It's no surprise that employee retention and reducing turnover are top of mind for many managers and leaders at the end of a long year of record-high resignations.
"Why do employees stay? The brief answer is 'inertia'. Employees tend to remain with a company until some force causes them to leave."Why Employees Stay, Harvard Business Review 1973
Nearly 50 years later, understanding and counteracting those forces that send employees searching for their next opportunity remains paramount to business leaders. Improving ways to attract, engage, and retain top talent is at the forefront of many organizations’ objectives as we all adjust to the changing world of work.
So let’s drill into the hard facts about employee retention. What are the statistics about what keeps people around? And most importantly, what can we learn from these facts and figures? How can they empower better engagement and retention strategies for a workforce with a new set of rules and expectations? Let's find out.
Why is employee retention so important?
Finding ways to improve employee retention is essential for companies that want to stay competitive in a fierce market. And, investing in employee retention strategies is necessary to maintain output, keep up team performance, and avoid lost productivity. It takes new employees time to ramp up, and when long-term employees leave, they take along their wealth of knowledge.
What’s more, constantly adjusting as team members come and go means decreased employee morale. This impacts everything from employee engagement to team collaboration and, ultimately, business success. If high employee turnover becomes the norm, even your most engaged employees could start to look for greener pastures.
This domino effect is one of the causes of high employee turnover, and it can happen for several reasons, like:
- Employees are assigned tasks outside of their role
- People take on more responsibility without a formal promotion
- Peer relationships and team dynamics take a hit
- Great managers are lost, and their direct reports are unsupported
- People are inspired by others taking on new challenges
Whether you're dealing with voluntary turnover or involuntary turnover, it can quickly start to snowball. So before you lose your high-performing employees, get a handle on the facts around employee retention and turnover. That way, you'll be equipped to improve employee retention on your team or at your organization.
57% of knowledge workers are open to new job opportunities in the next year
This number increases to 71% for employees who are dissatisfied with their level of flexibility. And for those who lack a sense of belonging, the number inches to 72%, according to the Fall 2021 report from Future Forum and HBR. The report also found that employees who feel their company lacks transparency around post-pandemic remote work policies are 17.3% more likely to look for a new job in the coming year.
One point here is clear: people want to have more freedom around where and when they work. They also want an employer who's open about their flexible work policies. But a sense of belonging is also a significant factor in why employees quit. A company culture where people feel like they're part of a community is a competitive advantage that helps retain employees.
Create community from afar. If you're a remote or hybrid workforce, establish rituals that help everyone feel more connected. You might host a weekly virtual social hour where your team plays an online game together. Or, you can make it a point to have more impactful meeting check-ins when you come together as a team. Remote work can be a barrier to belonging, but a little extra effort goes a long way.
The number 1 reason employees leave is a lack of opportunity...
A lack of career opportunities is a top-cited reason for employees leaving their jobs, Gallup reports. Professional development is absolutely essential for employee retention. People want to grow, apply themselves, gain new skills, and expand in their roles. If employees don't have the opportunity to advance their career at their current job, they'll find that opportunity elsewhere.
...and 28% of employees say they don't have opportunities to grow
Officevibe's Pulse Surveys—which measure employee sentiments at over 5,000 companies worldwide—reveal that 28% of employees don't feel they have opportunities to grow at their current employer. Creating those opportunities is one of the most high-impact methods of improving retention rates. And ultimately, the highly engaged employees who want to develop and grow in their roles are the ones you really want to keep around.
Make room for growth. To engage new hires from their first day, they need to have a clear sense of how they'll grow in their role and at your company. People should be encouraged to apply for positions that open up internally in other departments or at higher levels.
Employee development has to be a priority for managers. To make it one, they should talk to their direct reports about their career ambitions every 3-6 months at a minimum.
Only 30% of employees say they're really doing what they do best
Taking a step back from growth opportunities, people also want to be applying themselves in their current roles. A driven purpose is a baseline for a positive employee experience. Yet, just 30% of employees say they genuinely have the opportunity to do what they do best in their role in Officevibe's Pulse Surveys.
Make sure that your employees have clear roles and responsibilities, starting at the hiring stage. Monitor whether people are taking on too much that falls outside of their job description. And if it does happen, act swiftly to find solutions. Of course, you want to have team players who can collaborate and pitch in as needed. But to keep people around long-term, they need to feel valued for their expertise. And that means making sure that the majority of their workload is within their role.
When you have a clear view of how people feel, it's easier to keep your retention rates in check. Job seekers want an employer who values them, listens to their feedback, and continually strives to improve company culture. Collect employee feedback and take action on your turnover rate with Officevibe.
Of employees who recently quit, 54% felt undervalued by their company
Feeling undervalued was a big driver for employees who had recently left their jobs, recent research from McKinsey found. Not only were they feeling undervalued by their company, but 52% of the employees who had recently quit reported feeling undervalued by their manager. Recognizing employees is one of the simplest ways to tackle your turnover rate—yet another reason why employee recognition is so important.
When employees don't feel like their contributions count, they'll seek out an environment where they do. But employees are more likely to be engaged and will stay with your company longer when they feel appreciated. This is why it's important to drive a culture of recognition, where managers consistently acknowledge that employees play a key role in bringing the company's mission to life.
For more on the impact of appreciation, read our 5 employee recognition statistics you need to know.
In 2021, 74% of employees reported experiencing burnout at work
In June of 2021, Gallup found that 74% of employees said they experienced burnout at work at least sometimes. Yet, Gallup still found people in their study who had a near-zero risk of experiencing employee burnout. Burnout doesn't have to be so widespread, and when companies focus on wellbeing, it can really impact their employee retention rate.
The differentiators Gallup found in those who were low-risk for burnout were:
- Engagement at work
- High wellbeing
- A workplace culture that celebrates strengths
"They know what's expected of them. They have what they need to get their work done. And their manager helps them manage their workload, collaborate effectively and see a clear path to a bright future."How to Eliminate Burnout and Retain Top Talent, Gallup
52% of exiting employees say their manager could have done something
According to Gallup's exit strategy report, 52% of exiting employees say that their manager or organization could have done something to prevent them from leaving their job. But only 28% of those exiting employees say they spoke to their manager about leaving before they quit.
To stop employee turnover before it happens, managers need to be talking to their direct reports about job satisfaction. If a manager isn't aware that someone wants to work remotely, wants better work-life balance, or feels they deserve a pay raise until the employee leaves for a new job, they can't work to implement those solutions that will keep them around.
Don't skip your one-on-ones. One-on-one meetings are a crucial part of ongoing manager-employee communication. These are the moments managers can detect signs of decreased employee engagement. Likewise, they're a moment for employees to raise concerns or challenges. A good employee retention rate starts with strong manager-employee relationships.
49% of people surveyed didn't discuss key employee engagement and retention topics before they left
In the same exit strategy report from Gallup, nearly half of the employees who had left their jobs said they didn't discuss any of the following topics with a superior in the 3 months before they left:
- Their job satisfaction
- The future of their career with the organization
- What it takes to do their job effectively
- What it would take for them to stay with the organization if they had expressed concerns about needing to leave their job
Managers can't address what they don't see. If not asked, employees might not speak up. To keep employees engaged and address any issues, managers need to spark conversations with their direct reports about how they can succeed in their job and what might drive them to leave.
Employee turnover is expensive. Replacing employees costs 1/2 - 2x their annual salary
Filling a role that pays $50k a year can cost between $25k and $100k, Gallup reports. A high employee turnover rate gets expensive, fast. If this isn't the business case to invest in improving workforce retention, we don't know what is. These are the employee turnover statistics you might be looking for to sell your boss on your employee retention initiative. You're welcome.
Only 14% of employees fully trust that pay is determined fairly at their company
And, just 18% of people fully trust that they're paid fairly compared to similar roles within their organization. That drops to 16% when compared to similar positions at other companies. These statistics come from Officevibe's Pulse Surveys, which measure employee sentiments at over 5,000 companies worldwide.
An employee's salary greatly influences their job satisfaction and, in turn, your company's employee retention rate. But compensation can feel like a taboo subject, which only fuels any suspicions people might have about whether they have a competitive salary.
The antidote to distrust is transparency. New hires should have the compensation model explained to them in their onboarding process. Clear documentation must be easily accessible to all employees. Questions and conversations around pay should be encouraged, and happen more often than an annual performance review.
Employee retention statistics help you understand and support your team
Getting a grasp of key employee retention statistics helps you better understand what drives employee engagement. Not only that, it helps you spot what might lead to employee turnover on your team. And keeping an eye on the retention statistics at your company and on your team, like calculating your turnover rate and retention rate, helps you spot any fluctuations and take action before it's too late.
The bottom line is that employees want a manager who hears and supports them and a company culture that reflects their values. Managers having regular conversations with employees about growth, development, satisfaction, and engagement is key to keeping your star players on your team.
Use these employee retention statistics to establish an unbeatable employee experience at your organization. Remember, not everyone wants exactly the same thing from their job. That's why checking in regularly to understand what makes people truly happy is so important. It shows employees that they're valued. In turn, they'll stick around.