Your top employees are top targets. The candidate market is in a unique space: unemployment is low, turnover is at an all-time high, and loyalty isn’t necessarily a priority for all employees – and the finance industry, in particular, is feeling the pressure. As the demand for talent grows and the available candidate pool dwindles, recruiters have their eyes set on your best employees. And often, the temptation to take on a new adventure is too great.
While it’s easier to blame turnover on poachers, most employees quit because internal forces push them out, rather than external forces drawing them in. In so many words, it’s not them, it’s you.
According to TINYpulse, only 22% of financial workers are truly happy at work, putting them at a high risk for turnover. But even your most loyal employees are open to new opportunities, and the slightest nudge can tip the scale. Only 15% of employees are truly satisfied in their jobs and aren’t looking for other opportunities (LinkedIn). That means 85% of your employees could be at risk of leaving your organization.
Mercer states 34% of employees say they plan to leave their current role in the next 12 months. Gallup states a much higher percentage: 51% of workers are looking to leave their current jobs. LinkedIn research shows that 25% of employees are actively looking for new work, with two-thirds of them currently employed. In fact, 3.22 million Americans (2.2% of the workforce) quit their jobs in January 2017, the highest quit rate since February 2001 (Department of Labor).
While statistics on tenure and turnover may vary, one truth remains constant: employees are looking, especially in Finance.
In 2015, Compdata reported average turnover at 16.7%, but turnover within the Finance & Banking was reported at 18.6%. Meanwhile, CPA firms can experience an average turnover rate of up to 25% per year (TINYpulse).
Currently, 75% of jobseekers are employed but open to new opportunities— these are known as “passive candidates.” Almost 60% of workers look at other jobs at least monthly (Indeed). Platforms like LinkedIn and Glassdoor email new opportunities to passive candidates on a daily or weekly basis.
Just because they are open to new opportunities doesn’t mean they don’t like their current jobs: 80% of passive jobseekers are satisfied in their current job (LinkedIn). Among people who “love their jobs,” 50% would be willing to leave for a new opportunity (Adobe) and Glassdoor reports that 84% of candidates would consider leaving their current company if another company with an excellent reputation offered them a job.
More than half of U.S. employers (57%) said hiring activity has increased over the past 12 months, while turnover has picked up by 37% in 2016 (Willis Towers Watson). With demand high and available talent low, recruiters are becoming more aggressive. They aren’t shy about going for your top talent, and their tactics are effective. In 2015, 75% of workers with new jobs hadn’t actively applied for the position, they were referred or “poached” (FRBSF Economic Research).
The reasons they leave go beyond simple temptation.
It’s not just a Millennial problem.
Millennials have developed a reputation as job hoppers. And it’s not an incorrect assessment; 44% of Millennials say, if given the choice, they expect to leave their current employers in the next two years (Deloitte). But it’s not just Millennials: 37% of Gen X and 25% of Boomers are planning to leave their company in the next two years (Lightspeed).
Cost & Effect
When turnover is high, talent becomes a primary concern. According to the Society of Human Resources Management (SHRM), the top three challenges faced by HR organizations today are turnover, employee engagement, and succession planning.
The impact of these challenges all come at a high cost to your budget, to your team, and to your morale. Finding a new employee slows processes, requires recruiting efforts, and impacts culture. The cost of replacing an employee can range from 30%-400% of an employee’s salary (ERE Media).
When you lose an employee, their surrounding team feels the impact, too – not just in their productivity, but their team dynamic as well. Friendships can be a powerful tool in engagement and retention. Employees with a best friend at work tend to be more focused, more passionate, more loyal to their organizations, and they change jobs less frequently (SHRM). Employees agree: 46% of professionals worldwide believe that work friends are important to their overall happiness (LinkedIn) and 50% of employees with a best friend at work report a strong connection with the company (Gallup).
Friendship does have an effect on tenure: 37% of employees say “working with a great team” is their primary reason for staying (Gusto), while 55% of employees have put off job hunting because they didn’t want to leave their coworkers (ICIMS).
A revolving door of teammates does not allow for this kind of synergy. Meanwhile, a solid tenured workforce can:
Help guide strategic planning Acquire cross-training Mentor and train others Nurture culture Tenure’s impact on culture will be your biggest asset, and turnover’s impact on culture will be your biggest detriment. Longevity helps solidify and support culture, setting and maintaining the standard. A consistent culture is effective in its practices and expectations.
Why They Go & Why They Stay
There is no one factor that influences employee tenure. The U.S. Bureau of Labor Statistics currently defines the average employee tenure at 4.2 years. Typically, the top reasons job seekers will leave for another job are:
More compensation (61%) Location (42%) Better work-life balance (40%) Health benefits (36%) Growth opportunities (35%) Company culture (21%) Leadership (15%) (Jobvite)
All of these factors address employees’ human needs—the need to grow, the need to be valued, the need to live a full life.
Growth and opportunity are a particular driving force. Forty-one percent of employees said they would need to leave their current employer in order to advance their careers (Towers Watson). More than 60% don’t feel their career goals are aligned with the plans their employers have for them (Forbes), and another 47% of Americans would leave for their ideal job even if it meant less pay (Adobe).
Interaction between work and life can seriously influence tenure. Bamboo HR reports that 14% will leave if they don’t have a healthy work-life balance, while 46% of HR leaders say employee burnout is responsible for up to half of their annual workforce turnover (Kronos).
Sometimes it’s just a matter of timing. Job searching fluctuates in accordance with life events. Around birthdays, job searching increases by 12%, 16% around class reunions, and up to 9% around work anniversaries (HBR). Any life events that inspire reflection can lead your employees to wonder, “What’s next?”
There is an eternal human search for “something better.” The good news is, your organization can proactively address every single one of these factors.
Rob Beanett, author of Passion Saving: the Path to Plentiful Free-Time and Soul- Satisfying Work defines the Employee Life Cycle, defines the cycle at seven years and SHRM’s 2016 Human Capital Benchmarking Report defines average employee tenure at eight years, but it’s shortening. The U.S. Bureau of Labor Statistics currently defines the average employee tenure at 4.2 years. The cycle includes:
Starting a new job or position initially begins as stressful, but the new challenge drives them forward. New hire initiatives are crucial in balancing stress and engagement. (continued…)
- Happily Challenged
Within six months, the employee is still being challenged but enjoys the experience.
- Smooth Sailing
After another 6-12 months, the employee is confident in his ability to handle the job. They still enjoy the work, but there is not as much of a challenge and they are not learning as much.
It can take 3-7 years before an employee can feel like they can do their job in their sleep. Now the employee must actively begin looking for a new challenge.
Left unchallenged, the employee becomes unhappy with the company. They won’t care enough about the work to do it well. But if they find a new challenge, the cycle can begin again.
In the life cycle of an employee, it’s up to you to intervene and empower.
Lead the Way
How you involve your company’s leadership will make all the difference. They will set the tone and build a tenured team. In fact, 51% of employees who don’t feel they have the support of leadership plan to leave their job in the next year, compared to 25% of those who do have leadership support (American Psychological Association). In addition, 14% of HR leaders say lack of executive support is an obstacle to improving retention in 2017 (Kronos).
Through dedicated practices and daily efforts, your company’s leadership creates the employee experience—and plays a huge role in engagement. According to employees, the most memorable recognition comes from their manager (28%), a high-level leader or CEO (24%), and their manager’s manager (12%), followed by customers and peers.
We know that people don’t quit their jobs, they quit their boss. The main factor in workplace discontent is an employee’s manager—not wages, benefits, or hours (Gallup).
Half of U.S. adults have left their job to get away from their manager (Gallup), which is understandable considering the way the manager influences the factors mentioned earlier. Managers account for at least 70% of variance in employee engagement scores (Gallup).
But don’t be so quick to point the finger of blame. Your company’s leaders need great managers, too. Leaders need the same support from the individuals they report to. Just 35% of U.S. managers are engaged, while 51% are not engaged at all (Gallup). Meanwhile, 42% of managers are currently looking for jobs with other organizations (Modern Survey).
Managers actively influence nearly every factor of tenure and engagement. They require support, growth, and recognition to fill their own cup first—then they can nurture other employees.
Building Loyalty, Achieving Retention
If you want to retain your top employees, you must implement a dedicated, proactive strategy.
If your top employee won the lottery, who would do their job tomorrow? There should be no position on your team or in your organization that only one employee knows how to do. Cross-training employees can not only keep them challenged, it provides opportunities for growth and can come in handy when looking for a replacement.
Financial temptation can be your biggest enemy: 35% of employees will start looking for a job if they don’t receive a raise in the next 12 months (Glassdoor). Fix this by offering truly competitive pay. Give raises and adjustments proactively and always connect it with some other form of recognition. Never let a paycheck speak for itself. To ensure your pay is competitive, see our Salary Guide.
Don’t forget benefits. Your employees need them. It’s as simple as that.
Frequent Forbes contributor and seasoned Fortune 500 HR SVP Liz Ryan discusses a unique process at one of her former organizations. As her employees were receiving an avalanche of recruiter calls, turnover was becoming a top concern. Instead of punishing employees, the leadership team created a “poaching form.”
The form asked for the name of the recruiter, the hiring company, the name and description of the project or position, salary offered, and other details. Then, the company paid their employees $50 for each completed form. It worked like a charm. They were able to inspire an open dialogue about what employees were looking for and know what their competition was up to. Once recruiters figured out what was going on, the poaching slowed considerably.
A program like this can demonstrate trust, give you a chance to address concerns and efficiently enact retention strategies based directly on employee feedback.
Surveillance falls under the transparency umbrella. And it can be a tricky game. If you are or want to monitor employee internet or phone use, only use it to help, not punish.
For instance, if you notice an employee is spending considerably more time on LinkedIn, use that information to have a discussion about what the organization can do in service to that employee, rather than telling the employee to stop doing that.
Do not try to limit their behavior. The harder you press down the lid, the harder it will pop up.
Create Structured Career Paths
Everyone needs something to work towards. Work with employees on an individual basis to define a career path within your organization. Frequently check in on this path and adjust according to their needs and goals, ensuring they are challenged appropriately.
This is also how you will select your next group of leaders who will affect the tenure and performance of other employees. Promote according to performance and strengths, while rewarding tenure.
When 82% of employees don’t think they’re recognized for their work as often as they deserve (BambooHR), they will look for it elsewhere. Your top performers give you plenty to recognize. Create a structured program that allows for an abundance of both formal and informal recognition.
To address issues of location and work-life balance, allow for flexible work options. This is an effective demonstration of trust and appreciation while proactively meeting employee needs. Additionally, workers who were offered telecommuting options were more productive and had lower turnover (HBR). Make sure employees have the appropriate tools and training available to do their work well.
Surveying allows you to keep an eye on engagement and give employees a chance to speak candidly. Take results seriously and make adjustments accordingly.
Promote the right people into management roles, and make sure your leaders have the tools available to keep employees engaged.
Whether you recognize it or not, your organization has a culture. It’s simply the personality of your organization. You do not need ping pong tables to have an effective culture. You simply need to build your organization around your values, and in turn, implement programs that strengthen those values.
Keep a pulse on your culture and continuously nurture it. Every program, every technology, every process should somehow revert back to one of the values of the company. Always keep your culture at the forefront of every company communication.
No matter how great your organization is, some people will quit. It’s just part of life! Master the flow of talent and support your employees in their next step. Write recommendations and use your connections to help them build their careers. Soon, your organization will build a reputation as a launch pad, and you’ll get flooded with talent. Plus, you’d be surprised how many of those former employees will come back as boomerang employees—40% say they’d consider returning to their former company (Workplacetrends).
There’s nothing about the tenure crisis that you can’t manage. With dedicated programs, you can build effective longevity and reap all the benefits. The most important factor is to focus on helping your employees build their livelihood. When your employees are your main focus, they will find a career worth staying for within your organization.
Tips from Within
Creating Structured Career Paths
Jess Bushey serves as Market Vice President for Roth Staffing Companies, parent company of Ledgent. She oversees some of Roth’s most successful and tenured teams. Here’s what she has to say about creating structured career paths:
“I find that having a structured career path has empowered our coworkers, benefitting the overall organization. As a new employee is on-boarded, we lay an outline of several career opportunities relative to where they are starting, establishing what each stepping-stone requires. We then check in during quarterly performance reviews, outlining and benchmarking goals and outcomes that are needed to reach those next steps.
The key component to this is clear and consistent communication and allowing coworkers to explore different options than they originally thought they might aspire to.
Having a clear career path for promotion encourages coworkers to take ownership, keeping them engaged in their current role and within our organization. It has also allowed us to retain our top talent and have stronger succession planning for organic growth. It preserves and enlivens our company culture to have leaders who started in entry-level positions and grew into leadership positions, where they have authentic stories to tell our newest coworkers.”