High staff churn is here to stay. Retention strategies require a rethink
In the not-so-distant past, bosses did not have to worry as much about their workforces. Newcomers could absorb the corporate culture osmotically. Workers’ families were invisible, not constantly interrupting Zoom calls. Employees had a job, not a voice. Now firms have to “be intentional” (management-speak for thinking) about everything from the point of the office to how staff communicate with each other. Retention is the latest area to require attention.
The spike in staff departures known as the Great Resignation is centred on America: a record 3% of the workforce there quit their jobs in September. But employees in other places are also footloose. Resignations explain why job-to-job moves in Britain reached a record high in the third quarter of this year.
Some of the churn is transitory. It was hard to act on pent-up job dissatisfaction while economies were in free fall, so there is a post-pandemic backlog of job switches to clear. And more quitting now is not the same as sustained job-hopping later. As Melissa Swift of Mercer, a consultancy, notes, white-collar workers in search of higher purpose will choose a new employer carefully and stay longer.
But there is also reason to believe that higher rates of churn are here to stay. The prevalence of remote working means that more roles are plausible options for more jobseekers. And the pandemic has driven home the precariousness of life at the bottom of the income ladder. Resignation rates are highest in industries, like hospitality, that are full of low-wage workers who have lots of potentially risky face-to-face contact with colleagues and customers.
One conventional solution – identifying a few star performers and bunging them extra money – is not a retention strategy if large chunks of the workforce are thinking differently about their jobs. What should managers be doing?
First, they should systematically gauge the retention risk that their firm faces. Working out what has driven people to quit is too late; rather than exit interviews, forward-thinking firms conduct “stay interviews” to find out what keeps employees. Focusing on teams cut back during the pandemic is another tactic: burnout rates are likely to be higher in departments that took lay-offs. Understanding a firm’s vulnerability to other employers is also key. When behemoths like Amazon or Walmart raise wages or add perks, the effects ripple beyond retailing.
Second, managers need to pull different levers to retain different types of people. Salaries matter to everyone, but for lower-wage workers in particular, benefits like health care have also become central. A recent survey of young Americans by Jefferies, an investment bank, found that health concerns were the prime reason why people with only a high-school education had quit their jobs.
It’s a similar story for flexible working. For white-collar types the split between office and home is what counts. For blue-collar workers, single parents especially, scheduling matters – when their shifts start and end, and how much leeway they have to manage their time.
Firms also need to think harder about the career paths that entry-level employees can take. In a recent survey of large firms conducted by the Institute for Corporate Productivity, a research outfit, a majority admitted they did not have adequate data about the skills of their workers, making it harder to spot talent. A quarter reckoned that LinkedIn knew more about their workforce’s capabilities than their own firms did.
Third, managers should plan for how to find new workers. Remote working makes it easier to lose people but also to bring freelancers on board quickly. Qualification demands can be relaxed. In recent years, IBM has removed the requirement for undergraduate degrees from over half of its American job openings. And there is no better time for firms to take aim at dim-witted regulation. In response to a shortage of lorry drivers, Britain’s government has decided to combine separate tests for driving rigid and articulated lorries into one.
The Great Resignation should also prompt a question that rarely gets asked – exactly what level of churn is right? It is more expensive to hire new employees than to keep current ones. Yet by that logic, companies would never want anyone to quit. The mix of old and new is what matters. Existing hands provide cultural ballast; joiners bring fresh skills and perspectives. Keeping good employees happy is vital. But people are like water: there is such a thing as too much retention.