Summary
July 2022 saw 5.9 million total separations – More
Replacing a full-time employee can cost up to 2x the amount of that employee’s annual salary — More
Only 28% of workers say they have received a raise higher than the current 8.5% inflation rate — More
48% of people are leaving their current job and moving to an entirely new industry — More
16% of workers would consider quitting if asked to work on-site full time — More
40% of workers quit their jobs within the first year of employment — More
Millennials are twice as likely as boomers to quit their jobs — More
The Great Resignation, the Great Attrition, the Big Quit, or the Great Reshuffle. Since 2021, HR professionals have been dealing with high employee turnover rates and resignations as people started to return to work following the start of the COVID-19 pandemic. Over a year on, the Great Resignation shows no sign of abatement. The number of new job openings vastly outweighs the number of potential new employees willing to fill those roles.
Webinar: How to Retain Hourly Employees
In this article, we’ll provide you with seven eye-opening employee turnover statistics obtained from the latest studies that shed light on the current high turnover rates. We will discuss what HR professionals can do to create a company culture that fosters employee retention.
1. The average turnover rate remains much higher than pre-pandemic levels
According to the latest Job Openings and Labor Turnover Summary by the US Bureau of Labor Statistics (BLS), July 2022 saw 5.9 million total separations. Total separations refer to quits, layoffs, discharges, other involuntary turnover, and other separations. In December 2019, quits were registered at 3.5 million. In July 2022, the number of employees who quit their jobs was 4.2 million. That means that this is still 20% higher than the annual turnover rate at pre-pandemic levels.
According to the senior director of research at Gartner, Piers Hudson:
New employee expectations, and the availability of hybrid arrangements, will continue to fuel the rise in attrition. An individual organization with a turnover rate of 20% before the pandemic could face a turnover rate as high as 24% in 2022 and the years to come. For example, a workforce of 25,000 employees would need to prepare for an additional 1,000 voluntary departures.
Sectors like transportation, warehousing, and utilities saw an increase in quits of 39,000. Other sectors saw decreases, like healthcare and social assistance (-73,000) and state and local government education (-21,000).
2. The cost of employee turnover is high
According to Gallup, replacing a full-time employee can cost anywhere between half to two times the amount of that employee’s annual salary. These financial and organizational costs include:
- The cost of recruitment and the onboarding process
- The cost of training new employees
- Operational inefficiencies
- Under-resourcing and operational delays
- Negative impact on employee morale and burnout
- Loss of organizational knowledge
- Loss of innovative thinkers and leaders (This is considered to be an opportunity cost.)
- Negative impact on the customer experience due to organizational inefficiencies
3. Inflation and the fear of recession is a growing concern amongst workers
Another factor contributing to higher turnover rates is the current mismatch between wages and the cost of living, as well as a pervasive fear of an upcoming recession. A reported 41% of job seekers have received pay raises to combat inflation in 2022, but only 28% of respondents say that they received a raise higher than the current 8.5% inflation rate. In light of this, 78% are looking to switch jobs in order to make more money.
As fuel prices have more than doubled, 86% of respondents who drive to work sometimes and 68% who do so all of the time are feeling the hit; 59% say that these gas prices are having a “high” or “very high” financial impact on their lives.
Given the current landscape, fears of a recession seem to be widespread amongst US employees — 80% expect the US to enter a recession within the next year.
4. Many workers are switching industries
According to a study by McKinsey, nearly half (48%) of people are leaving their current job and moving to an entirely new industry. Worldwide, only 35% who quit in the last two years took on a new role in the same sector.
This has affected different industries differently. Sixty-five percent of employees who quit the finance and insurance sector changed industries altogether. This percentage was higher for the public and social sector, which lost 72% of workers who quit to go to other industries.
It would appear that many employees feel more confident to take the leap in their career development toward something different. People are looking for jobs that offer more flexible work arrangements, remote work opportunities, and generally greater job satisfaction.
5. Flexibility is key when seeking better work-life balance
A 2022 Gartner survey found that many employees are seeking work environments that offer higher levels of flexibility. Flexibility could refer to the physical location where work takes place, the number of working hours, and the days worked.
Results show that 52% of respondents said levels of flexibility would impact whether or not they stick with their current employer. 16% would consider quitting if asked to work on-site full time. Eight percent would also quit even if asked to work on-site partially.
6. Most new hires quit in the first year
The Work Institute’s 2020 Retention Report found that nearly 40% of the respondents who quit their jobs did so within the first year of their employment. Two-thirds of these employees left in the first six months.
It is important to note that these are pre-pandemic and pre-Great Resignation statistics. These rates are likely to be even higher now.
7. Younger people are more likely to leave their jobs
A study by EY found that age influences attrition rate. Boomers and those with over 10 years of tenure are most likely to stay in their current roles. This is particularly true of employees working in government or education roles.
Millennials, on the other hand, are twice as likely as boomers to quit their jobs.
How to increase employee engagement and your retention rate
For business owners and human resource professionals, employee retention is a top priority. It not only costs less but also ensures more stability and consistent quality within the organization. There are a number of things that can be done to boost your employee retention strategy, lower turnover rates, and hold on to your top talent.
Understand why employees leave
Understanding the reasons you’re losing good employees will help you make necessary changes to provide a better employee experience, which will ultimately help you hold on to more of your people.
Webinar: How to Predict Employee Flight Risk
According to a study by McKinsey, the top reasons employees quit are:
- A lack of career development opportunities and room for career growth – 41%
- Inadequate total compensation – 36%
- Uncaring and uninspiring leaders – 34%
- Lack of meaningful work – 31%
Conducting exit interviews helps you understand the reasons why your people are leaving and puts you in a better position to do something about it. If you’re finding that a lack of professional development is commonly cited, you might want to implement learning and development opportunities to boost your employee retention rate.
Create opportunities to attract nontraditional workers
It can be argued that the current system is geared toward attracting and retaining traditional workers. These are career-oriented people who are happy to make sacrifices in exchange for a good salary, perks, title, and career advancement. Unfortunately, these workers are not large enough in number to fill the ever-growing demand for work.
Employers should look to nontraditional workers. McKinsey classifies them as:
- Do-it-yourselfers – These workers value flexibility, meaningful work, and adequate compensation. They are typically between 25 and 45 years old and can be found to be self-employed, in full-time traditional roles, or doing gig and part-time work.
- Idealists – This group tends to be younger — aged between 18 to 24. Many are students or part-time workers who are not tied down by things like mortgages or dependents. They value flexibility, career development, meaningful work, and community. Compensation is not as high on their list of priorities.
- Caregivers and others – These are people who have largely stayed home since the pandemic. They are predominantly women, aged between 18 and 44, and are responsible for the care of their children or other dependents. They value good compensation for their work but need flexibility and support from their employers in order to continue their care.
Generally speaking, non-traditionalists value:
- Flexibility
- Adequate compensation
- Meaningful work
- Support for health and well-being
- Having reliable and supportive people in the workplace
For employers to attract these personas, it is important to remove barriers to employment that might stop them from being hired in the first place. This could include educational qualifications that might not be prevalent amongst these groups and are also not really necessary for the job upon re-examination.
Attracting such employees could also require HR teams to reach out beyond traditional recruitment platforms. Nontraditional workers might not be so prevalent on online job boards or might not spend so much of their time on LinkedIn. Companies might want to consider bolstering their referral programs or exploring other social media platforms.
Focus on creating work environments that foster employee retention
Employees are looking for more than just a high salary. Companies need to work on developing a culture at the workplace that makes people want to stay. HR teams can do this by:
- Listening to and addressing the needs of their employees
- Prioritizing psychological safety
- Working toward building a strong sense of community at work
- Beyond exit interviews, frequently asking for feedback and asking questions about what will make employees stick around
- Offering well-being bonuses or perks
- Funding career development programs
According to the Society for Human Resource Management (SHRM), the key to employee retention and greater job satisfaction depends on these five factors:
- Respectful treatment of all employees at all levels
- Compensation/pay
- Trust between employees and senior management
- Job security
- Opportunities to use their skills and abilities at work
Equip HR to better manage and prevent turnover
In light of today’s tight labor market, it is essential that HR teams prioritize employee retention and reduce turnover. Executive Advisor and CEO of Status Flow Chris M. King dives into some strategies to stop employee turnover in a recent webinar with Workforce.com, which you can access below:
Webinar: How to Stop Employee Turnover
With the right strategies and the right tools, turnover can be mitigated and sometimes even prevented. Utilizing workforce management software combined with the right strategic initiatives makes this possible. Get in touch to learn more about how Workforce.com can help keep the cost of your employee turnover low.
