27 percent of employees plan to leave their place of employment once the pandemic is over, according to multiple surveys. This level of change is without precedent. Employees are becoming more mobile and opportunistic. In other words, it’s looking to be a radically-shifted buyers’ market.
One of the biggest dangers is assuming that upheaval won’t include your employees.
This goes against the grain of what work life appeared to be like before COVID-19 took over. SHRM reports that “quit rates” reached the lowest level in nine years in April 2020. Employees were planning to stay where they were, just feeling lucky to be employed at all. Department of Labor statistics show that from April 2020 to August of that year, the number of employees leaving by choice went down by 27 percent compared to the same period in 2019.
So, why are we anticipating what amounts to a tsunami of employees changing jobs sometime later this year — and beyond — as the problems brought on by COVID-19 abate?
Some causes for turnover are on the horizon, but some are already here
Experts who have been watching the trends and studying the psychology of what all age groups expect from their jobs are united in their belief that the way we used to work is not the way it will be in the future. The “long tail” of the COVID-19 pandemic has caused many employees to re-evaluate their overall life trajectories, including their work life. They are reflecting on what has gone on and how they feel about it. The daily commute to a 9-to-5 job isn’t worth it anymore for a lot of employees.
Women, primarily from Gen X, have been leaving the workforce in significant numbers. They have discovered that their family can survive on their spouse’s income. Or they can now work from home, possibly fewer hours. Or they simply have no choice because of childcare responsibilities.
In addition, there’s an unanticipated dynamic that fuels the employment crisis: Boomers are retiring earlier than expected. In fact, Boomers retired at twice the rate from 2019 to 2020, according to the Pew Research Center. 28.6 million left the workforce in 3rd quarter of 2020 alone. Many have experienced the freedom and satisfaction of working remotely and their re-evaluations of their lives have demonstrated that leaving the workforce is a possibility, or at the very least going part-time or signing on in a consulting role.
To further complicate the employment landscape, overall employee burnout was on the rise, even before the pandemic hit. Eagle Hill Consulting surveys found that currently 57 percent of U.S. employees say they are suffering from burnout. It was 45 percent during the early part of the pandemic. Millennials, women and employees with children doing remote learning at home report higher levels of burnout. Leaving the workforce — or at least their current place of employment — is often viewed as the only choice, especially as the economy and labor markets become stronger.
The result of this exodus is a formidable set of potential problems.
- Companies are forced to actively recruit, most often competing against a wealth of possible options for each employee
- Each of those new employees must be onboarded and trained, costing the company time and money
- Finally, the crucial knowledge accumulated by Boomers and even Gen Xers is lost, unless the company finds a way to capture, catalog and disperse it
What is the cost to you of significant voluntary turnover?
The Work Institute 2020 Retention Report estimates the cost to companies across the U.S. at $630 billion. That works out to approximately $15,000 per employee and includes:
- Cost of the employee leaving
- Cost of replacing the employee
- Cost of vacancy (number of days the job is open times the average value of the job per/day)
- Cost of the learning curve (lost productivity calculated by multiplying the revenue per employee per day by the number of days it takes to get the new hire up to standard performance)
This formula does not account for that loss of expertise and accumulated knowledge when an experienced employee leaves for another position.
What will be the result of replacing experienced employees with inexperience?
Millennials (Gen Y) have often been misrepresented as entitled, demanding employees—more so than previous generations. Truth is, they are often exceptionally hard workers who have little problem being at the workplace. They crave the social aspect as well as the structure it often imposes.
However, these younger workers also desire flexibility. They want to feel that they are supported and encouraged by their employer. And they want to work for a company to not only make money, but also to make a difference. Social issues and climate change have both become essential touchpoints for most of Gen Y and Gen Z.
In addition to knowledge being lost, requiring you to possibly have to train more thoroughly, you won’t necessarily be dealing with the same kind employee you just lost who simply doesn’t “know the ropes.” You’ll potentially be dealing with an entirely different mindset about work and how it fits into their lives.
What exactly do employees want these days?
IBM published a Research Brief titled “What employees expect in 2021: Engaging talent in the shadow of COVID” that established what workers needed from their employment:
- 51 percent — Work/Life balance
- 43 percent — Career advancement opportunities
- 41 percent — Compensation and benefits/Employer ethics and values
- 36 percent — Continuous learning opportunities
- 34 percent — Organizational stability
A LinkedIn research study asked what was important to employees in a post-COVID world. The answers are quite similar to the IBM study:
- 50 percent — Flexibility (location/hours)
- 45 percent — Work/Life balance
- 41 percent — Benefits
- 36 percent — Salary
- 36 percent — Culture
But remember, you have multiple generations working for you. Each one has its own biases, expectations and needs. While you can’t please everyone, all of the time, it’s important to find common ground and do as much as you possibly can to keep key employees engaged and eager to help the company move forward.
A Bersin & Associates research report discovered that it costs 4 to 6 times less investment to “build” a strong employee than “buy” one. So, anything you can do to create a more employee-centric culture can help you thrive.
How do you attract, cultivate and retain talent in a fast-evolving workscape?
What do you need to accommodate if and when you’re forced to fill voids left by departing employees? How do you strategically plan for dealing with a work situation that has changed radically?
Employees today are not only thinking about how they can reshape what “work” looks like for them, they’re going to be demanding it.
With the accelerated retirement of the Boom generation, you also need to create an internal model to keep the accumulated business knowledge available. That may mean hiring retirees on a consulting basis.
As employees such as the Gen Xer mothers leave the workforce, would it help if they could contribute 20 hours a week rather than full-time? Would that help reduce the need for new hires?
Retaining employees and attracting new ones require that you focus on two areas of your business: the physical workplace and your culture.
Cultural — Creating a culture that gives employees support and encouragement to thrive is essential to retaining and attracting talent. That’s essential, whether your employees are on the factory floor, in an office or working remotely from home. What you do to hone your culture can also affect your ability to bring remote workers together as well as how you configure a physical workspace.
What do your employees truly care about? What do potential hires need to see you as a place they want to work and stay? Can you structure your business to accommodate the needs of a partially remote workforce and the varying requirements of new employees, particularly Gen Y and Gen Z.
Listen carefully to what they need. Then listen again. And make sure your employees know that you’re actively listening.
Physical — Zoom fatigue is real and there will be enough employees who will choose to return to the workplace, especially millennials and Gen Z who desire more socialization. Many employees will be returning to jobs that couldn’t be done remotely, so will you need to rearrange their workspace?
How much flexibility can you afford to accommodate? How much social distancing will you need to employ, if any? Will you need to create workstations that employees can use temporarily whenever they come to the offices, rather than offices earmarked for specific employees?
What your organization looks like from the inside — how your employees perceive you — but also from the outside — how the world, including potential hires, perceive you—has become significantly more important than ever.
According to the OC Tanner 2020 Global Cultural Report, you stand to gain enormously by building a culture that not only allows but actively encourages employees to thrive.
- 13 times more likely to have highly engaged employees
- 8 times more likely to have high incidence of great work
- 7 times more likely to have employees innovating
- 6 times more likely to find that you’re promoted on the internet
- 3 times less likely to have layoffs
- 3 times less likely to have employees experience burnout
- 2 times more likely to increase your revenue
Marsh & McLennan Agency can help you build what you need
2021 and 2022 could be incredibly volatile years. Whether your employees are working on the front lines or remotely, the nature of work and what the workplace needs to be is shifting—and it’s an ongoing challenge. You don’t want to get left behind and miss huge opportunities to make important changes that will position your company for a stronger future.
Leaders need to take stock and reflect on what works and what does not. Relying solely on “old ways” may be wonderfully nostalgic but could have damaging effects.
At MMA, we believe the workplace is a place to inspire collaboration, not where we inspect work or productivity. We want employees to want to be in the office, and not to feel as though they’re required to be there, like it’s a punishment.
Building a strong culture can seem like a task that’s entirely too daunting. But doing it right is worth every effort. And a one-size-fits-all solution fits no one.
MMA has a team of experts to help you analyze your current culture, make recommendations for moving forward, create the right plan and effectively communicate it.
To learn more, contact your Marsh & McLennan Agency representative.