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The Challenge of Retaining Employees In 2019

The Challenge of Retaining Employees In 2019
Employers need to set more realistic expectations and follow through to deliver on those expectations to improve retention of new hires...

More U.S. workers are quitting their jobs today than at any time since the numbers have been recorded.

The Bureau of Labor Statistics (BLS) reported that 3.5 million people—or 2.3% of the total workforce—left their jobs voluntarily in October, the most recent month for which data exists. Private-sector workers quit at a rate of 2.6% in October, up from 2.4% the previous year.

In 2000, the BLS began recording what's known as the “quits rate”. The number of employee quits has increased for nine consecutive years. The last time the voluntary quits rate was as high as it is now was April 2001. Additional sources support the BLS findings. Global HR consulting firm Mercer surveyed 163 large employers in 2018 and found that voluntary turnover the year before, not including retirements, accounted for 15.5%, up from 14% the previous year. According to Mercer, millennials accounted for half of voluntary separations (51%), followed by Generation X (25%) and baby boomers (19%). The oldest and youngest generational cohorts—those born before 1945 (2%) and after 2000 (4%), quit in much lower numbers, due to their relatively smaller representation in the total workforce. An analysis conducted by Compdata, the consulting practice at Salary.com, showed that, based on data from nearly 25,000 organizations of varying sizes in the United States, employee quits increased from 13.5% in October 2017 to 14.2% in October 2018.

The hospitality (31.8%), health care (20.4%), and manufacturing (20%) industries had the highest rates of total turnover, according to Compdata. In contrast, utilities (10.3%), insurance (12.8%) and finance (16.7%) had the lowest.

Labor market conditions—historic levels of job openings combined with low unemployment— appear to be driving the job-hopping trend.

"It's no secret that the job market is tight. With unemployment under 4%, there are ample opportunities for employees to jump ship and look for another job that might offer better perks or salary," said Allison Betancourt, vice president of people strategy at Addison Group, a Chicago-based staffing and consulting firm.

Approximately 40% of employees who quit in 2017 did so within 12 months of being hired, according to a study based on data from over 34,000 exit interviews analyzed by Work Institute, a workplace research and consulting firm in Franklin, TN. About half of workers who departed in their first year left quickly—within the first 90 days. "The rise in first-year turnover is a sign of the job market, as employees can easily go elsewhere if a job doesn't meet their needs and expectations," said Danny Nelms, the president of Work Institute. He added that employees who have not already quit are likely to be evaluating their opportunities. "With a healthy economy, robust confidence and an abundance of jobs, workers are expected to be increasingly selective about where they work and will voluntarily change jobs when a better opportunity is present."

"Most studies report that employees leave their current jobs for better-paying positions, and one of the best ways to combat turnover is to ensure that pay in your organization is both externally competitive and internally equitable," said Kent Plunkett, CEO of Salary.com.

But other research tells a different story. In the Mercer study, promotion opportunities and career changes were given as two of the top reasons most workers (especially members of Generation X and millennials) quit their jobs. Interestingly, the emerging Generation Z workforce cited returning to school and base salary as the most prevalent reasons for leaving a job. Secondary reasons overall included issues related to benefits, fit with the organization or the job, and relationship problems with direct supervisors or managers.

The Work Institute found that career development, work/life balance, and bad managers are consistently the top issues that push employees to job-hop, with compensation cited in only 9% of exit interviews. That's not to say that pay is not important; reasons for quitting related to compensation and benefits have increased by more than 26% since 2010.

Nelms suggested that employers take steps to understand the needs, preferences and goals of their employees, focusing on new hires. "Employers need to set more realistic expectations and follow through to deliver on those expectations to improve retention of new hires," Nelms said. "Employee feedback should be solicited, and onboarding and other training should be evaluated to better understand where employers are not meeting the expectations of newly hired employees."

Betancourt added that HR should work on improving work flexibility, career pathing and learning opportunities. "A clear career trajectory with guidance on how to achieve goals is [something] current employees look for in a company," she said. "If you don't invest in them, how can you expect them to invest in you?"


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