What makes people decide to stay in a role or quit?
£4.13bn: a modest estimate of the cost to UK businesses of employee turnover in 2014, according to CIPD research. And a much-cited report from Oxford Economics from the same year put the average cost of replacing an employee at over £30,000, with more than £25,000 of that down to lost productivity. Not surprising when the average time taken by a new employee to reach peak productivity levels stands at 28 weeks.
Numbers like these mean that you need to pay close attention to employee turnover rates so you can understand and proactively manage them. From our own research, we know that one of the deciding factors when an employee is considering whether to stay or go is their Happiness at Work.
The real costs of employee turnover
“So what?”, you might think, if your organization has a very lean, super-efficient, cost-effective approach to recruitment and training. But there are other negative consequences to having high churn besides financial ones. It can:
- Have an adverse impact on overall workplace and employee morale by, for instance, damaging employees’ Pride and Trust, core elements of Happiness at Work
- Hinder organizational learning and progress through brain drain
- Disrupt working patterns and projects
- Create organizational risks and liabilities, e.g. legal and reputational
One evidence-backed means of proactively managing employee turnover and increasing your organization’s productivity into the bargain that we understand very well is that of maximizing Happiness at Work. In fact, so clear is the correlation between Happiness at Work and an employee’s intention to leave or remain in their role, the latter has become one of the principal outcome measures of iOpener’s work.
Understanding the causes of intentions to stay or go
Our evidence suggests a demonstrable and strong correlation between Happiness at Work and intention to stay: all things being equal, your commitment and productivity within your organization is closely bound up with your feelings toward it.
But you need to examine the factors underlying intention to stay, to determine what makes employees feel more attached to your organization and what drives them away.
How are we, then, to unpick the social and economic, individual and organizational drivers of intention to stay?
The Bureau of Labor Statistics observed that higher employee turnover rates are associated with industries such as the wholesale and retail trade, and information industries, as well as specific age groups such as Generation Y. These factors are correlated, since these industries have a lower median age (in the United States, at least) than almost all others. Carsten and Spector’s study showed that the economy can also play a central role in people’s intention to stay or leave their jobs, with employees tending to stay put during weaker economic periods.
But if we dig a little deeper into these statistics, we see Gen Y citing career opportunities and job fulfilment as crucial components of their overall job satisfaction:
Generation Y strive for success. They measure this success on what they have learned and the skills they have acquired from their experiences. Generation Y are a driven generation who want to feel important and appreciated in their careers.
In our white paper on the subject, we presented the findings of an original analysis clearly showing that Generation Y are motivated to stay with their employer, and to actively recommend their organization to friends, by the level to which they are fulfilled in their job.
These matters are pivotal for all generations of employee, not just Gen Y: a study by George and Jones found that the job satisfaction-intention to leave (“turnover intention”) relationship is such that by helping employees to attain their “terminal values” organizations can strengthen job satisfaction-based intention to stay.
Another factor worthy of mention is the changing shape of the workplace: there can be little doubt the workplace is changing through an increase in cross-functional teamwork, remote working and “flat” organizational structures. However, as we noted in our blog entry on Trust, these changes mean that stronger bonds between employees and organizations are needed than ever before. Organizations today need employees who are committed to continual learning and can manage significant transformation without simply ‘jumping ship’.
So no matter what’s going on in the wider world of work, you can’t overlook the happiness of your employees at work if you want to keep them.
Santi Garcia, MD of iOpener Iberia, is currently undertaking a research project to understand and share the reasons why people choose to leave an organization. So if you have left a company yourself within the past five years, please take a few minutes to fill out our questionnaire by clicking this link, or please share this with anyone you know has voluntarily left a job within the last five years. The questionnaire is available in English, Spanish, Portuguese and Italian; just use the drop-down menu in the top right to select your language. Don’t worry: all answers are confidential and anonymous – all participants use the same link, and we don’t ask for any personal details.
With the data we collect we will produce a report and publish it on this blog. Sneak-preview findings indicate that Trust, the cultivation of which is central to iOpener’s work, is a crucial factor.
Interested in knowing more?
Employee turnover is a matter of increasing concern for all employers; Amazon and Google, for example, have some of the highest turnover rates of the Fortune 500 companies. If you would like to know more about proactively managing employee turnover, maximizing happiness within your workforce, enhancing your own Happiness at Work, or anything else besides, please comment on this post or get in touch.