According to the U.S. Bureau of Labor Statistics, over 47 million Americans voluntarily quit their jobs in 2021. In the month of November alone, nearly 4.5 million people resigned from their jobs, an all-time monthly high since the government started tracking resignation data. This trend appears to be continuing into 2022. According to the U.S. Department of Labor’s Job Openings and Labor Turnover Survey, nearly 4.3 million people quit their jobs in January, and followed by another 4.2 million in February. The U.S. Bureau of Labor Statistics reported 11.3 million job openings as of the last business day of February.
A recent Pew Research Center survey found that the three top reasons why Americans quit their jobs last year were low pay, a lack of opportunity for advancement and feeling disrespected at work. Among the other reasons given by workers for their resignations were childcare issues, a lack of flexibility to choose when and where they put in their hours and not having good benefits such as health insurance and paid time off.
Most experts agree that the COVID-19 pandemic likely was a central factor in causing the so-called “Great Resignation.” Lockdowns and work from home arrangements have led to employee demands for fewer working hours and more flexibility at work. The pandemic has also contributed to a widespread feeling of burnout among employees. As a result, many employees are focused on better pay and benefits, more flexible working arrangements and a chance to adjust their work-life priorities. Most employers were unprepared for this shift in workers’ expectations.
The cost of employee turnover for businesses is high. Experts estimate that losing an employee can cost a company 1.5 to 2 times the employee’s salary, depending on the individual’s level of seniority. There are also intangible costs associated with the loss of employees, including loss of knowledge and experience, loss of productivity for recruiting and training time, lower morale among retained workers and the loss of customers if the employee’s position was customer-facing.
Smart employers will recognize that attracting and retaining good employees in this tight labor market is a key to maintaining a healthy business. This issue of The Resource will explore some practical steps employers can take now to reinforce employee loyalty and minimize costly workforce turnover.
Survey your employees. Taking an assessment of your turnover risk is a good place to start. This will generally involve conducting a survey of your employees. The survey can be formal or informal, company-wide or targeted. Make sure employees feel comfortable expressing their opinions. You will want to ask questions such as, “What are your most pressing concerns about your job?” “What is most important to you in your career?” “What steps could management take to make the workplace better?” Let employees know that you value and respect their views. Employees like to feel their voices are heard and count for something.
Aside from surveys, with a little attention from management, employee dissatisfaction is not difficult to detect. Some signs of employee disengagement include increased absenteeism, customer complaints, changes in attitude, disruptive behavior and poor performance. Employee morale has been shown to affect everything from customer satisfaction to a company’s bottom line.
Define your company’s culture. Whether or not management has identified it, your company has a culture. A company’s culture is defined by its attitudes, values and focus. Does your company focus on and reward individual performance and metrics? Or are your employees expected to mentor and share responsibility for performance? Is the company highly structured, with a focus on hierarchy and process? Or is your workforce more team oriented? Do employees have flexibility and the ability to be creative? Or are their roles more structured and traditional? Company culture plays a large role in employee morale and job satisfaction. Employees who feel that they are a good “fit” with the company’s culture will usually feel more engaged in their jobs and more loyal to their employers.
If the company’s culture is out of step with its workforce, management may be looking at some serious retention issues. Changing a company’s culture may sound like a drastic step, and it sometimes may not be possible without a change in key management roles. However, making some modest adjustments could make a big difference in aligning the company’s culture with the expectations and desires of the workforce.
Assess your compensation and benefits package. Of course, pay and benefits are important to your employees. However, in some cases, when the company experiences a strong year, an increase in employee pay and benefits may be a lower priority, after management bonuses and shareholder dividends. Your employees’ perception that they are not being recognized for their role in the company’s success will likely motivate employees to explore other options. Pay equity is another concern. Are you rewarding the right people for the right reasons? Is there a pay disparity or even a perception of unfair pay practices across groups based on race, sex or other protected classifications?
In addition to assessing your internal pay structure for inequities, compare your pay and benefits package for key employees to packages for comparable positions with your competitors. Ask yourself if you would consider a move with the right incentives if you were in the employee’s situation. Bear in mind that your failure to engage and reward your employees may be an invitation for a competitor to pick off your key talent.
Finally, pay attention to your employees. Do they value more paid time off over a raise or bonus? Do they need flexible time for family caregiving responsibilities? Do they want more outside training or professional development opportunities? Do your employee benefit plans meet your employees’ needs? Having the right benefits can go a long way to success in recruiting and employee retention.
Provide feedback. One of the most important tools for professional growth and job satisfaction is a good mentoring system. Positive feedback and constructive criticism are keys to having employees both do well at their jobs and strive to advance in their careers. A good mentor can also assess problems at an early stage, while a solution is still possible. In addition to coaching, a good mentor champions his mentee for advancement opportunities. Employees who feel like they have an advocate for them in management are more likely to remain loyal to the company.
Provide transparency to employees. Lack of trust in management is often a key reason for employee turnover. But trust is not built simply by developing and publishing company mission and vision statements. Management must believe in the company’s values and demonstrate that belief by acting in accordance with those values. Management should continuously communicate company values to employees through its words and its deeds. Employees will be tuned into how management responds to challenges and opportunities, and if employees don’t have faith that management will adhere to its stated values, they will look elsewhere to continue their careers.
Demonstrate good leadership. Another key factor in an employee’s decision to look for other career opportunities is the perceived quality of the company’s leadership. Effective management will provide good training and development, fair and consistent rewards and recognition, effective mentoring and feedback, good communications and respect for employees. If employees do not see strong and visible leadership at the top of the company, they will look elsewhere to find it.
Encourage involvement. Be sure that your employees know that they are an important part of the company and key to the company’s success. Solicit their feedback. Listen. Engage them in making workplace improvements. Employees will gain more satisfaction from a change in the workplace if they feel that they had a say in why and how it was implemented. Reward engagement. Foster a sense of ownership. Help them to feel proud of the job they are doing and of the products and services of the company.
Keep your promises. If you promised flexible schedules, time off for childcare, raises or goal-based bonuses, make sure you keep those promises. If the company can’t currently fulfill its promises, communicate with employees about the reasons for any delay and the prospect of making good on those promises later. Even if a forecast or expressed expectation of reward is not legally binding, employees will remember it as a promise, and a failure by the company to live up to its commitment will impact employee morale and likely lead to turnover.
Invest in your employees’ future. One of the most important steps employers can take to show that they care about employees is to invest in employees’ training and development. Find out how your employees envision their futures. If an employee believes that his career path is compatible with the goals of the company, and the company makes a commitment to help the employee reach those career goals, the employee is much more likely to be a loyal and long-term employee. If the company has little room for advancement, explore lateral job changes that could broaden employees’ knowledge and skills. Be sure to encourage and reward mentorship and coaching.
Show you care about employees and their workplace. The one common-sense rule that all employers should embrace in their efforts to retain key employees is that employees want to know that their employers care about them. Even if you cannot afford to pay out retention bonuses to reward employee loyalty, sometimes a simple “thank you” or “job well done” will go a long way towards making an employee feel satisfied with his job. Rewarding star performers with small tokens such as extra days off, gift cards or certificates of accomplishment will also create more job satisfaction. Where employees have family pressures or special needs, flexible work schedules and work from home programs will often show that the employer is attuned to and sympathetic with its workforce.
Increasing employee job satisfaction and avoiding employee turnover is not always complicated and it need not be expensive. Simply paying attention to employee concerns and feelings and making an effort to let them know you care and want to assist them if possible will go a long way toward creating employee loyalty and retaining key talent in your workforce. Remember, if your workforce is disengaged, distrustful of management and uncertain about the future, your employees are ripe for picking off by your competitors. Take a few simple steps now and create strong and lasting employee relationships with the manpower and talent to make your business succeed.