Time & Attendance
By JD Farrugia
Sep. 13, 2022
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.
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.
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).
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:
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.
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.
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.
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.
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.
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.
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.
According to a study by McKinsey, the top reasons employees quit are:
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.
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:
Generally speaking, non-traditionalists value:
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.
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:
According to the Society for Human Resource Management (SHRM), the key to employee retention and greater job satisfaction depends on these five factors:
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:
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.
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