Top trends in employee retention

Employee retention spiked upward during the second quarter of 2024, continuing a first-quarter increase and signaling the potential for lower employee attrition through the rest of the year, according to a report from Eagle Hill Consulting.

Based on the firm’s Employee Retention Index, retention numbers reached the highest point in 18 months and surpassed the previous high point observed during the first quarter of 2023.

The increase is “welcome news for employers struggling to retain employees, which has become the norm amid a remarkably strong labor market and economy,” Melissa Jezior, president and CEO of Eagle Hill Consulting, said in a statement.

Baby boomer and Generation Z employees largely drove the increase in retention numbers during the second quarter, the report found. Millennials had a slower increase, while Gen X was lowest and the only generation to see a decline. Both baby boomers and Gen Z workers had sharp and “almost parallel” increases across three drivers of retention — organizational confidence, culture and compensation — Jezior said.

Looking at gender, men had a greater increase during the second quarter and are more likely to stay at their jobs during the next six months, the report found. A “substantial gender gap” remains in retention sentiment, with only a small increase among women.

Based on Eagle Hill’s individual index factors, organizational confidence had the largest jump, although it’s been the most volatile indicator historically. Culture had the second-largest increase, followed by compensation, which was the strongest indicator for the second quarter. Job market opportunity, which was the lowest indicator for the quarter, still increased by nearly three points and continues to be relatively stable, the report found.

The Eagle Hill data mirrors the U.S. Department of Labor’s latest Job Openings and Labor Turnover Survey, which found hiring and job opening rates were higher in May as the quit rate remained unchanged around 2%, indicating that employees are more likely to stay, even with open opportunities at other organizations.

In addition, during the first quarter of 2024, 72% of employees said they plan to stay put for now, according to a WTW survey. They cited pay, job security, health benefits and flexible work arrangements as the top reasons for both talent attraction and retention.

With steady or decreasing attrition, employers can work on succession planning and enhancing their value proposition, CHROs told HR Dive. Now is the time to create a workplace where employees want to stay, including benefits, employee experience and opportunities for learning and development, they said.

If you were to ask a random person on the street what an HR professional does, their answer would probably be conflict resolution, or that HR folks deal with employee salaries and benefits. And while that is part of an HR professional’s responsibilities — to ensure employee safety, respect and accountability — that doesn’t even scratch the surface. HR plays a crucial role in developing, nurturing and honing employee skills, starting with identifying, hiring and retaining the right talent.

From my time at MeridianLink, a provider of software platforms for financial institutions and consumer reporting agencies, I’ve learned that hiring and retaining employees is time-consuming and challenging, but with the right tools, it can be done well and effectively.

Identifying talent

Today’s job market is tough, and identifying top talent can be a tedious process. According to ManpowerGroup, 75% of employers report difficulty filling roles, a sharp increase over 36% saying the same 10 years ago. Despite this, employers can use the following five techniques for identifying talent they can depend on.

1. Use talent assessments

Talent assessments are incredibly useful and can be offered in many ways depending on the applicant and/or role. I like to include a small project within the application that requires the applicant to complete a task demonstrating their skills for a particular role. This will give an accurate baseline of whether they have the skills necessary to excel at their job.

Countless other options may help hiring managers find the right talent, including job simulations, asking for writing samples, cognitive ability testing and AI-powered interviews.

2. Standardize the interview process

One of the cornerstones of the hiring process, interviews are essential for assessing a candidate's fit for the role and the company culture. They show you how well candidates think on their feet and can give you insight into how they work in group settings. Interviews are useful for finding out who a candidate is, not just what they can do. 

In my interviews, I use the STAR (situation, task, action and result) method. Every candidate is asked the same questions and their answers are rated on a predetermined point scale. This allows for objective scoring and provides realistic comparisons between candidates. Understanding someone’s personality is critical, as you want to ensure they will be a good fit not only within the team but the entire organization’s mission and values.

3. Leverage data to guide your process

Compile the information gathered from each candidate's resume, talent assessment and interview, and use that to inform your decision making process. The more hard data you can compile for each candidate, the better. This data-focused approach helps you objectively compare candidates to each other and assess where there may be weaknesses in each individual. Data empowers the hiring manager to make evidence-based decisions.

At MeridianLink, each of our hiring managers uses an applicant tracking system to understand how interviewers rate, give feedback and engage with candidates to see whether there are challenges or discrepancies present across applicants. My human resources team then uses this data to train managers and interviewers accordingly. Additionally, we use early turnover data to explore how it correlates with manager feedback and any other trends.

4. Be open to changing your process and embrace learning

There isn’t just one way to hire. Recruiters need to be adaptable and embrace new hiring methodologies to stay ahead of the competition.

In addition to seeking advice and best practices from HR professionals at other companies or in other industries, it’s important to solicit feedback from your employees, the people who actually experience the hiring process. Asking your employees for input serves the dual purpose of improving the applicant experience, thereby increasing the chance to attract and retain top talent, and also showing your colleagues that HR takes their feedback seriously.

5. Know that hiring is changing

According to recent studies, talent professionals agree that virtual recruiting will soon become the standard. That’s why implementing varied hiring methodologies, including using AI to expedite processes and technology trends, is necessary to ensure you’re keeping up.

But never underestimate the power of old-school strategies, like referrals. Asking your employees for referrals is an excellent way to tap into talent existing networks and demonstrate to your current employees that you value their insight. This ties into creating a strong company brand and culture to attract top talent.

Additionally, hiring events are extremely valuable as they provide HR and other hiring managers the chance to meet potential candidates outside of the traditional hiring process. These can be mixers, job fairs or conference panels. And because virtual recruiting is on the rise, different tools can now supplement such events.

Retaining talent

While finding the right candidate takes time and effort, retaining talent is equally as important and requires focus and diligence. The first thing to know is that retaining employees doesn’t start on their first day of the job. At MeridianLink, onboarding begins as soon as they are hired.

For remote employees, give them their computer as early as possible before their start date, and set them up with IT so there are no glitches on their first day. An effective and attentive onboarding makes sure new hires feel welcome, heard and cared for. More importantly, it helps to ensure everybody is on the same page when it comes to the onboarding process.

One of the most effective strategies I’ve seen at MeridianLink is offering new employees a mentor for their first 90 days of employment, separate from their day-to-day manager. The mentor helps employees learn about the company, is available to answer any questions, and performs frequent check-ins so any concerns are addressed as they arise, not when it becomes an issue. Retention is not just about hiring the right people; it’s about creating a positive and supportive work environment in which the right people can thrive.

We make a point to regularly check in with managers to see what they need and to learn what we can focus on to help teams stay motivated. Manager insight is always valuable.

One of the most important things an HR professional can do is listen to employees and potential hires. By doing so, you’re opening the door to crucial conversations that will serve your organization better in the long run.

When companies implement rigid return-to-office (RTO) mandates, they’re likely to drive away high-performing employees, women and millennials, according to recent survey results from consulting firm Gartner’s HR practice.

High performers’ intent to stay was 16% lower with employers that have strict RTO requirements — double the rate of average employees (8%), the survey found. Among women and millennials, the intent to stay was 11% and 10% lower, respectively, according to the 2,080 knowledge workers surveyed in May and June 2023. In a separate June 2023 survey of 3,500 employees, nearly half said their company’s RTO mandates prioritize what leaders want versus what employees need to do good work, Gartner noted.

“Mandated on-site requirements can carry very steep costs for talent attraction and retention. This is especially true for high-performers, women and millennials — three employee segments who greatly value flexibility,” Gartner HR practice Director Caitlin Duffy stated in a press release. “Often these costs far outweigh the moderate benefits to employee engagement and effort,” Duffy said.

In the early months of 2024, stakeholders have continued to adjust to evolving RTO and hybrid work practices.

There have been successes, like financial technology firm Global Payments, which refashioned a mandatory RTO policy into a hybrid approach after employee feedback revealed that the lack of flexibility was one of the top reasons people were leaving the company.

Before rolling out the new approach, the company’s HR president reached out to employee resource groups, including its diversity action team, the CHRO recently told HR Dive. Knowing they have flexibility to respond to something going on in their personal life makes it easier for them to come into the office, the CHRO said.

Leading an RTO trend that fosters inclusiveness and belonging, Minnesota-based The Coven offers co-working space designed with community in mind. This creates a sense of physical and psychological safety, which in turn allows members to focus on the work, one of the co-founders previously explained.

For many employees, working in-office is simply more pragmatic. While the preference leans toward remote work whenever possible, professionals will take office-based roles if those roles provide the best career growth, according to a recruitment expert.

Flexibility has positive results, especially with high-performers, women and millennials, the Gartner survey found. For instance, high performers feel they proved themselves and maintained high levels of performance throughout the pandemic and remote work, but see mandates as a signal they still can’t be trusted to work autonomously to make the best choices about how their work gets done, Gartner said.

“Losing high-performers to attrition cost[s] organizations in terms of productivity, difficulty in backfilling the role, and the overall loss of high-quality talent available to fill critical positions,” HR practice director Duffy said.

Increased flexibility and the ability to work from home during the pandemic had a positive affect on the ability of women to manage work and life priorities in a holistic, integrated way, Duffy added. Women also report experiencing fewer microaggressions and biases compared to when working in an office.

For millennials, the generation now most likely to have caregiving responsibilities, Gartner data found their performance was lower at organizations with RTO mandates, the firm noted.

It recommended four best practices HR leaders can consider if their organizations seek to formalize an in-office work requirement:

1. Motivate, rather than mandate, by designing office spaces and hybrid policies that make everyone feel capable, autonomous and connected;
2. Focus on yearly, not weekly, attendance requirements;
3. Enable employees to shape the policy; and
4. Provide clear reasons for requiring employees to work on-site.

As hybrid schedules continue to change workplace norms, casual dress codes and informal workplace etiquette are becoming more common as well, according to survey results from Express Employment Professionals and The Harris Poll.

Fewer U.S. hiring managers said it’s important to have a dress code than did five years ago. Employers are also less likely to ask employees to silence their mobile devices at work, refrain from making personal calls or use formal business communication.

“In a tight labor market, perks like a more casual dress code are simple to implement and can have a significant impact on recruiting and retention,” Bill Stoller, CEO of Express Employment International, said in a statement. “Some values, however, like punctuality and workspace cleanliness should remain important to respect colleagues’ valuable time and mutual space.”

In the survey of 1,007 U.S. hiring decision-makers, less than a third said having dress code guidelines and adhering to a dress code is important, as compared to 49% and 46%, respectively, who said the same five years ago. In addition, 7 in 10 said workplace etiquette that wasn’t acceptable three years ago is now acceptable.

However, several aspects of workplace culture remain important, such as arriving on time for work and meetings, keeping a clean workspace and greeting co-workers, hiring managers said.

But as rules shift or become less formal, employees may find it difficult to keep up, the report found. About half of hiring managers said it’s hard for employees to understand what is and isn’t acceptable due to recent changes in the workplace.

Workers reported similar sentiments. In a separate survey of 1,002 U.S. adults, a majority said the same aspects of workplace culture remain important, such as arriving on time for work and meetings, keeping workspaces clean and greeting co-workers.

About a third of workers said having a dress code and adhering to a dress code were important, which dropped from nearly two-thirds about five years ago. In addition, 75% of workers agreed that workplace etiquette that wasn’t acceptable three years ago is now.

Overall, most companies appear to be shifting toward a more casual dress code, according to an Adzuna analysis. Although few job ads mention a dress code, the vast majority that do tend to list “casual” or “business casual” attire.

Although company culture has also become more casual, 41% of job seekers say they aren’t comfortable being themselves at work, according to another survey by Express Employment Professionals. More than half also said it’s hard to know what’s acceptable at work due to recent changes, and 86% said they prefer to keep their home and work lives separate.

Workplace etiquette and professionalism continue to be popular areas for learning and development opportunities, especially for younger workers, Christine Cruzvergara, the chief education strategy officer for Handshake, previously told HR Dive. In particular, no-shows and a lack of communication about sick days can be a problem, so time management, organization skills and communication should be “taught from an upskilling and professional development standpoint,” she said.

Amid ongoing labor market challenges, recruitment and retention difficulties have somewhat decreased or eased, according to a report from The Conference Board.

In 2022 — during the peak of the great resignation — 83% of HR leaders reported issues with recruitment, which has dropped to 55% in 2024. Similarly, 66% of HR leaders reported difficulty with retaining workers in 2022, which has fallen to 41%.

“The steps companies have taken to attract workers are paying off, but more than half still report difficulty finding talent,” Robin Erickson, vice president of human capital at The Conference Board, said in a statement.

In a March/April 2024 survey of 216 U.S. HR executives, retention challenges appeared to be linked with work arrangements. While 15% of HR leaders at organizations that allow employees to choose where they work reported retention issues, 45% of those at organizations with mandatory on-site work said the same.

About 8 in 10 HR leaders said hybrid work has improved their ability to attract and retain talent, and even higher percentages reported that hybrid schedules improved job satisfaction and work-life balance.

In contrast, on-site mandates may drive employees away, the report found. Nearly half of HR leaders expressed retention difficulties when on-site work was mandated or strongly encouraged, but only 15% of HR leaders reported retention issues when employees could choose where to work. Voluntary turnover was also twice as high for fully on-site workers than for hybrid or remote workers, at 16% versus 8%.

These trends appear to be reflected on the employee side as well. In a WTW survey during the first quarter of 2024, 72% of employees said they plan to stick with their current employer, as compared to 2022, when about half of employees said they were looking to leave. Employees’ top reasons for staying included pay, job security, health benefits and flexible work arrangements.

Employees are also eager for career development and internal mobility opportunities, according to a report from the University of Phoenix Career Institute. Nearly three-quarters said they need to learn new skills to stay ahead in their career, and two-thirds said they’d be more likely to stay with a company that offered ways to upskill, reskill and apply new skills.

To retain talent, HR pros can implement attentive onboarding, offer mentorship, regularly check in with managers and strive to create a positive and supportive work environment for the right people to thrive, the chief people officer at MeridianLink wrote for HR Dive. Importantly, HR teams should listen to both employees and potential hires, which can open the door to crucial conversations to help improve your organization, she said.

DEI isn’t just about getting people from varied backgrounds in the room, but supporting them as well. For women and other birthing people, reproductive health benefits continue to be a way that HR can champion gender diversity. For example, while tense, post-Dobbs decision discussions about employer-sponsored abortion benefits ended up shaping employers’ talent acquisition and retention strategies.

Menopausal benefits, one HR professional argued, will be the next frontier.

Kate Westrin is currently looking to bridge that gap between DEI objective and flesh-and-blood support. As head of people experience, partnering, and product engineering for Xero’s Americas division, she told HR Dive how her team had taken a forward-looking approach to their colleagues’ reproductive health.

“Over the past few years, we had really pushed for looking at building out our fertility and inclusive family-forming support,” said Westrin.

Xero currently works with a vendor known to offer benefits including adoption, egg and sperm freezing, IVF and other forms of assisted reproduction, postpartum support and surrogacy. The conversation turned to how HR is more than a liaison between employees and management these days — less transactional, and more involved in shaping the “people” part of the business. Benefits are directly tied to that conversation, including paying stricter attention to holistic aspects of health — like menopause.

“In recent years, there’s been a lot more just dialogue and acknowledgment of the impact that menopause has on women physically, mentally and emotionally. And also [more] acknowledgment that the symptoms can impair daily activities and the ability to be a productive employee,” Westrin said.

Benefits are just one piece of the puzzle

As Xero’s people team seeks to solidify the company’s menopause benefits, the organization puts on health education events for its employees in the meantime. “We’ve had some speakers come in and talk to our broader workforce,” Westrin said. “I think that there is a big opportunity in terms of awareness, as well as wanting to create a space where there’s open dialogue around the impact that [menopause] can have on women.”

Westrin plans to use this approach when Xero nails down its menopause offerings, too. “We’ll want to really promote and raise awareness, once we get a benefit in place,” she said. She said she’d want to outline the details of the offering and how employees can access it in her communications.

Open dialogue about reproductive health, family-planning is crucial

Xero employees had actually been reaching out to their people team “proactively,” Westrin said, in order to thoroughly understand their benefits package. Employees were also asking questions about what Xero would offer them in the future, “from a women’s health and menopause perspective,” Westrin recounted.

This openness was rare in the past: As one COO of a family-planning benefits platform previously said, discussing pregnancy with one’s boss at all was once a social faux pas. From hiding morning sickness to lying about OB-GYN appointments, pregnant people kept their conditions under wraps. But now, it’s increasingly common for pregnancy and other aspects of reproductive health to be at the forefront of work-related conversations.

When asked about why the taboo around reproductive health discussions has started to melt away, Westrin didn’t have any concrete answers. (Two researchers at Mercer previously told HR Dive their theory: The COVID-19 pandemic revealed that good child care has been tenuous at best and that all caregivers, especially parents and parents-to-be, need more support.)

But what Xero’s people chief did say was that fertility benefits are now standard for leading workplaces. Some major employer news that affirms this: In 2022, Walmart rolled out doula benefits for workers in Illinois, Indiana and Louisiana after piloting them a year earlier for Walmart workers in Georgia. The next year, Amazon expanded its fertility benefits to workers across 50 countries.

Menopausal support and hormonal treatments, Westrin said, are “just a continued evolution of how employers take a more progressive approach to supporting employees.”

Why extra menopausal and fertility support may be needed

Reproductive support can be an obvious lure, considering that most people can’t afford fertility treatments out of pocket, according to Carrot. Last year, the family planning vendor surveyed 5,000 workers in Canada, India, Mexico, the U.K. and the U.S., each of whom were building their family in some way.

About one-third said they could afford fertility treatments. Twenty-nine percent said they would probably need to go into debt to afford these treatments and 39% said they would have to use their savings, according to the April 2023 report.

Further, 47% of U.S. survey-takers said they’d shoulder a loan to pay for the necessary treatments. Along with Canadians, Americans were the most likely to say they’d take a second job. More than any of the other groups, Americans said they would sell their possessions to help grow their family.

“Fertility is not only a healthcare issue, but also a global workplace concern,” Tammy Sun, founder and CEO of Carrot, noted at the time. The survey results show how “essential” these benefits are, Sun added, and “showcase the opportunity employers have to make impactful investments in this critical part of healthcare."

Beyond attracting new talent, introducing and highlighting a comprehensive benefits package may also help retain current employees and make them more productive. 

In Carrot’s report, 65% of survey-takers said they have researched fertility treatments and benefits on the clock. To be fair, respondents taking a survey offered by a family planning vendor may have more of a vested interest than the average worker; however, that concern may still be worthwhile for HR to address.

More than half of Carrot’s survey-takers said that fertility challenges have “detrimentally” affected their work performance. And in general, per Calm’s Voice of the Workplace survey, the majority of workers say that their mental health has worsened over the past year. 

All data points to the long-held belief that mental and physical health go hand-in-hand — and that should inform benefits strategy. When asked what would keep them in the workforce longer, 75% of women in a British Standards Institute survey said more maternity support, including during the return to work, and 72% said increased support for perimenopause or menopause. Regarding the lack of resources, BSI researchers said, “It does not have to be this way.” 

Along with benefits, researchers recommended providing schedule flexibility and creating “a positive workplace
culture that prioritizes people of all ages,” especially in its well-being programs. “Nor is this just for women to address — there is an opportunity for male colleagues and workers of a different generation to play a role and turn ambition into action,” researchers said.