become increasingly individualistic. Sometimes as employers and leaders, we forget how much pressure people are putting on their jobs to get their sense of calling or meaning or purpose. Whether or not we can fully answer that or should is a debate for another time, but I think we need to at least understand that that’s in the air and that’s part of what people are coming to us with, even though they may not know it.

Michael: It’s an imperative for us, as leaders, to find out what the people who are working with us feel like their sense of calling is and then to connect that, help them see how that fits into the vision.

Larry: I want to throw in another thought from that same study I cited. The companies that are able to do that successfully found that their employees were more productive and happier and even felt lucky to work where they did.

Michael: Love that.

Larry: This really is an argument, too, for having a vision that’s fleshed out and that statement about impact that’s part of your vision script, Michael, so that whatever your business is, you’re seeing the ways you are positively impacting your customers, because if you’re not, it’s pretty hard to connect people to that.

Michael: Yeah. And even beyond your customers. Just the world in general. I think there are a lot of companies out there that have done a great job connecting their social impact with their employees’ desire to make a difference in the world. It kind of goes beyond the scope of the immediate mission of the company, but realizing that we all exist in a social context where there are ripples from our business, and to be responsible with that, whether it’s the environment or climate or other things. We need to be thoughtful about that and include that in our vision.

Larry: Here’s a question for you guys. Have you ever had an occasion where you’ve tried to communicate your vision, clarify it as best you can, and then connect people to it, but some people just don’t buy into it?

Michael: I think that in larger corporations, depending on the history, people can be cynical. It’s like, “Well, we’ve heard this before” or “That’s nice,” but they see such a gap between their current reality and the vision, with no articulation about how we’re going to get there, that it just sounds like pie in the sky, and it actually makes people more discontent.

“That’s what could be, but that’s not what is, so you’re just being hypocritical.” So people can disengage from that. I think we have to be honest and humble as leaders to say, “Look, here’s our vision” and acknowledge, “We are not there yet. We’re a work in process, but we can’t create this by ourselves, as leaders. We need all of us. It’s going to take all of us working together to create this future.”

Larry: The key point here is that people don’t want to join a vision that doesn’t include them, so show them where they fit, and they’ll be much more likely to sign in and support your vision for your company and the world. Today we’ve learned that every leader can retain a great team by taking three steps:

  1. Clarify your vision.
  2. Communicate your vision.
  3. Connect people to your vision.

What are your final thoughts today?

Megan: If you’re a leader right now who maybe doesn’t have a vision or has a vision in your head or maybe partially on paper, but it’s not as clear as it needs to be, I just want to encourage you to invest the time to get clear. You can’t imagine the impact this is going to have on your organization, on your team at large, and also individually when you take the time to make your vision explicit and then develop a communication plan around it. It will absolutely transform your company, and your ability to retain and attract great talent will increase.

Michael: The thing I would say is that there’s a misconception in our culture that you’re either a visionary leader or you’re not. I think every leader can be visionary. All they have to do is to have a process, sort of a template in place. That’s what I tried to offer with my new book The Vision-Driven Leader. Anybody can be visionary if you’re willing to take the time and do the hard work of getting clear on what you want.

Larry: Thank you, Megan; thank you, Michael, for a very challenging episode today.

Michael: Absolutely. Thank you, Larry. Thank you, Megan. And thanks to all of you for joining us today. We’ll see you right here next week. Until then, lead to win.