We have all heard about, experienced, or participated in "The Great Resignation of 2021." The numbers are staggering. According to the recent Microsoft Work Trend Index 2021, 41% of the workforce is considering moving employers. In our recent Job Seekers Mindset report, 58% of survey respondents say they are highly likely or likely to work for a new employer within the next 6 months.
Turnover itself is not a new topic of discussion. For years, organizations have considered its impact. And, for some, they accept it as a reality of their business and only look to manage it. Others have instigated it with a forced reduction in the workforce (pre-covid) to control costs. Leading companies have developed and executed initiatives around recruiting, training, managerial development, employee surveys and recognition & engagement to reduce turnover. All organizations must embrace a new strategic direction as the impacted costs will be severe, especially since this is now employee driven.
What are the costs of turnover? The Work Institute estimates the cost of an employee to be 30% of the annual salary based on: costs of termination and replacement, vacancy curve and learning curve. Yet, with turnover now unplanned and unpredicted between 41-58%, it appears the financial impact is now exponential. What are the increased costs to an organization based on the loss of knowledge, experience and relationships? Are the costs now more like 2X or higher than the traditional costs of turnover?
The opportunity exists for organizations to embrace the required change for remedying the dire situation fully. As leading companies in the past, they should look at all the dynamics around hiring the right talent and keeping them. They should look to optimize the recruiting process, especially with the number of current openings in the marketplace, and ask themselves the following questions:
- Have we made the process efficient and effective?
- Did we identify and remove the bottlenecks?
- Are we implementing innovative and creative ways to attract and engage candidates?
- Do we know who our Top Performers are and are rewarding them to stay?
- Do we know how to recruit more of them?
- Have we examined Job Descriptions to ensure that we can attract and hire more Diverse and Inclusive candidates?
- Have we enhanced our Employee Referral programs, including heightened communication of it to our employees?
- Have we increased our emphasis on internal mobility, making it easier for employees to learn about new roles and apply?
- Is our compensation competitive and do we have a compelling reason/purpose for people joining our organization?
- Have we determined the financial impact of not having these positions filled such as loss of revenue, increased overtime and decreased productivity from burn-out of employees?
- Would it make sense to spend more on recruiting to yield a greater ROI to the organization overall?
- Does our onboarding experience solidify for the candidate that they made the right decision to join? Is it welcoming, warm, inviting and unexpected?
I'd like to suggest that companies focus more on recognition and engagement programs in the first 90 days, 6 months and now 1 year. We no longer can afford to have a "wait and see" mindset with new employees. We discovered that 67% candidates in the Job Seeker Mindset Report stated that their onboarding experience would affect their decision to stay over a year.
The thoughts above are just a small sampling of possibilities that organizations should consider mitigating the financial impact of "The Great Resignation." While we are being reactive to the current reality of unfilled jobs and turnover, we must be proactive for improving it both short and long term.