One-quarter of white-collar employees in the US who recently quit did so without having a job lined up, a finding that held across income levels. And between November and December 2021, 8.8 million Americans quit their jobs. The Great Resignation is still underway and the consequences of high attrition rates on companies are dramatic. In order to weather the storm, successful companies will need to respond with agility by making a concerted effort to understand why employees are leaving and taking steps to encourage them to stay. Tactics often used in the past such as cash bonuses and short-term perks are no longer enough: employers need to take meaningful action to retain employees. This means developing talent, increasing employee engagement and connectedness, and gaining a much deeper understanding of what is driving this high rate of attrition in the first place. Companies that do so will gain the edge over their competitors and move forward into the post-pandemic climate with a committed and thriving workforce.
Who or what is driving The Great Resignation?
An interesting aspect of The Great Resignation is that for once, young people aren’t driving the status quo. Resignation rates are highest among mid-career employees attrition rates for employees aged between 30 and 45 increased by 20% between 2020 and 2021. Workers across the US are resigning for different reasons, but triggers include a need for better work/life balance (42%) and more career advancement opportunities (33%). A further 33% of people admit to experiencing COVID Clarity; a pandemic-fuelled realization that they want something different from their work than what they are currently experiencing. Most of those surveyed admit that their desire for change came about during the pandemic, as their expectations of what they want from a job have changed during the past two years.
What impact does high attrition have on an organization?
When an employee leaves a job it costs time and money to replace them, not to mention the huge disruption that can occur in the wake of their departure. Replacing an employee can cost high as 50%-60% of an employee’s annual salary. Additional losses that can occur are training and administrative costs, the loss of that employee’s knowledge and productivity; a plunge in the focus and morale of remaining employees who may feel abandoned; the chance of contagion as other colleagues consider leaving too and the possibility of a decrease in diversity in the workplace making the total costs associated with the loss of an employee range from 90% to 200% of annual salary.
Key recommendations for retaining talent
1. Leadership and an honest look inwards
Employees are much more engaged and committed when they trust management, receive clear communication about corporate strategy, and when they believe their leaders have the ability to follow through and deliver. A Deloitte study found that more than six in ten employees who said they plan to stay with their current employers reported high levels of trust in their corporate leadership. By contrast, 22 percent said dissatisfaction with their manager was a top motivator to look for a new job. It’s not just leadership that can impact employee retention – it’s managers too. The more empathetic and connected to the workforce a manager is, the more likely they are to have a committed, motivated team. Companies need to shine a light inwards and put their operations under the spotlight. Ask key questions such as: how do employees perceive leadership? How are managers doing and do they have the right leadership skills? Do we have the right management in the right parts of our organization? The answers to these questions will help a company to understand if it is leading from a positive and abundant position, or if strategic changes need to be made.
2. Diversity and Inclusion
While an employee may feel that they personally have equal opportunities, they may not feel that all their colleagues are being treated in the same way. Less than 50% of women surveyed think the best opportunities go to the most deserving employees, and less than 25% say that the most qualified candidates are promoted. In both situations, women are less optimistic than men. And when it comes to minorities, black employees are 23% less likely to receive “a lot” or “quite a bit” of backing when it comes to promotions and 41% less likely to perceive promotions in their workplace as equitable. By contrast, when employees feel they have equal opportunities for advancement and progress, they feel the workplace is fair, and their investment increases. Organizations can make changes by truly understanding the state of diversity in the company and implementing new practices. Managers can make sure that hiring practices are inclusive and unbiased; that the path to promotion is not only open to all but recognized as such, and that support is offered to those who need or want it.
Organizations play a vital role in helping employees identify their purpose and it’s time to rise to the occasion, as nearly two-thirds of US-based employees say that COVID-19 has caused them to re-assess their purpose in life. Almost half of the respondents confirmed that the pandemic caused them to reconsider the kind of work they want to do, while Millennials, in particular, are three times more likely to be re-evaluating career plans. This existential shift matters because 70% of employees also say that their sense of purpose is defined by their work. Companies need to engage with this challenge and work strategically to build a culture of togetherness; to make individual employees’ desire for career advancement a routine part of internal conversations and to re-double their efforts to keep remote workers socially connected.
It’s not easy to empathize with every single team member, but now more than ever, it’s critical to lead with empathy and understand what matters to your team, whether they are new starters in a junior role or senior executives. 85% of HR leaders believe it’s more important to develop empathy now than before the pandemic. But how can you do this? One great way to build empathy is by opening up time and space for employees to speak to management freely and without stress. Whether it’s in-person or on Zoom. Keeping doors (or virtual doors) open and optimizing reporting lines offers a way for managers to keep their ears to the ground and to stay connected to the concerns of their people. All of which can in turn help strengthen an employees’ sense of being understood, and cut attrition rates.
5. Work-life Balance
Pre-pandemic, many employees were regularly putting in a 40+ hour work week and missing important events and milestones in their personal lives. Commutes were long and demands were intense. But two years of working from the kitchen table or spare bedroom have given employees a new perspective. Now, as we enter the post-pandemic era, organizations are offering flexible work policies designed to maintain and increase collective work-life balance. In fact, 57% of workers that reported their overall work satisfaction as “strong” believe their companies are “world-class” or “very good” when it comes to providing flexible work options. It’s vital that companies make flexibility available to all employees if possible, and that workers are encouraged to manage the idea of what flexibility means to them. For some, this will mean leaving the office early to fulfill childcare duties, as they were pre-pandemic. For others, it might mean working in the evenings when they feel more creative, or when there are fewer people on Slack to distract them. It might mean integrating exercise and wellness into the working day and not sidelining it for after-hours. Managers need to find out what flexible working means to their team members and then take strategic steps to accommodate them.
Looking towards the future
Employees need a renewed and increased sense of purpose in their work. They want to connect socially and interpersonally with co-workers and managers. They want a shared sense of identity and to feel that where they work is where they belong. Companies that realize this and embrace change will be one step closer to success in the post-pandemic era. In times of uncertainty, leadership should be collaborative in nature, convey empathy and care for the needs of all employees.
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