Despite recent news of mass layoffs in tech, finance, and other industries, the American job market remains squarely in favor of job seekers. Now more than ever, companies are struggling to attract and retain qualified talent. The most recent report from the Bureau of Labor Statistics reports 11.4 million open positions in the United States.
The number of open positions alone doesn’t even tell the full story. About six million people left their jobs in April, 2022. Only 20% of those were layoffs or firings, the balance voluntarily quit to join other companies in droves. In other words, employees have incredible mobility within the labor market.
So it’s clear there’s a problem at hand, but why are employees leaving? Understanding why workers quit, and enacting changes to do the opposite, is key to becoming an attractive employer. Pew’s research shows that there are a few clear reasons, none of which have to do with fancy perks like free meals or rideshares to the office. As it turns out, workers unite on leaving due to a lack of basic similar features in their role. Among them:
The top two reasons for quitting are fairly guessable: poor pay and a deadend job. We’ll cover those down below. But the third reason, disrespect, is a little more fuzzy.
An astronomically high 57% of people who left their jobs reported that disrespect was a factor that pushed them out. Workers report that disrespect stems from a poor company culture, which leads to stressful situations including microaggressions related to diversity, equity, and inclusion and hostile relationships with their colleagues.
Many assert that humans are unpredictable liabilities when it comes to disrespecting their colleagues, and thus the only strategy to follow is a reactionary one. This is not the case. Instead, companies that take an active role in shaping respectful company culture outperform those which do not. Deloitte explains that these firms report 516% higher revenue growth over a 10 year period than those which do not.
To join this group of proactive company culture builders, take some small steps to enter the arena. Put yourself in the shoes of your employees. What would make them happier at work? Wellness programs, a sense of meaning, community building, and open communication are all good places to start. These programs don’t need to be expensive, creating a top down culture of simple kindness and transparency costs nothing.
This is the obvious one. People want to get paid for their work. And in today’s inflationary economy, a lack of substantial raises over the years leaves workers yearning for more. As wages rise across industries and salary data reaches the masses on platforms like Glassdoor, Payscale, and Blind, workers remain confident that the best way to get a pay bump is to leave to another company.
So what can you do to preemptively combat this worker churn? Pay people what they’re worth. Easier said than done, though. It takes disciplined practices to ensure you stay up to date with market wages while not overspending and maintaining human capital ROI.
These practices begin at the point of hiring. Create a sourcing top of funnel that targets workers in the pay and experience range for the position, and hold that throughout the process. Resist temptation to hire people far beneath their market value - these workers might look like a good investment at first, but they often leave your company quickly when they realize they can earn more elsewhere. This churn can cost you an average of $4,000 per hire.
Post hire and with your current employees, follow a strict and transparent wage adjustment process. The more often, the better. Consider enacting policies like Cost of Living Adjustments. Only 11% of employers include COLA into their compensation plans, but 100% of workers actively lose buying power as a result of increasing cost of living. This perceived lack of earning contributes, among other factors, to the reasons your employees will quit due to poor pay.
Nearly two-thirds of workers reported that when they feel like they have no opportunities for advancement in their company, they’ll quit.
This rate becomes astronomically higher in younger generations. Millennials and Gen Z workers look for mentorship and advancement opportunities, and they’re willing to jump ship quickly to get it. The average Millennial worker stays with their employer for just over two years.
In a perfect world, every one of your employees could rise through the ranks and build a dream career inside your firm. But, business leaders must navigate certain realities when combating employee churn due to deadend positions. Things like the Peter Principle - the idea that organizational hierarchies tend to promote workers to their level of incompetence - leave leaders with a conundrum. That is, how do you keep workers from feeling that they have no room for growth while not promoting them into positions they are not fit for?
The answer is creating opportunities for growth within your organization.
Don’t promote for the sake of promotion. Rather, prepare your employees to succeed ahead of time with access to inexpensive upskilling platforms and free mentorship, and promote them when they are ready to thrive.
This simple strategy pays dividends in many ways. First, Workers will feel that you are investing in their career, which builds loyalty. Second, promoting those with institutional knowledge in addition to position specific talent creates a faster period of adjustment for those in new positions. Third, it is less expensive to backfill lower positions than it is to hire externally for higher ones. This alone provides a clear return on investment on the aforementioned upskilling and mentorship programs.
Every company is different, and in turn, churn in your firm may be different than in others. Pew reports that other factors include childcare issues, lack of flexibility, suboptimal benefits, location, and hours. To really understand how your company fits into this mix, do something simple: ask your team.
Becoming an attractive employer starts with an understanding of each individual in your company. Survey your current employees to understand their motivations at work. Like you already do externally for marketing, create segments or personas that represent the makeup of your human capital. From there, create targeted programs to address the motivations of each segment of your workforce.
Once you have an understanding of your internal motivations, tie the key takeaways to your hiring process too. In interviews, discuss what motivates your potential hire in the workplace. Matching this to your company culture is just as important as making sure they’re competent in any other aspect of the position.
You don’t need to be Google or Facebook to be an attractive employer. It doesn’t take fancy free meals and highrise corner offices to make your people happy. Listening and reacting to the needs of your workforce is free, and taking action to adjust will pay dividends to your organization for years to come.