Employee Attrition – How can Companies Address the Job-Hopping Trend among Employees?

Employee Attrition – Increasing Trend of Job-Hopping

Gone are the days when employees join a company and expect to stay there for their career duration.  According to a year 2016 Gallup report, about half of today’s Gen-Z and millennial workforce, the 20 to 40-something-year-olds, say that they will be changing jobs in the next year or so. And 21% of the respondents reported that they had changed jobs within the past year. 

This trend, traditionally referred to as “job-hopping,” is defined as switching jobs or careers every two years or so. Prospective employers may take a dim view of job hoppers, but the trend looks like it’s here to stay. The present generation of employees have grown up with a more macro view of the world than the previous ones. They have seen that in times of recession, such as those that followed the 2008 stock market crash, even working for companies that seemed immutable and rock-solid – think Lehman Brothers and Goldman Sachs – were no guarantee that their livelihoods were never going to be jeopardized. Thus, it is hardly surprising that an “every-man-for-himself” culture began to show up in current employment trends.

How can companies strike a balance between investing in an employee’s onboarding, training, settling-in process, and making allowances for this tendency among their employees to job-hop? The key is to ask why employees are leaving their jobs, and the answers to this critical question will provide a foundation for companies to address this issue. After all, a lot is at stake, considering the cost of replacing an employee.

Cost of Replacing an Employee

The Society for Human Resource Management (SHRM) estimates a salaried employee’s average replacement cost to be six to nine months’ salary. An employee earning $60,000 per year totals approximately $30,000 to $45,000 in recruiting and training costs.

The Gallup poll estimates that employee turnovers cost the US economy USD 30.5 billion annually. 

No such data for replacing a departing employee by recruiting a new one is available for Japan. However, considering the total cost of recruitment, possible hire remuneration of the new employee, number of days or even months the position may remain open, possibly initial low productivity of the new employee and other direct and indirect costs would not make the cost of replacing an employee in Japan any less.

So Why do Employees Job-Hop and How to Improve Employee Retention?

Money

Not surprisingly, this is the main (but not only) motivating factor, according to the Workforce Vitality Report from ADP, the payroll processing company, especially in junior and mid-career levels. The report suggests that the largest salary increases occur after two years at a company, and employees who move on at this point are likely to score higher wages at the next place. According to the report, the data bears this out: job switchers generally saw their salaries increase by 5.6% in the last year. With this in mind, it comes as no surprise again then, that job-hopping tends to occur at the two-year mark.

So, what can companies do to minimize the likelihood of employees leaving at this point? The answer is obvious: monitor your employees’ progress in your company, and offer not just competitive salaries but also increments and benefits that keep employees satisfied, stimulated, and feeling valued for the work that they do for you.

“Pay for performance” is one of the ways how you can financially motivate your employees, rewarding them with higher salaries or bonuses based on performance measures. For example, a sales associate can get a higher quarterly bonus for quotas met. An IT engineer gets a higher salary when a target number of jobs are completed on time with a low error rate. Other methods to financially motivate employees include trips, gift cards, or tickets.

Lower Levels of Employee Engagement

As per the Gallup report mentioned above, only 29% of millennials reported that they are “emotionally and behaviorally” connected to their jobs and companies. This means for your company that probably only 30% of employees care about what happens in the company beyond putting the hours in and getting their paycheck. Worse, another 16% of these employees reported that they are actively disengaged, which Gallup interprets as that they are “more or less out to do damage to their company”! And this situation is going to worsen with the increasing work from home policies. Many of us tend to have some level of pride in our companies, an attachment to our physical workplace, our work-stations, attachment with work-place friends, attachment to even our routines of going to the office and coming back home to relax. With work from home and remote working, all, or almost all, of these will slowly go out of the window. 

So not paying attention to engaging millennial and Gen-Z employees could potentially create problems for your company. Employers must understand how to retain the top talents from these generations and attract employees looking to switch over to them. It is possible to consider that many employees don’t want to switch jobs in the first place, but their companies aren’t giving them many reasons to stay. So, when a better opportunity comes along, what would compel your employee not to take it? One of the best ways to engage employees is to get to know them. Spend time with the people who work for you, learn about their backgrounds, families, and personal goals. Organize social events that allow people of different departments within your company who would not normally meet to get to know one another. Another way to increase employee engagement is to let them know how the company is doing. Weekly or monthly briefings of the company’s successes and/or struggles will allow your team to know what works and what doesn’t and let them know how their role plays an important part in the big picture.

When it comes to remote working and online meetings, one critical point is to use video power. Do not have the online meetings with the video switched off. Having a meeting only with voices increases stress levels and further reduces the attachments.

Employee Engagement by Effective Communication

Creating an environment of open communication and periodic transparent two-way feedback is very important wherein employees feel valued. 

The communication about company policies and feedbacks is equally important for employees cultural, behavioral fitment. Many organizations seem to be satisfied by handing the policy handbook at the onboarding time, but that formality does not serve any purpose. A tiny percentage of employees would even put in the efforts to read it, and much less would remember any of that after some time. There has to be an established framework and mechanism to communicate and enforce the policies and expectations continuously. And unlike the forgotten handbooks, these frameworks and processes need to undergo periodic reviews to measure the effectiveness.

Understand Why Employees Leave

Conducting a positive and friendly exit interview is a must. Again, these interviews should not be treated as a formality to be completed but need to be planned and taken seriously. The mechanism of conducting these interviews and analyzing the results and ways to positively and effectively use them to minimize the attrition rate should also undergo periodic reviews. 

Exit interviews alone cannot serve the entire purpose; there has been a mechanism to have reviews and feedback from the current and former employees. For current employees, an organization may engage external consultants for interviewing selected candidates anonymously. Various platforms like Officevibe, Vennli, and 15Five enable organizations to gather meaningful feedback from employees regularly.

Understand why employees stay

Managers should be coached to get periodic insight into what makes employees remain employed with the company. For this also, the above-mentioned platforms can help in understanding the same.

Investing in Professional Development and Overall Empowerment

In industries with higher attrition rates, some leaders fear that investing in training may cost them more than the ROI because of the chances of losing the employees soon after any investment in them. However, providing employees with training and upskilling, not only for technical skills but also soft skills and leadership, increases employee engagement & attachment and creates opportunities for their advancement within the organization in terms of pay, recognition, and responsibility. The overall effect is better retention on average and a good overall return on investment. The indirect effect would be that such organizations would always attract good talent from the market because of such policies.

Some studies from the Lumina Foundation on the returns of investments on employee trainings have sown the following results: 

• Cigna realized a 129% ROI from its educational reimbursement program between 2012 and 2014.
• With its tuition reimbursement policies, Discover realized a 114% ROI.
• Advocate Health Care, an education assistance program, helped the company achieve $1.3 million in net savings from lower talent management costs.
• A large communication technology company’s tuition assistance program helped achieve 39% ROI, in actual figures that translated into $54.2 million in savings.

Career, Community, Cause

With the rise of tech, remote collaborations, and a breakdown of traditional ideas of rank and seniority within companies (for example, your average Gen-Z or millennial IT department team is likely to be infinitely more knowledgeable about software processes than your average baby boomer C-suite exec), career progressions are no longer linear. Employees no longer want to wait years before they “get there” in terms of their careers. So, what can companies do to capitalize on this trend?

This is where a T.E.A.M. (Teach, Empower, Align, and Mentor) model can come in useful. Making teaching a key responsibility amongst your employees lets them use their expertise and knowledge to lead their teams, engage in meaningful conversations, share information, and likely gain insights into their own contributions to the company. This directly empowers your employees to produce better results. 

Performance improvement methods such as Six Sigma have always asserted that better results always follow when you talk to the employees closest to work being done, making sense that two-way dialogues are of paramount importance. When you are armed with all the requisite information, you should then align all desired end results at the team or department level so that everyone has a clear idea of the goals they are striving towards and understands how their contributions make a difference. Throughout this process, mentoring is a manager’s most important job. This includes building morale, setting standards, and having conversations that reward positive results and reinforce successes.

These are only a few of the many areas you can consider when you are looking to hire and retain your team’s key members.  For further insights on recruitment and training quality staff, talk to us. We will be happy to discuss all your recruitment needs.