Category Archives: Risk Management

Why Employees Quit—And How to Keep Them

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Why Employees Quit

Employee turnover creates tremendous risk—resources are lost in recruitment and training, productivity lags with insufficient staffing, intellectual property can be exposed, and no company wants to get a reputation as a place where no one can stay very long. Further, the implications for workers comp, lawsuits and insurance extended to employees can cause headaches long after a desk has been cleared out.

A few recent studies highlight some of the biggest factors contributing to employee turnover resultant human resources risk, and what managers can do to keep staff and avoid risk.

Why Employees Leave

A new “exit survey” conducted by LinkedIn among members from five countries found that top reason workers left their jobs was because they wanted greater opportunities for advancement. In a related study from the social network, the number one reason employees who were not actively seeking a new job would be willing to leave was for better compensation or benefits. Regular performance reviews and assessments that open up opportunity for advancement in both responsibilities and salary can help keep employees engaged—and prevent feeling they have to stray to stay on top.

Room to Improve

Another recent study from LinkedIn found that 69% of human resources managers thought that employees were well aware of internal advancement programs. Yet only 25% of departing employees said they knew about these opportunities. In fact, of those who stayed within the company and found a new position internally, two thirds found out about the opportunity through informal interaction with coworkers. Strengthening formal retention and advancement programs and improving awareness of these initiatives may go a long way toward getting employees to use them.

Why New Hires Quit

One in six employees quits a new job within six months — and 15% either make plans to do so or quit outright within that time frame, according to Time. HR software company BambooHR found that the primary factor was “onboarding problems”—in other words, HR or managers are failing to properly orient new hires and integrate them into the workplace. This may seem silly, but they could have reason to feel this is a fatal flaw: research from John Kammeyer-Mueller, associate professor at the University of Minnesota’s Carlson School of Management, found that there is only a 90-day window for settling in. If your new employee is not caught up to speed by then, you may see them walk out the door.

Getting Employees to Stay

CareerBuilder surveyed thousands of workers recently to gain insight into why they decide to stay or go. Of those who plan to stay at their jobs, the top reasons they did not want to leave included: liking the people they work with (54%), having a good work/life balance (50%), being satisfied with the benefits package (49%), and feeling happy with their salary (43%). Of those who are unhappy, however, 58% said they plan to leave in the next year. Making sure these bases are covered is a strong step to keeping your top talent at their desks.

Check out the infographic below for more of LinkedIn’s insights into why employees leave, and what you lose when they go:

Mudslide Was Forewarned, Experts Assert

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Shutterstock/Dan Schreiber. Mudslides scar Washington hillsides.

Even as rescue teams search for more bodies in the aftermath of the March 22 mud slide in Washington, records show that while the area is prone to these disasters, homes were allowed to be built there anyway.

The slide, triggered by excessive rain, has claimed 24 lives so far and 176 are still unaccounted for, the Associated Press reports.

Snohomish County Emergency Management Director John Pennington said during a news conference on March 24 that the slide was “completely unforeseen” and that it “came out of nowhere.”

In a 1999 report filed with the U.S. Army Corps of Engineers, however, geomorph­ologist Daniel J.

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Miller and his wife, Lynne Rodgers Miller, warned of “the potential for a large catastrophic failure” in the area, according to the Seattle Times.

“We’ve known it would happen at some point,” Daniel Miller said. “We just didn’t know when.” He added that after a mudslide in 2006, he was surprised to find that more building was allowed in the area just weeks later. “Frankly, I was shocked that the county permitted any building across from the river,” he told the Seattle Times. “We’ve known that it’s been failing,” he said of the hill. “It’s not unknown that this hazard exists.

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The area has a history of mudslides. After two earlier slides on the hill in 1949 and 1951, recommendations were made to permanently divert the Stillaguamish River or build berms to reinforce the slide area.

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Howard Coombs of the University of Washington, however, concluded that any fix was likely to be temporary.

A thousand-foot berm was built in the fall of 1960, but it was mostly destroyed by high water in the Stillaguamish the following year, according to state records. Other barriers that were built were also destroyed by mud, the report said.

Tracy Drury, an environmental engineer and applied geomorphologist said there have been discussions over the years about whether to buy out property owners in the area, but that the talks never became serious proposals, The Seattle Times reported.

Who’s Committing Economic Crime?

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According to a recent survey from PricewaterhouseCoopers, economic crime is on the rise, particularly in the United States. Of organizations in the U.S., 45% suffered from some type of fraud in the past two years, compared to the global average of 37%. Further, 23% of companies that reported economic crime experienced accounting fraud, up from 16% in 2011.

So who is committing these crimes?

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External perpetrators are on the rise, closing the gap with internal perpetrators — it’s now 45% versus 50%, respectively. But the profile of these internal actors has changed since the last survey in 2011.

Now, most internal frauds are perpetrated by middle management (54%, compared to 45% in 2011), and fraud by junior staff has dropped by almost half, now totaling 31%.

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The typical internal fraudster is now a white male in middle management, age 31-40, who has been with the company for six years or more.

Internal Fraudster Profile

In good news, PwC also found that awareness of risk is higher among U.S. companies, for example, seven out of 10 American respondents perceived an increased risk of cybercrime in the last two years, compared to just under half globally. The C-suite is also increasingly getting the message about the risk of economic crime:

C-Suite and Economic Crime

For more details on the 2014 Global Economic Crime Survey, check out the report from PwC here.

Marine Losses Continue Downward Trend

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The marine industry continued to see a steady decline in the number of large ships losses globally since 2002, with 94 ships lost in 2013, down 20% from 117 reported in 2012, according to a study by Allianz.

The “Safety and Shipping Review 2014” by Allianz Global Corporate & Specialty found that of ships lost, the largest number, 32, were cargo vessels; 14 were fishing vessels; and 12 were bulk shipments. Only six passenger ships were lost, the survey found. The most common cause of losses in 2013, and over  the last 12 years, was foundering (sinking or submerging). The demise of 69 ships accounted for nearly three-quarters of all losses—with bad weather a significant driver.

Worldwide there were 1,673 losses from Jan. 1, 2002-Dec. 31, 2013, with an average of 139 per year. The top geographic area for losses has been South China, Indo China, Indonesia and Philippines. The area including British Isles, North Sea, English Channel and Bay of Biscay is still ranked fourth, despite improvement. With 45 losses overall, the U.S. eastern seaboard improved in 2013, dropping out of the top 10 regions.

According to the study, January is the worst month for all casualties in the Northern Hemisphere. There were 23% more losses in January compared with the quietest month, June. In the Southern Hemisphere July sees 41% more losses than April.

The majority of losses are caused by machinery damage, the reason for most losses in marine insurance. Statistics from the International Union of Marine Insurance (IUMI) report that 40% of hull claims are machinery damage and account for 20% of costs.

The review found that while piracy is still a threat, it has also subsided. Piracy at sea reached its lowest levels in six years, with 264 attacks recorded worldwide in 2013, a 40% drop since Somali piracy peaked in 2011. Fifteen incidents were reported off Somalia in 2013, including Gulf of Aden and Red Sea incidents, down from 75 in 2012, and 237 in 2011 (including attacks attributed to Somali pirates in Gulf of Aden, Red Sea and Oman).

According to the study: “The very real threat of piracy for ships operating in the Gulf of Aden reached the general public last year as the Hollywood Oscar-nominated blockbuster Captain Phillips was released. Tom Hanks played the lead as the master of the pirated Mærsk Alabama, broadcasting the piracy problem to a much wider audience and raising awareness of its consequences. The steps that the international maritime community has taken to reduce the threat of piracy in the Gulf of Aden have been extremely successful with the number of ships seized and hostages taken in 2013 significantly down on 2012.”

Lower losses overall were attributed to a number of factors including increased regulation, which has helped the maritime industry improve its safety record. Because the quality of operations varies in different regions, however, there is a big need for universal regulations on ship safety to reduce the risk of casualties and loss of life, the survey concluded.