For all the employee engagement and employee satisfaction initiatives that companies implement on an annual basis, it would seem as though they’re all for naught. Employee turnover is at an all-time high, but simply trying harder to keep employees engaged is not enough according to best-selling author and organizational change expert, Lee Caraher.
“The reality is that more than 50 percent of people disengage from their work within six months, and more than 70 percent of them leave a company in just 12 months - these are alarming statistics yet organizations continue to miss the mark on employee retention and development."
Of course employee engagement is still important, but there are many factors that make employee retention difficult. “We need to approach employee retention in a more holistic way, which means we need to focus on the culture of the organization and the people who work for it. The reality is that if you keep hiring A-players then employee turnover rates will decline without requiring any other changes," Caraher says.
So, why exactly is the average employee turnover rate so high? It’s impossible to pinpoint the exact cause, but there are a wide range of contributing factors. Along with employee engagement, employee satisfaction is equally important. A new employee may be satisfied with their compensation and benefits, but they might not feel fulfilled in their role or think that there isn’t much room for career advancement at their organization.
Employee turnover rate has been on the rise for several years now. Some experts say that it’s due to more people looking for flexible work arrangements, while others see it as a symptom of an economic pandemic. According to Caraher, “employee turnover is high because organizations aren't continually investing in human capital development."
If you're a business owner, you likely don't need to read a list of statistics to know that the workforce is currently in the midst of "The Great Resignation," a pandemic that is forcing voluntary turnover rates to hit an all-time high. From the employee perspective, it's like a cold: employees start off hopeful and energetic, but quickly become frustrated and tired.
Employees may not be immediately looking for a new job after they feel unhappy at their current one, but if they feel abandoned by their organization or feel unchallenged in their role, it won't take long before they begin applying elsewhere.
Today's workforce values flexibility, and organizations need to make sure that employee expectations are communicated clearly from the beginning of employment. If you don't go out of your way to boost employee morale with good company culture by being respectful towards them and values their success while still meeting needs outside of work, then it will be difficult to have employee retention.
So, what's causing high turnover and the so-called Great Resignation? Well, there are likely many contributing factors, but it seems that both economic panic from 2020 and pandemic burnout are the leading causes.
Economic panic set in following the presidential election of 2020. The new administration rolled back employee benefits and employee compensation stagnated despite skyrocketing prices. This caused many organizations to lose their competitive edge, which led to employees quitting rather than being forced into accepting lower wages.
Employees are now able to find work that makes them feel fulfilled at companies that respect them as individuals, but there simply aren't enough qualified people for employers to hire. As a result, staff turnover rates have reached an all-time high.
According to Caraher, “this pandemic has been accelerated by an employee burnout rate of 60 percent among businesses who fail to invest in human capital development."
Employee turnover costs are at an all-time high in nearly every industry, but for some companies this pandemic is causing problems much closer to home. The construction industry has long been known to have notoriously high employee turnover rates.
It is expensive and time-consuming to find specialized employees needed for construction work, so many businesses choose not to sink the initial costs into training their contractors. This makes contractors more likely leave when they run across a job which pays better or comes with more benefits. This exacerbates high employee turnover rates even further for these organizations, hurting employee engagement efforts which might bring these unique employees back to them in the future.
And just as employee turnover rates have been rising, so too have employee absenteeism rates. It’s estimated that employee absenteeism costs U.S. companies more than $200 million each year because of lost productivity.
It can be difficult to pinpoint how much employee absenteeism factors into employee turnover, but it could certainly be a reason why employee turnover is at an all-time high. “About 20% of employees are engaged in their jobs, which means 80% aren't - this pervasive dissatisfaction has resulted in the pandemic we now see taking place within organizations worldwide," Caraher says.
The workplace has changed since the construction industry was first established. Employers are now willing to do whatever it takes to avoid a high turnover rate. Many find that remote work is their best option for avoiding employee turnover, even though the modern workforce was originally hesitant to embrace telecommuting.
And as employee retention becomes more difficult, employers should take advantage of employee engagement efforts by prioritizing flexible work options and offering other types of employee rewards programs designed specifically for worker satisfaction.
Employers will have a much easier time retaining employees if they embrace new methods of providing flexibility, opportunities for development, collaboration and recognition. If you can show your employees how much you value them and they bring to the organization then employee turnover rates will start to drop and employee engagement levels will increase.
According to Caraher, “companies that invest in employee development see a boost in employee performance and employee retention. Instead of seeing employee turnover as something you need to put out fires from, it should be considered an opportunity for human capital growth."
High employee turnover (both voluntary and involuntary turnover) is not going anywhere anytime soon, so employers will have to move forward accepting this new reality. If employee retention has always been difficult for your company, today's challenging market might require you to change what you consider normal.
As we’ve already seen, many companies are adopting remote work and flexible scheduling because these policies build stronger relationships with and help keep them competitive against other employers in their field. Other organizations have been working to improve employee compensation packages or utilizing employee recognition programs to boost employee engagement levels and employee retention rates.
In order to retain employees, companies need a well-rounded employee development plan that focuses on employee satisfaction. If your company truly values its workers, then it will take time out of its day to invest into the individuals who make up the workforce. "Instead of trying to quell employee turnover rates at any cost, encourage employees to stay through job enrichment and engaging them as valued members of the team."
Matter’s goal is to help businesses grow and retain a positive work culture, and empower good employees through praise and constructive feedback. If you found this information helpful and want to learn more about employee turnover rates, check out our comprehensive guide to employee turnover.
