Jorge Paolo Lemann once said: “The greatest asset of a company is its people.”
Employees are what keep a company running. Their contributions and hard work garner success and help an organization grow. That is why retention is such a major focus for HR teams. Low retention rates imply that good employees are leaving – sometimes to competitors – and taking their skills and knowledge with them.
For an organization, this doesn’t just mean losing a valuable asset. It also means that extra funds, time, and effort will be needed to replace that empty spot.
But why are so many employees leaving? Understanding the reasons behind this can help your business improve and thus reduce turnover.
1. Employee Purpose
Employees should feel like they are doing something useful with their lives when they come to work. Work is not just necessary for the economy but also provides purpose to one’s life. It makes them feel like their lives have led up to something, particularly for college graduates.
Research shows that companies where the mission itself has a purpose have 49% lower attrition rates than others. Missions that give employees purpose motivate their employees to work towards something rather than work and thus feel connected to work itself. As a result, their satisfaction with their job grows, and they are less likely to leave.
A major reason employees leave is due to the compensation they receive for their efforts, and this is particularly true for young people. In fact, low compensation is the biggest contributor to employee turnover.
Compensation is a tangible way to acknowledge the efforts that people put into their work and value their compensation. With rising inflation rates and decreasing purchasing power, financial benefits motivate employees to want to stick around. Good base pay is also a good way to make sure that competitors don’t steal your best employees through financial means.
But compensation involves more than just base pay. It includes employee benefits, such as health insurance, fuel compensation, and retirement fund contributions.
A major cause of job dissatisfaction is when employees feel that they are being overworked and burnt out. Being made to perform tasks that they are not equipped for, or given the resources for, or in unreasonably short periods can result in stress and exhaustion.
This includes anything from regular overtime to not being provided with the technology needed to carry out tasks efficiently.
The problem with burnout is that you can’t reduce it just by providing enough compensation. If employees are overworked, the compensation is not enough to cover their daily exhaustion and stress levels. The stress also further impedes their productivity and causes tension in the workplace between them and their supervisors. As a result, they end up quitting.
A big part of preventing turnover due to burnout is ensuring employees are heard and listened to when they ask for change and that their well-being is prioritized.
4. Work-Life Balance
Work-life balance is a strong contender for why so many people leave their jobs. This also ties in with burnout and overtime. A regular work day lasts about 8 hours, and commute time to and from work can easily take up to 2 hours each, given that most employees will be doing so during peak hours.
That’s 12 hours of the day being taken up by work. Of the remaining 12, a minimum of 7 hours of sleep is needed to keep one in good health and capable of working the next day. That leaves them with 5 hours during which individuals have to cater to their household, family members, any pending tasks that need addressing, and find time for themselves.
Now cut into those 5 hours with overtime and extra work, and there is no ‘life’ left – only work. Unsurprisingly, lack of work-life balance is a huge reason for employees quitting!
Remote work during the pandemic allowed individuals to find the balance between home life and work, on top of being able to rest and relax in a comfortable space.
That is also why the Great Resignation started – as the threat of COVID-19 subsided, companies’ return-to-work policies no longer sounded appealing to people working such long hours every day.
Allowing for more flexibility in work hours and work location can help reduce turnover rates due to work-life balance. Research shows that productivity levels were actually higher during the pandemic when people were working remotely, so this should not be a concern.
5. Bad Management
The stereotype of bad management and toxic bosses doesn’t exist for no reason. Plenty of people abuse their position of authority, are unreasonable to work with, and discriminate for personal reasons.
Preventing turnover involves identifying these people and weeding them out, particularly because a big chunk of all the reasons for high turnover also depend on management. After all, managers influence career growth, compensation rates, and workload.
A study on different types of managers identified that good managers pay close attention to their subordinates, identify their unique skills and capabilities, and utilize them accordingly. Accommodating the individuals in the workforce and recognizing their accomplishments is part of good management, which can help reduce turnover rates.
Employees are the building block of any organization. No company can progress without a strong and capable workforce. So, understanding why employees may be unsatisfied is vital to preventing turnover and emerging unscathed from the current crisis.
CCY is a top Recruitment Consultants For Hire NY. We can help you identify why your organization may face high turnover rates and what you can do to reduce them. Contact CCY now and get more information on New York Executive Headhunters NY!