2 in 5 employees are likely to leave their organization within 12 months.
The question is not one of when they’ll leave, but why they’ll leave.
So what, exactly, makes people quit?
For the most part, when joining an organization, many prospective employees will carefully consider a company’s value proposition- the very thing or things that make an organization different from others they’ve come across.
Traditionally, that value proposition has been shaped by what organizations believe will make an employee choose them over others, but more leaders are shifting their focus to what will make an employee stay.
At its core, employee retention revolves around experience, engagement, and connection; an organization’s people need to feel inspired by and connected to the values, visions and culture of their company, and organizations are paying more attention to this. That’s critical, given that 33% of employees don’t believe their personal values align with those of their organization!
Perhaps that’s also why 51% of companies are shifting their priorities to develop future-focused people strategies - the initiatives that incentivize employees to stay rather than jump ship.
Why, then, do people voluntarily leave their current companies?
Surprisingly, it’s not all about money
89% of employers assume that employees quit their jobs because of money.
Though still one of the more prominent reasons for employee turnover, salary and pay scale is no longer the deciding factor in an employee’s decision to exit their company.
For example, job satisfaction and meaningful work, especially among millennials, are critical drivers for turnover; according to Hays, 71% of millennial workers would take a pay cut for their ‘ideal job,’ while 44% of millennials are unhappy in the roles and work they perform.
Add that to the growing number of people who can’t envision staying with their company for longer than one year (approximately 15% of employees), and organizations are mitigating turnover on a more consistent basis. Even in roles where employees are happy, only 25% report being willing to commit up to 3 years (max) to their current company.
If it’s not all about money, why would an employee choose to quit their job? What about raises, workplace relationships, or development opportunities?
Employees expect more from their organizations than just a paycheck
Several studies and reports point to engagement, recognition, relationship and encouragement as reasons why people choose to remain in their roles, regardless of the pay scale.
Why is that?
Any employee will crave recognition for their work, and beyond that, most will also desire development opportunities that can help them grow (personally and professionally) while having a genuine relationship with their fellow team members and leaders.
According to a study by Mercer, recognition for contributions, and opportunities to work on meaningful projects are two key ways of helping employees thrive at work, globally. By providing teams with the chance to shine and showcase their skills, organizations can foster more engagement and confidence in their employees - 15% of employees are less likely to quit if given the room to grow and spread their wings!
Spreading one’s wings may not always come easy, however. Leaders have to be willing to provide a foundation on which employees can build their confidence and add to their existing skill set, which speaks to one aspect of employee engagement: development.
Learning and development, for example, is often cited as a notable incentive for employees to stay with their current company. Ceridian found that 83% of employees whose organizations provide them with learning & development opportunities are more likely to remain in their existing jobs. Similarly, 45% of millennials report that career development opportunities are very important when it comes to considering a role with a company.
Let’s not forget about the employee relationship
While the opportunity to learn, grow, and perform meaningful work is essential, employees also seek more than just the basics of a thriving organizational culture.
Consider the employee relationship.
Here at Kudos, we focus on the relationship employers build with their teams to help them thrive. This relationship will differ based on each organization, but the base of it must include trust, recognition, and communication.
As it turns out, we’re hitting the nail on the head with this approach!
28% of employees cite positive working relationships with leaders and colleagues as a top reason for staying with their companies. Contrastively, 32% of employees have to wait an average of three months to receive constructive feedback from their leaders, while 31% wished their leaders would communicate with them more consistently. A lack of communication from their leaders can hinder teams from building a rapport and positive relationship with those who must guide and mentor them.
Part of nurturing this relationship includes trusting employees and empathizing with their needs, their struggles at work, and their desires to advance. 82% of employees, for instance, would leave their current organizations for more empathetic ones, while 72% of employees would be willing to work longer and harder for empathetic leaders. If leaders can effectively and consistently communicate with their teams, build authentic relationships with them, and voice their support of their employees, they’ll be well on their way to winning the race to retaining high-performing team members.
Where does leadership accountability come into play?
Leaders have the significant responsibility of retaining their top-tier talent for the simple reason being that employees don’t have to stay.
There is no ‘rule book’ which requires an employee to devote x number of years to their organization, but leaders have to recognize which patterns and practices lead to high turnover, employee disengagement, and job dissatisfaction. You may be surprised to learn, for example, that leaders and managers account for at least 70% of the variance in employee engagement scores, failing to create environments in which employees feel motivated to stay.
In other words, leaders have to take accountability for their role in employee turnover.
Every organization will, at one point or another, face a people risk or human capital risk - both generally refer to the value an individual brings to an organization through their skills, knowledge and expertise, and the ‘risk’ comes into play when companies have to consider the cost of the loss of that value.
Only 1 in 3 executives feel their company’s ability to mitigate people risks (like turnover) is ‘very effective,’ and only 29% of HR professionals feel their leaders prioritize human capital risks. Those statistics don’t exactly inspire confidence, given that managers and HR leaders are tasked with retention and keeping employees engaged.
Under such pressure, it’s no wonder that the failure to attract but also retain top talent is the number one concern for most C-suite executives!
Interestingly, Gallup found that managers and leaders can influence at least 75% of the reasons for employee turnover. What this means is that leaders can play a proactive role in incentivizing employees to stay rather than jump ship.
Can leaders foster retention and relationships?
You may be wondering, “How can leaders tell when an employee is about to jump ship?”
Where do leaders or HR teams turn when employees leave consistently, or when turnover rates begin to increase? Without relying solely on tactics like exit interviews or employee satisfaction surveys, how are leaders supposed to know how their organizations are performing and thriving?
It begins with listening to what employees are, and aren’t, saying. Not every employee will voice their concerns, issues, or pain points with their leaders, which is why leaders have to take note of how employees are doing beyond traditional means of communication.
Kudos, for example, uses deep analytics and insights which provide organizations with a better understanding of how their people perform, what they value most, where improvements in company culture could be made, and how engaged their teams are.
That information is incredibly valuable to organizations and their culture; however, just 33% of companies go beyond listening to their teams by actually analyzing the key drivers of both engagement and disengagement in their organization. Moreover, only 1 in 4 HR professionals uses analytics to understand why their employees leave their company!
By paying close attention to what employees value, what drives their performance, and the overall health of the organization (or Culture Biorhythm™, as we call it here at Kudos!), leaders will not only nurture engagement but can also pinpoint the key reasons for turnover in their company.
How can organizations keep their employees from jumping ship?
- Provide development opportunities - 83% of employees view skill and knowledge updates as their own responsibility, rather than their company’s. On the contrary, organizations should be encouraging their employees’ professional growth, supporting their desires to increase their skill sets and expand their areas of expertise. Not only do employees benefit professionally and personally, but organizations can also benefit from these new skills and highly engaged teams.
- Make wellness a priority - Employees who are thriving in their organization with well-being at its center are 70% less likely to miss work. Prioritizing a healthy work environment where employee burnout is low and engagement is high is an excellent way of incentivizing teams to stay.
- Communicate with your people - 65% of employees seek clarity when it comes to the expectations of their roles and responsibilities. The simplest way for leaders to validate their employees’ concerns and encourage productivity is to communicate what they expect from their teams and how they’ll help them achieve their goals.
- Encourage initiative - 57% of employees feel their organizations make it easy or accessible to explore projects and opportunities that go beyond their typical job scope. And people want the opportunity to spread their wings! Giving people the chance to try their hand at new projects, create new initiatives, or contribute in more significant ways incentivizes them to stay and broaden their skills.
- Hold ‘stay’ interviews - Unlike exit interviews, a ‘stay’ interview is one in which leaders reassess why they initially hired an employee, reiterate why the employee chose the company, and discuss their goals, needs, and how well their expectations are being met!
- Focus on engagement - Engaged employees are 59% less likely to seek out a new job or career in the next 12 months. That’s terrific news for organizations who prioritize engagement, but how do they go about doing so? At Kudos, we believe in recognition as part of a broader engagement strategy. Simply thanking your teams today for their hard work, contributions and dedication can begin to foster engagement. Want to take your engagement strategy to the next level? Let’s chat!
97% of c-suite executives predict an increase in competition for talent acquisition. What is your organization doing to retain its amazing people and encourage top talent to jump on board?