COVID-19 kickstarted The Great Resignation — according to the U.S. Department of Labor, a record 4.5 million workers quit their jobs in March 2022, edging just above the previous high-water mark set in November 2021. Why are so many people leaving their jobs, and what can companies do to retain talent?
The Current State of Employee Retention
Prior to COVID, the median worker had been with their current employer for a little over four years, according to a U.S. Bureau of Labor Statistics report. Since COVID? Millennials (those born between ’77 and ’95) make up 66 percent of the U.S. workforce, and 91% of them say they expect to change jobs every three years. The average tenure for workers between the ages of 25 and 34 is 2.8 years.
The current overall turnover rate is 57.3 percent — 25 percent voluntary, 29 percent involuntary, 3 percent high performers. This means one in four employees left their jobs voluntarily during the second year of the pandemic.
The Cost of Training and the Impact of Employee Turnover
According to Training Magazine’s 2021 Training Industry Report, the average U.S. company spent $1,071 per employee on training costs in 2021, with varying amounts of time required to learn new software, protocols, and timekeeping procedures. Companies are now spending more and more on employee training, on subjects including consulting, off-the-shelf and custom content, products, services, technologies facilities, travel, and equipment.
Turnover is generally detrimental to a company. Knowledge, training and development all leave when employees leave. Projects may have to remain unfinished on hold until a new employee is hired and trained. Too much turnover is also terrible for morale — when more than a few employees leave a company in the same span of time, it can diminish the enthusiasm of coworkers, who may in turn be inspired to undertake their own job searches.
Why Employees Depart
Creative Circle recently put the question to our 486,000 LinkedIn followers, and here’s what they told us:
- 48 percent left a job for better pay.
- 24 percent said they were looking for more fulfilling work.
- 20 percent wanted more flexibility.
One respondent put it quite succinctly: “Money and flexibility.” “I think most people decided that life is for the living and want to make the most of it,” another respondent said, a sentiment many have come to share since the pandemic began. Another of our followers simply told us, “Money isn’t everything.” Another respondent remarked, “…plan is to be able to ‘retire’ from the corporate world and run my own business in the next 10 years,” and she’s not alone – the number of new business applications increased by almost a million in 2021 from 2020. Finally, many of the people who responded to our survey feel undervalued at their jobs, which often spurred them, or is spurring them, to seek new opportunities.
See a full recap of why Creative Circle candidates are considering switching jobs here.
According to a Gartner HR report from October 2021, attrition is driven by a number of factors, including:
- Lack of employee recognition
- Poor management
- Absence of opportunities for professional growth/development of new skills
- Lack of flexibility
- Non-competitive pay
The unemployment rate is down 3.6 percent, housing prices are up 19.8 percent between February 2021 and 2022, and inflation closed March 2022 at 8.5 percent. Compare these percentages to the average raise in the USA, which is around 3 percent — chances are if employees leave one company for another, it’s because their new employer will pay them more than what they’re making.
As for burnout, for a lot of people “work from anywhere” has become “work from everywhere all the time.” Workplace stress and burnout go hand in hand. In a 2022 report, the American Psychological Association found that both issues were at an all-time high across all professions: 79 percent of the 1,501 U.S. workers surveyed in late 2021 reported experiencing work-related stress in the month they were surveyed, with three out of five confessing the stress was bringing anxiety and stress into their personal lives.
How to Improve Retention
How are companies attempting to staunch the bleeding? In February 2022, Gartner advised companies to revise their employee retention strategy as follows:
- Offer flexible work arrangements.
- Identify select roles with critical skills for compensation increases.
- Work to retain employees from underrepresented groups by setting retention goals and doubling down on DEI initiatives.
What’s our advice to keep your employees — and to keep them happy? It’s a combination of a number of ingredients. Let’s say you create a pie chart of reasons your employees will want to remain with your company: each employee will weight the reasons differently, but the list of reasons will be pretty much the same. The pie is the same, but the slices are all different sizes.
So how can companies bake their employees the perfect pie? Here are some general guidelines:
- Pay your people salaries and bonuses in line with other employers in your industry.
- Don’t make team members who deserve raises wait or ask for them, especially when other companies might hire them at higher salaries.
- Adopt a remote/hybrid model to give your people the opportunity to create a work-life balance that actually works for them.
- Be responsive to ongoing economic conditions such as higher gas prices, overall inflation, etc. Now’s the time to subsidize employee commutes, provide in-office meals, and more. However you can help your people reduce their everyday expenses, do it.
- Shift your focus from hours to projects. If the pandemic has shown us anything, it’s the days of punching a clock are over. As long as your team members get their work done, and do it well, does it matter how many hours they work?
- Tailor your management style. Some of your employees want more recognition for what they achieve, while some want more autonomy…whatever it is, let them have it.
- Incentivize your staff with more paid time off. It’s an inexpensive way to stave off burnout. Even just one extra week each year of PTO is akin to a slight raise or small bonus, to say nothing of its mental health benefits.