By Faye Wai
17 min read
The great resignation, turnover tsunami, the big quit, whatever you call it—2021 has been dubbed the year of employee exit where we’re seeing people all over the world resigning left and right.
Leaders ought to take note because employee retention is a key indicator of workforce stability. It provides a vital reference about how well your business is taking care of its people, whether working there offers a good work life balance, a competitive salary, or growth opportunities. High turnover rates signify room for improvement in employee experience and your organization’s culture.
Low employee retention is a huge problem
The real cost of low employee retention
Key statistics about 2021’s employee retention crisis
Reasons why employee retention is so low right now
How to spot disengaged employees in 2021
What makes employees stay with a company
13 actionable strategies to increase employee retention
Employee retention is considered an organizational goal of keeping employees and their contributions for the long term. It describes the situation where employees aren’t actively seeking other job opportunities and choose to grow and stay with their current company.
Of course, career switches nowadays aren’t at all rare. A lot of the time though, companies only focus on why people leave (and only find out why during the exit interviews). This article will dive into everything you need to know about employee retention and what you could proactively do to keep your people happy and motivated.
Organizational performance and output aren’t the only things affected when a talented employee leaves. The broader team culture, morale, and determination of other employees to stay also take a hit. If you’d prefer to frame this as a bottom-line impact, according to Gallup, the cost of employee turnover in the United States in 2019 was up to $1 trillion per year. That’s a lot of (avoidable) money down the drain.
To help us understand the current landscape, the following sections will investigate the actual cost of employee retention and the most recent indicators of 2021. I’ll also dissect the reasons why employee retention is so low coming out of the pandemic.
Gallup’s “conservative estimate” states the cost of replacing an employee can range from 1.5 to 2 times their annual salary. In C-suite and executive positions (often challenging and time-consuming to hire for), turnover costs often top 213% of salaries.
It takes a considerable amount of resources to replace a departed employee: on average, it takes 94 days to fill a high-skilled role. In addition to lost productivity while filling an opening, add on interview time, onboarding, and training the replacement after recruitment. Perhaps most valuable yet often forgotten is the institutional knowledge (the ins and outs of your company’s dynamics, collaboration styles, and values) and experience on the job that employees take away with them when they leave. And don’t count out the repercussions that extend beyond that particular role; leaders might also face a tank in team morale, meaning more individuals are susceptible to the idea of leaving.
In sum, here are the main costs of employee turnover:
An alarming number of employees are quitting their jobs. In the US alone, almost four million people quit their jobs in April 2021. As the market reopens, employers are struggling to fill new and critical roles as employees become more selective and look for something better. Oh, and it doesn’t stop there. Microsoft’s survey of more than 31,000 global workers found that 41% are considering leaving their current employer this year.
This statistic is concerning, especially as 47% of HR leaders view retention as the top talent management problem they face (even more than recruitment at 36%).
It’s worth emphasizing that compensation isn’t the main reason why people leave their jobs. According to the 2021 Work Institute’s Retention Report, the top reasons why people leave are career, health and family issues, and work-life balance. The pandemic has also contributed to these factors; let’s take a closer look in the section below.
Pre-pandemic, there were already many known causes of employee turnover. Here are some that left an extended mark after our drastically changed world of work:
Accustomed to flexibility in location and hours, remote work is a core reason people choose to leave. One survey showed how 1 in 3 office workers are willing to quit if their organization ends the WFH mode.
Even before COVID-19 struck, 94% of respondents in a Deloitte survey showed that employees wanted flexibility. It’s easy to understand why the idea of mandatory in-office work isn’t exactly hitting home. We had to switch to work from our homes manically and unprepared at the beginning of 2020. It took a while to get used to it, and now you’re asking us to go back to the office? This year and a half proved to office workers that they could take their laptops and work from anywhere in the world (and some data points to how productivity has improved instead of taking a hit).
The younger talent force is also increasingly looking for autonomy and trust from management. Organizations that can afford to let people work remotely but insist on physical presence at the office will face low employee retention. A two-hour commute with no private kitchen to make tea? No thanks.
COVID-19 canceled most sources of downtime like vacations in 2020. And our research survey showed that sick time was vastly under-utilized and is hurting people. Many workers gave up their vacation time last year...and even if they did take time off, it was probably a staycation close to home without the company of family and friends.
This new Robert Half survey of 2,800 workers also found out that 4 in 10 employees are more burnt out than a year ago, and 43% of them are ready to take at least three weeks off this year.
The lack of real, restful rest means that people are finally prioritizing mental health, and some are opting to leave their jobs for an extended break to deal with overwhelming fatigue.
While the worst of the pandemic is hopefully over, employees do remember how their leaders treated them during the lowest of lows. The untrusting, abusive side of employers who didn’t provide support or reassurance during the crisis was unveiled, meaning employees are naturally seeking more people-centric workplaces where they can grow their careers.
Have you learned more about yourself from the isolation last year? As the world was disrupted and turned upside down, suddenly, our daily lives were put on hold too. We were forced to sit with ourselves, and according to the Pulse of the American Worker survey, half of all workers said the pandemic had pushed them to re-evaluate their career goals. And with the challenges from industries such as hospitality and travel, 48% are rethinking the type of job they want altogether. Not surprising.
There’s no more need for speculation; the war for talent is already here. Just over one year ago, the global market was in a terrible place, and we were forced to pivot to flight or fight mode. Millions of people lost their jobs, and those who kept them felt like it was too risky to move.
A year later, things are moving fast. Industries like the restaurant and event industry are now competing heavily against each other for the bounced-back demand of workers. We’re at the peak of hiring demands with millions of job openings as countries open back up. New opportunities after lockdown are enticing—let alone the known fact that an effective way to increase your compensation is to switch jobs.
Want to future-proof your employee retention? Start small and observe how your people show up at work. Here are a few indicators that it might be good to have a sit-down conversation about how your employees are feeling.
Are they doing the bare minimum and always needing your prompts to start new projects? While this might indicate the autonomy they’re given, it speaks volumes when an employee appears to be uninterested in their work. Low energy and a negative attitude are typically the early signs of employee disengagement.
Yes, yes, silence is golden, there are many introverts out there, and we’re always preaching the skill of active listening. But if a teammate never speaks up during a brainstorming session or voices their concerns, the lack of communication is a strong indicator that they’re unengaged.
An empty desk is easy to spot, but if someone’s always skipping meetings and not readily online, they might be withdrawn from their work. Take note of mistaking presence for engagement, though—we should be mindful of health issues and personal circumstances too.
By all means, some people are happy where they’re at. But when a person has been in the same role for years and years, they may find that the job has become repetitive. The boredom that comes with the absence of evolving at an organization may sow discontent, especially when work produced is unsatisfactory.
In 2020, the US Bureau of Labor Statistics showed that the typical employee stays at a job for just over four years. But the fact is, there’s a push and pull for everything, including non-work factors, personal situations, and perceived job opportunities. This section explores the role leaders play in employee retention and some of the strong reasons employees stay at their companies.
HR departments are often labeled as the stewards of employee retention. They’re responsible for presenting retention data and conducting exit interviews, but it doesn’t stop there. Metrics such as voluntary turnover and retention rates by team represent the overall employee experience, which reminds us of this—the manager is often the primary touchpoint that causes employees to leave.
While it’s essential to let managers know that retention is a priority, every single person in an organization plays a role in employee retention. From coaches to coworkers to even customers, each interaction influences whether employees choose to leave or stay with a company.
Undoubtedly, working with great people and having a supportive manager makes it hard to leave, especially when you love the work you do!
There’s more to staying, though. Here are some compelling reasons why people stay, pulled from LinkedIn’s 2021 Workplace Learning report:
We can argue whether or not it’s easier to focus and be productive while working at home. But with the right tools such as an intranet to centralize important updates, remote work provides favorable conditions for deep focus, higher autonomy, and better flexibility. Note that social connection is something that organizations desperately need to work on because lonely employees are two times more likely to quit.
I know how frustrating it is when you invest significant time and money into recruiting a new teammate, only to have them leave within two months. When a company doesn’t properly onboard a new employee into the organization’s values and culture, little blockers pop up. Frustrations about navigating a small tool or unclear expectations from the get-go can lead to uncertainty and anxiety.
Actionable tips:
A workplace that revolves around its people will naturally take interest in its employees’ needs and pain points. This means that leaders are focused on making sure their employees feel valued and achieve a sense of belonging at work.
Actionable tips:
Employee engagement is not enough. Employers need to equip their people with the right attitudes, tools, and support to deliver outstanding results. Ask your employees what programs and software can help them. It also helps maintain a clear scope of work and responsibilities between each individual with an org chart.
Actionable tip:
A great manager trusts their people and admits when they don’t have all the answers. They communicate effectively and support team members as they debate and have open discussions. Set the expectation of empathy for people’s individual situations.
Actionable tips:
For a safe and productive workplace, trust is essential. Without trust, managers might be dubious about work quality and eventually resort to micromanaging. And on the flip side, employees who trust their colleagues and leaders are often more collaborative, creative, and productive.
Actionable tips:
Employers are encouraging employees to take breaks and go on vacation. Emerging from the pandemic, some are even shutting down offices for weeks to let people rest more. Leaders should learn how to look for cues from those who may be struggling and gear up for difficult conversations.
Actionable tips:
When a crisis looms, people are more anxious and aware of stability at work. After recognizing that the past year wasn’t quite “business as usual”, it’s essential to reassure staff that the company will shift and that you’ll get through the challenging times together.
Actionable tip:
Establishing open communication channels for your people to stay in the loop is a key employee retention strategy. Why? It encourages professional disagreement and fosters project innovation, leading to better collaboration.
Actionable tips:
There’s a positive relationship between retention and employee recognition. So much that 82% of people say that recognition is a key part of their happiness at work! And it’s no surprise—because when good work is validated, people feel a sense of achievement.
Actionable tips:
Your people’s success is your organization’s success. Companies can reduce turnover and build loyalty by providing training and support to employees through workshops, courses, networking opportunities, or other resources. When encouraged to be creative and take risks, they often want to channel their inner inventiveness and bring something fresh to the world.
Actionable tips:
Employees want to take ownership of their work and be supported along the way. New to the concept of employee empowerment? Imagine having no voice for what you need to do your best job. It’s incredibly demotivating, frustrating, and you could already guess that this reduces productivity drastically. That’s why it’s critical for modern workplaces to make empowerment a part of the organization’s culture, and the good news is that there’s only one way to start—by asking your people what they want.
Actionable tips:
Leaders often talk about the importance of feedback but aren’t skilled in giving and receiving it themselves. When feedback is welcome, listened to, and acted upon, people naturally feel valued and part of the organization.
Actionable tip:
The rapid shift to remote work has exacerbated and expanded workplace inclusion barriers. Over 80% of our survey participants experienced disconnection from their workplaces’ cultures, as well as communication obstacles. Do your current communication practices encourage inclusion and belonging?
Actionable tips:
To win the talent war, organizations should do their best to offer flexibility and listen to their workers. Leaders can do a lot to increase employee retention. Today, employees take a holistic view of their jobs when deciding whether or not to stay. If you agree that people are your most valuable asset, let’s get to work.
Hopefully, this article has illustrated the need for organizations to proactively retain employees and build a human-centric culture that acknowledges individual needs.
Any strategies I’ve missed? Let me know in the comments below!
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Faye Wai
Jostle’s employee success platform is where everyone connects, communicates, and celebrates at work. Find out more at jostle.me. © 2009–2024 Jostle Corporation. All rights reserved.
