Despite talk of recession and slowdown in some sectors, workers are quitting their jobs at record rates and its leaving companies struggling to cope with the impact. Remaining workers are overworked and stressed out and in danger of quitting too. Customer service is suffering and competitors are trying to steal your market share. Managers are frustrated and worried and no one seems to know what to do. How can you stop the bleeding?
In November 2021, 4.5 million Americans quit or changed jobs, an all-time high. In May 2022 over 4.3 million Americans quit or changed. The practice of ‘job hopping’ has become significantly more popular in recent years, and with the widespread introduction of remote work, traditional obstacles to employees switching companies – notably physically moving – have been weakened and have led to even more workers switching companies than before.
As businesses around the country continue to be hurt by the current labor shortage, the last thing companies want to endure is valued employees leaving them for another company.
Not only does retaining employees lead to more experience within the company and better relationships with co-workers, but it also reduces a company’s cost to hire. Hiring and training new employees, including the lost productivity during the process, can cost companies multiple months-worth of a new employee’s salary. This means significant losses to a company that does not effectively retain its employees.
Why Employees are Leaving?
First and foremost, they are being offered more money.
What is at the root of this mass exodus? Today’s labor market has created unusually attractive opportunities for employees to switch jobs. With the demand for jobs near all-time highs – there were 11.3 million unfilled jobs in May 2022 – better compensation has driven millions of workers to seek out more lucrative jobs, a result also stemming from the high rates of inflation.
Salary historically has, however, not been the most significant driver of employees quitting. Other significant factors include lack of career advancement opportunities, toxic workplace environments, and poor relationships with managers.
Typically, employees leave based on many interrelated reasons. To help you prevent or reduce the problem here are a few proven tactics to improve retention.
Improving Retention
(1) Utilize stay and exit interviews in order to determine which aspects of the company experience is attractive and which aspects lead employees to consider other jobs. While on a macro-scale, workers are quitting because of salary concerns, relationships with their managers, workplace environments, and career advancement opportunities, causes of people leaving jobs can vary drastically from industry to industry and from company to company. By using stay and exit interviews, HR departments can more effectively analyze the factors specific to their company that are attractive or unsatisfactory to employees.
(2) Encourage managers to regularly check-in with employees. Studies have shown that employees who have regular check-ins with their manager are significantly more likely to be engaged in their work than employees who do not have regular check-ins. By having regular check-ins with employees, managers build trust between them and their employees, become involved in their employees’ lives, and promote better performance. Additionally, managers can identify an employee’s issues and address them before the employee begins looking elsewhere for job opportunities.
(3) Expect employee turnover through succession planning. Changes within a company are occurring at all times, and change will continue to be an inevitable challenge for companies. Even if a company does everything right, workers will be forced to leave for a variety of reasons – for example, health, family matters, or their own retirement. However, by expecting change, companies can reduce the negative effects that accompany such changes. Companies can develop a thorough succession plan to ensure the success of future leaders of the organization, and proactively consider the implications of what would happen should a high-performing employee leave the company. By expecting employees to leave and having a systemic process to prepare employees to assume key roles within the organization, the hiring and onboarding process will be less drastic, time consuming, and costly, and will equip the company to better operate in the future after employees depart.
Having a well-developed succession plan also addresses one of the key drivers of employee dissatisfaction with companies: a lack of career development opportunities. With a succession plan in place, employees will feel more valuable to the company and feel that their future is actively being well thought of, boosting self-esteem and motivation in their work.
(4) Invest in employee success through both extrinsic and intrinsic rewards. Historically, one of the most significant reasons employees quit jobs is because they feel disrespected at work. Employees tend to remain with companies when they feel valued and rewarding them is an effective method to ensure employees feel that their efforts are being acknowledged and appreciated. Common rewards come through tangible extrinsic rewards: bonuses, salary increases, company stock, and other benefits like increased paid time off. However, rewarding employees through such methods is not merely enough to ensure that employees feel valued – employees feel valued when they receive intrinsic rewards, too. Intrinsic rewards come commonly through feelings of employee pride, sense of progress, and sense of meaningfulness.
Rewarding employees through intrinsic rewards requires a more deliberately-designed culture that promotes employees’ engagement and achievements. To intrinsically reward employees, managers can praise employees for their hard work when they are successful, allow them to take autonomy over their work when necessary to promote their feeling of pride in their accomplishments, and include them in appropriate decision making processes to make them an active part of the company culture.
Takeaways
Retention is an essential part to a company’s success. Although today’s inflationary economy has led many employees to switch jobs for a higher salary, most employees decide to leave based on a number of factors, notably issues with their managers, workplace environment, or career advancement opportunities. By getting at the core of why employees are leaving through exit and stay interviews and employee check-ins, preparing for employees leaving with succession planning, and rewarding employees with intrinsic and extrinsic rewards, companies can more effectively combat the pressing issue of retention and reap the numerous benefits associated with retaining valuable employees.
