Turnover is Trending Upward. Here’s How to Reduce It.
According to the 2019 Retention Report: State of the Workforce conducted by the Work Institute, in 2018 a staggering 41.4 million U.S. workers voluntarily left their jobs. Nationally, employee voluntary turnover exceeded 27% that year. Turnover trends demonstrate an 8.3% increase over 2017 and 88% increase since 2010. If you allow this trend to continue, U.S. voluntary turnover will hit 35% by 2023, placing companies in continuous and enormous risk.
Competition for workers has intensified in the last several years. With a stronger economy, job creation is expanding at a record pace and unemployment has declined to historic lows. The Work Institute conservatively estimates that the cost to lose a U.S. worker is $15,000. Generalizing this cost to U.S. voluntary turnover in 2018, U.S. employers have lost $617 billion to employee turnover. At the current trend, that number could be $800 billion by 2023.
Preventable Reasons Employees Quit Continue to Trend up – Suggesting Companies Are Not Acting on the Right Reasons.
77% of the reasons why employees quit could have been prevented by their employer! Four preventable themes are trending up. These include:
- Job Characteristics (↑81%)
- Work Environment (↑53%)
- Career Development (↑32%)
- Work-life Balance (↑20%).
- And the 5th reason has been around for a long time: Manager Behavior.
Return on Investment in Retention
To show what a significant outcome a small investment in retention can have, consider the impact of improving ratings across the following scenarios:
- For every 100 employees who move their company ratings from fair or poor to excellent, 37 fewer employees would leave in the next year, amounting to $555,000 in savings.
- For every 100 employees who move their growth and development ratings from fair or poor to excellent, 21 fewer employees would leave in the next year, amounting to $315,000 in savings.
Tips to Improve Your Retention
Ensuring that your selection process and career development program provide you with objective data by using assessments can make all the difference in reducing turnover and increasing employee engagement. Here’s a few suggestions.
Job Characteristics need to be aligned with the new hire’s traits.
Employers must get better at selection, including:
Career Development programs should include opportunities for employees (and the organization) to:
- Learn about their vocational identity and self-concept, including who the employee is, and where and how and with whom the employee does their best work
- Assess occupational personality, values, skill motivation, and interests
- Identify and learn about occupational alternatives at the organization
- Understand preparation and skill development requirements for selected alternative
Skilled Hiring Managers Create Better Work Environments All Around
In January of 2020, The National Bureau of Economic Research study reported that relying on pre-employment test scores does a better job of identifying workers who will have longer tenure than allowing managers to use discretion. It further argues that all other steps in the process, i.e., resumes, screening, reference checking, interviews have only a limited capacity to determine whether a potential employee has the right skills and is a good fit for a particular job.
Then, deduct (or add) HR’s relationship and reputation with hiring managers. If you have hiring managers who make poor judgement hiring decisions, or have preferences that do not align well with your firm’s interests, or have no faith with HR’s selection process, turnover goes up and retention and engagement go down.
Partnering with us will get your managers partnering with you. When we initiate applicant testing at your organization, we provide manager training which covers the instruments being used, the hiring process and where the testing fits in, and how to determine if the candidate is the best fit for the job. We also partner with your hiring managers to create the job profile, which takes little time and gets them committed to the value of the report and finding the best fit. Because they helped us create it, they believe in the value of your recruiting process! And we partner with your recruiters by training them on how to administer the testing platform(s) in order to send the assessment to the candidate, the report to the hiring manager, and be an advisor in the results of the report.
We have the tools to drastically improve your ability to place, promote and develop people into the right jobs – thus matching characteristics; improving career development, management behavior and work environment. Let us show you how.