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The Bureau of Labor Statistics (‘BLS’) has reported the ‘quits rate’ (defined as voluntary terminations as a percentage of the workforce) for the last 21 years. Today, people are quitting work like they have never quit before. Nearly four million Americans a month, for each of the last four months.

retention rate chart

Source: BLS

 

Astonishingly, a recent survey found that 40% those recently leaving their jobs do so without having their next job lined up. BLS also reports that job openings rose to an unprecedented high, nearly 11 million, in July. The quits rate indicates significant dissatisfaction with the companies left behind. The huge unfilled job number shows that people are selective about the jobs they will take.

Who is Leaving, and Why?

Retail and hospitality industries are among the industries most affected, but workers across all industries, and many white-collar workers, have quit or say they plan to quit.

One leading theory about why this extraordinary exodus is occurring blames COVID. In the middle of a plague, people are deciding what is important in their lives. So, if the current job is complicating life, or is not providing meaning and satisfaction, employees are giving it the heave-ho.

How Can Employers Encourage Retention?

Employers should pay attention to this trend. If nothing else, replacing employees is an expensive proposition, commonly estimated at a third of salary. This figure includes the loss of organizational knowledge and productivity when an established worker goes out the door, the cost of hire, and the time involved in getting the new hire up to speed.

The good news is that there are actions that companies can take that encourage employee retention.

  • Job growth – Empower and upskill your employees. Create or reinvigorate commitment through strong onboarding, continuous training and development, readily-available coaching, and mentoring promising employees. Also, as the higher you go the fewer slots there are, develop alternatives for advancement. For example, recognize growth opportunity roles within project teams, and rotate duties within organizations so employees do not feel stale, sidelined, or bored.
  • Work/life balance – Many people are burned out, doing more than they did when they were in the office, plus juggling family commitments. Rigid work requirements further stress those with demanding home-life commitments. Adjust work load and schedules when an employee’s home commitments increase. Strengthen flex-time and parental leave practices. Flexibility means the employer is making a commitment to the employee, which increases employee loyalty. Post COVID, consider moving to a hybrid home/office work schedule instead of returning to 100% in-person attendance.
  • Management style – ‘People leave managers, not companies.’ An overstatement, but a useful one. The best bosses are ‘servant leaders’ who facilitate the success of their reports. They are courteous, respect the dignity of the members of their team, and make sure that every team member feels valued. Recognition is the gold standard for ensuring retention. If your company fosters, rewards and insists on these ‘soft skills’ in management, employees will stick around.
  • Engagement – Encourage the ‘small group cohesion’ so natural to the social animals that we humans are. Foster interpersonal connections by creating opportunities for collaboration and by acknowledging personal and professional milestones, big and small.
  • Communication – Working remotely, more communication than ever is done via emails and IMs. Be very aware of tone; make sure your message ‘lands’ as you intend, on point but not harsh. You should always communicate what your company does and why it does it to create a shared sense of purpose, challenge, and wins. Today, company and manager communications should acknowledge COVID’s effects on life and work. Acknowledgment sends the message that the employer cares, and helps employees accept what cannot be changed.
  • Listening – Strong exit interview programs and climate assessments will help your employer identify the root cause of turnover and your success in addressing them.

Are Changes Coming?

For years, the corporate world focused on ‘shareholder value.’ Wages stagnated, the wage gap between the middle class and the rich grew astronomically, employee discontent mounted and, as shown in the table above, the quits rate moved steadily up. Now it is on steroids.

To address this exodus, perhaps what we see today is a shift back to the idea that the purpose of the workplace is to fund the success of employees and their families. Companies that brand on this theme should see less attrition – and more applicants.

Having happier staff is, on its own, a great thing. That employee retention initiatives result in significant corporate savings by increasing efficiency and eliminating worker replacement costs – well, that isn’t bad either.

Author

Paul McGovern
Managing Partner
Praxis Compliance

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