The solution to a high quit rate is right under your nose
The employee quit rate rose to 2.4% in May — a 16-year high. So what's an employer to do?
Let's face it: It's an employee market. The low unemployment rate may be good for the economy, but it presents a challenge for employers that need to fill positions.
That means the war for talent in full force, with employers using every tool they have to attract applicants. What's more, employees know that their best shot a promotion or raise is with another company. Workers, understandably, are increasingly taking employers up on these offers; the quit rate rose to 2.4% in May — a 16-year high.
So what's an employer to do? The solution, experts say, is some preventative maintenance.
Take this job and shove it
While quit rates are high across the board, they're painfully high in competitive industries like big data and artificial intelligence, Brian Kropp, Gartner group vice president, HR practice, told HR Dive. The demand is just too strong, he said. "Companies are competing and the opportunities [employees] are receiving from other organizations are too great."
Employers are in constant competition, and this exchange of employees won't end well, said Kamal Ahluwalia, president of Eightfold, a talent intelligence platform. Mere salary increases won't be enough to help solve the employee deficit for those in-demand positions, he told HR Dive. "Twenty-eight percent of currently opened positions won't be filled in the next 12 months."
The battle may be demoralizing for the employees who stay put, too. It's not great when someone who averages a 2% annual merit increase finds themselves working alongside someone who commanded 15% more, Kropp said. Productivity will suffer, Kropp predicted. If employees know their best effort will only yield a 2% increase, why bother? And less effort results in decreased job performance, he said.
"If you don't address this particular problem, companies are going to be left with a workforce where the best quit and the rest quit in place," he said.
Ain't about the money, money, money
Salary may be employees' top priority when accepting a new job, but it's rarely why they decided to leave the last one. "People leave because they're not happy with the work environment or they don't care for the way they're being treated," Tabitha Scott, CEO, Cole Scott Group, told HR Dive.
Kropp agreed that it's not about money. "The biggest reason people leave their jobs today is a lack of career opportunities," he said. Organizations flattened since the 2011 global financial crisis, and that has resulted in fewer opportunities to get promoted. It takes longer to get promoted nowadays, he said.
Companies are trying different ways to engage and retain employees, but it has to be more than small perks, Ahluwalia said. "Offering free food is not enough. Work needs to have some meaning; an alignment with the company's goals," he said.
"Companies have gone overboard with freebies," Ashutosh Garg, Eightfold CEO and co-founder, said. Instead, they need to focus "more on what matters to people, their careers, that inclusion."
But, Garg said, there is a ray of hope for companies. Most people who jump ship don't actually want to leave the company entirely, he said. But they don't see a path to advancement.
Let's stay together
Employers who want to fill jobs and stem the exodus need to focus on current employees before focusing on shiny new candidates, experts agreed. They offered several tips:
- Listen to your employees, Scott said. Understanding why employees are leaving in the first place is critical. "On the surface, it may seem like they are leaving for more money, but a thorough exit interview will reveal their true intentions. Once a company understands what need is going unfulfilled, they can focus on it," she told HR Dive in a followup email.
- Be creative in positioning employees, making sure they are in the right positions for their strengths, Scott said. This may mean moving employees around as projects begin or end to help them succeed in their sweet spots.
- Collaborate with the employee to create a development plan to get them to the next job. When a manager offers to help an employee be more employable within or outside of the company, the employee feels the company genuinely cares and is more loyal, Kropp explained. Consider creating additional organizational levels to allow for more career opportunities, and consider promoting people earlier, he added.
- Encourage employees to continually develop their skills, Ahluwalia said. The shelf life of skills is five to seven years, so emphasizing learning will be beneficial for employees and the organization.
- Use this opportunity to add diversity to the organization, Ahluwalia said. Companies understand diversity is important, but most haven't achieved it. "Now is a great opportunity to create a diverse workforce," he said. "For any job that opens up, first look at who is likely to leave and if they're capable, give them an opportunity to have a role. Then look at diverse candidates." Seeing your commitment to internal hiring will create a stronger alignment with employees, he said.
While you may still need to look outside occasionally for key skills, it is essential to value the employees you have, the experts advised. "If you keep hiring people from the outside — these people will leave you in 1-2 years for 15% more," Ahluwalia said. "Money cannot be the number one issue in how you hire or retain people."