The hiring crunch has been going on for quite some time. Across all industries, at every level, there are more open jobs than there are qualified candidates to fill them. In parallel, people are leaving their jobs in record numbers. In November 2021, the United States’ resignation rate reached a 20-year high. One Pew Research survey examined the top reasons that employees resign. The survey found that most employees leave due to low pay, feeling disrespected, and/or no opportunities for advancement. Other reasons for leaving included: a lack of childcare, no scheduling flexibility, and poor (or no) job benefits. The Great Resignation is primarily being driven by young people, particularly those under age 30. With more employees than ever deciding that it’s time to move on, focusing on employee retention has never mattered more.
Employee Retention Challenges: What’s Driving the Great Resignation?
Economists say the leading cause of the Great Resignation is the pandemic. The COVID-19 pandemic has caused employees to rethink their life priorities. The things employees previously sought (and/or tolerated) in a workplace are no longer the same things they seek out today. But this priority shift isn’t just employees’ concern. Managers have much at stake in the Great Resignation as well. Research has repeatedly found that it can cost at least ⅓ of an employee’s salary to replace that employee. For high-level positions, replacing a lost staff member can easily cost 4 times their annual salary.
If your organization is having trouble hanging onto your employees, you’re looking at lost time and money. Furthermore, your understaffed crew is likely experiencing low morale as they try to pick up the slack. That’s why improving employee retention is one of the best things you can do for employee morale and your bottom line. Here are some things you can do to boost your retention rate and cut down on turnover costs.
Give Your Managers Ongoing Training to Increase Employee Retention
It’s often said that people don’t quit jobs; they quit bosses. While a good manager can win employees’ respect and loyalty, a bad manager can drive away even dedicated staff. That’s why training your managers is one of the best things you can do to ensure your staff stay with you long-term.
Managing people is its own skill-set with its own learning curve. While some people are naturally gifted at team management, others are not. Even if managers have degrees in management or business, their post-secondary education won’t necessarily transfer over to your workplace. Investing in managerial training with focus on motivational tactics and leadership styles can help you to cultivate leaders within your organization that your team likes and respects. That means training your managers will go a long way toward keeping your whole team for the long-term.
Provide Opportunities for Career Advancement & Watch Your Employee Retention Rate Soar
Employees don’t just want opportunities for career advancement – they want to see the path to advancement and understand what it entails. Show your top performers that good work is rewarded, and they’ll feel more invested in your organization.
Hiring from within is also faster and far more affordable than external hiring. When hiring externally, you’ll likely need to pay for a recruiter and training time. You’ll also need to give your new hire time to become acclimated to their new environment. But when you can hire internally, you save the time and money involved in recruitment and training.
It’s also much easier to cultivate and reward your up-and-coming intrapreneurs if you have a training tool that tracks their progress. Your organization likely has intrapreneurs – employees with entrepreneur-like motivation and creativity – working on innovative ideas for your company. If your managers aren’t paying attention, it’s easy to miss these high-performers – and under-utilize them.
But when you can track your employees’ training, you can easily spot the top performers. You can identify the ultra-motivated people who are succeeding at their training and even taking the initiative to train themselves in areas outside their job requirements. With a tool like Cogcentric, for instance, you can instantly identify who’s taking on extra training — so you know who your high-performers are.
Cultivate a Retention-Oriented Workplace Culture
One of the top reasons why employees leave is toxic workplace culture. In January 2022, a team of researchers from Revelio Labs, CultureX, the New York University School of Business, and the MIT Sloan School of Management performed an in-depth analysis of over 34 million online employee profiles, aiming to uncover the top reasons why employees leave their employers. The researchers also created an index called the Culture 500, a list of 500 large private-sector employers across the United States that collectively employ 25% of the American workforce. This study examined the resignation rates across companies and industries, assessing which industries and organizations were most likely to see employees quit.
The findings were complex, but they tell a story about workplace culture. While some industries, like fashion retailers and management consultancies, were most likely to lose employees, there was also significant variation within industries. Within the airline industry, for instance, employees were nearly twice as likely to leave JetBlue as to resign from Southwest Airlines.
Next, the researchers analyzed 1.4 million Glassdoor reviews of the 500 employers, identifying which topics mentioned in reviews were most predictive of a high resignation rate. Surprisingly, pay rate ranked #16 on the list of most-mentioned topics. In other words: Pay rate wasn’t top-of-mind for employees who resigned.
In contrast, the study found that toxic workplace culture is the #1 most common reason for and strongest predictor of employee resignation. Toxic workplace culture is the driving force behind 10 times more resignations than pay; that means no amount of compensation can convince employees to stay in a toxic work environment.
In a follow-up article, the researchers describe the 5 attributes of workplace culture that are the most toxic to an organization. Notably, all of these attributes are things that are within a manager’s control.
Workplace Culture is a Choice
Workplace culture isn’t something that happens by accident; it’s a byproduct of your organization’s leadership. Every manager in your company plays a role in setting your organizational culture. By training your managers and senior staff to counteract these toxic attributes and instead cultivate a positive workplace culture, your organization can improve its retention rate – thereby cutting your hiring costs.
The Great Resignation has employees at all levels questioning their priorities and leaving positions that no longer appeal to them. As employees quit, employers are facing higher recruitment costs driven by high inflation and high staff turnover. With employee recruitment costs easily eclipsing the cost of retention, it’s never been more important to hold onto your staff. You can boost your retention efforts with a mix of managerial training, opportunities for advancement, and a positive workplace culture.
What is your company doing to boost employee retention? How are you equipping your employees to succeed in their roles and enticing them to stay with you?