Let's begin with a quick thought experiment...
Picture a sample of about ten of your closest family and friends. If you casually surveyed them and asked how many years they stayed at their longest job, what types of numbers do you think would come up? Probably some very uninspiring ones.
It's essentially a modern fact; finding a great company to work for when you're fresh out of school and climbing the ladder for the next 30 or 40 years in the same place is no longer a mark of career success. And maybe that's a good thing. There is an appeal to testing out different options.
However, the polar opposite pattern of endless job-hopping is not necessarily appealing either.
Although it sounds downright exhausting, the reality is many people—especially younger workers, are serial job-hoppers.
Employee Retention Statistics You Should Know About
According to an extensive analysis by Workopolis of over 7,000,000 employment-history records from 1990 to the present, the overarching trend suggests “shorter stints at jobs have now become the majority.”
These statistics unequivocally show that—yes, people are job-hopping at a higher rate. Still, the numbers fail to tell us anything about why employees quit their jobs, nor anything about the psychological impact of continually switching jobs.
Retention Statistics on The Psychological Impact of Turnover
Interestingly, recent reports suggest these statistics don't paint the full picture.
For instance, a 2016 Forbes report suggests that workers—even millennials!—“aspire to build a long-lasting career with one company.”
It makes sense: Frequent job changes can cause uncertainty-related stress. Almost half of job seekers polled by iHire revealed that job hunting negatively impacts their mental health.
The financial burden of turnover is amplified for workers in between jobs. Research shows that financial hardship can actually hinder job search efforts, which, in turn, harms well-being even further.
These insights show that employee retention isn’t just good for businesses – job security can bring benefits for employees too.
For example, another study revealed that greater job security is associated with decreased odds of serious psychological distress.
One burning question remains: If workers are not entirely happy with job-hopping, Why are they doing it? What is prompting people to jump ship so quickly at any given company, and what can businesses do to increase retention?
We will explore some employee retention statistics and figure out some valuable lessons organizations can learn from these insights.
Retention Statistics About Why Employees Leave
Let's start on an optimistic note...
Underpinning employee churn is a core reason for each departure. A Work Institute study shows that 75% of the causes of employee turnover are preventable.
In short, no matter what the reason, if management and HR had intervened with a solution early enough, churn could have been prevented.
Let's find out exactly what is causing employee churn.
Feeling unappreciated
A TINYpulse survey found that feeling underappreciated is a significant driver for employee churn.
When employees feel undervalued, even the potential of a small boost in earnings may persuade them to jump ship, as 25% of employees surveyed said they would be willing to leave their current employer for just a 10% raise.
It turns out that company culture plays a big role in perpetuating an environment of positivity and acknowledgement. As 47% of employees that felt undervalued are actively looking for new positions, say company culture is the main reason.
It’s worth noting that appreciation isn’t just about salary. According to McKinsey, up to 55% of employee engagement is driven by non-financial forms of recognition. To retain employees, you need to understand what they care about.
Other forms of appreciation include private or public recognition, opportunities for growth and development and flexibility in the workplace.
Lack of trust and autonomy
Think about churn in higher ranks of a company: with the individuals holding VP and Director titles.
VPs and Directors are considered experts in their discipline. Often, holding Masters and even Ph.D. degrees, with ten to fifteen years (or more) of experience in a specific field under their belt. Executives hire people with these subject authorities because they may be lacking in-depth knowledge and expertise.
Imagine then executives not being able to relinquish control and requiring these experts to run every decision by them. Of course, executives should have a clear understanding of what's happening in their company. But shouldn't they also trust the experts?
It's no surprise that a climate of control and organizational distrust fuels employee churn.
A Gallup study shows that employees “whose hands are regularly tied are 28% more likely to think about greener pastures.”
The same study found a strong connection between employee satisfaction and the “freedom to make decisions about how to do their jobs.”
According to other Gallup data, workers are 43% less likely to experience high levels of burnout when they have decision-making power over their tasks.
In his book, “My Way or the Highway: The Micromanagement Survival Guide,” author Harry E. Chambers highlights a survey that uncovered the devastating impact of micromanagement on employee retention: 79% of respondents said they experience micromanagement – nearly 70% said they considered changing jobs because of it and over a third (36%) actually changed jobs because of it .
Miscommunication of expectation
Sometimes, employees and managers are not fully aligned on the job requirements. Perhaps this misalignment occurred due to an opaque hiring process or an inadequate job description. Whatever the reason, stats show that when employees feel they are not doing what they thought they would be doing, churn often occurs very quickly.
A study showed from a group of employees that look for a new job within the first 90-days, 43% of them report the reasons as their day-to-day role wasn't what they had been led to believe would be during the hiring process.
This should be a lesson for HR and managers to collaborate on writing job descriptions and ensuring that the tasks and responsibilities of this role are made abundantly clear during the job interview process.
Additionally, onboarding is often a missed opportunity to strengthen employee retention. Poor onboarding is a major driver of turnover.
According to a Paychex survey, when onboarding doesn’t meet the expectations of a new hire, the next step is often to quit – 80% of new hires who plan to quit soon also report lacking employee training.
Among those looking to leave, 74% describe their latest onboarding experience as boring, 66% say it was confusing, and 64% go as far as calling it a “fail.”
The good news is, a strong onboarding experience has a positive effect on retention. According to the Society for Human Resource Management (SHRM), 69 percent of employees are more likely to stay with an organization for three years after a great onboarding experience.
Lack of trust and autonomy
Think about churn in higher ranks of a company: with the individuals holding VP and Director titles.
VPs and Directors are considered experts in their discipline. Often, holding Masters and even Ph.D. degrees, with ten to fifteen years (or more) of experience in a specific field under their belt. Executives hire people with these subject authorities because they may be lacking in-depth knowledge and expertise.
Imagine then executives not being able to relinquish control and requiring these experts to run every decision by them. Of course, executives should have a clear understanding of what’s happening in their company. But shouldn’t they also trust the experts?
It’s no surprise that a climate of control and organizational distrust fuels employee churn.
A Gallup study shows that employees “whose hands are regularly tied are 28% more likely to think about greener pastures.”
The same study found a strong connection between employee job satisfaction and the “freedom to make decisions about how to do their jobs.”
Miscommunication of expectations
Sometimes employees and managers are not fully aligned on the job requirements. Perhaps this misalignment occurred due to an opaque hiring process or an inadequate job description. Whatever the reason, stats show that when employees feel they are not doing what they thought they would be doing, churn often occurs very quickly.
A study showed from a group of employees that quit within the first 90-days, 43% of them report the reasons as their day-to-day role wasn’t what they had been led to believe would be during the hiring process.
This should be a lesson for HR and managers to collaborate on writing job descriptions and ensuring that the tasks and responsibilities of this role are made abundantly clear during the job interview process.
Retention Statistics About Remote and Hybrid Work
Remote and hybrid work are changing the game on the employee retention front. For example, remote employees are 117% more likely than on site employees to plan to leave their organizations soon, according to Paychex.
This statistic demonstrates that there may be a disconnect between the employee experience of remote workers compared to on-site ones. It also highlights the importance of building employee retention strategies that cater to remote and hybrid workforces.
On a more positive note, flexible work policies can also improve retention. Stanford economist Nicholas Bloom uncovered the powerful impact of hybrid schedules. “Employees who work from home two days a week are just as productive, likely to get promoted, and far less prone to quit,” according to a Stanford Report article on the study findings.
The study further revealed that, resignations dropped by a third among team members who shifted to a hybrid schedule.
Retention Statistics on Ways to Improve Employee Retention
Now that we have explored some root causes of employee churn, let's continue on an optimistic note and look at what the stats have to say about improving employee retention.
Employee recognition
As mentioned, feeling under-appreciated is a significant driver of employee churn. It's no surprise that implementing a recognition program like Applauz Recognition can do wonders to boost engagement and retention.
Studies back this up and show that companies with recognition programs are highly effective at improving employee engagement and have a 31% lower voluntary turnover.
Moreover, studies show that when employees feel engaged, businesses experience a drop in absenteeism by 41%.
Actively rewarding and recognizing employees contributes to lower voluntary turnover and highlights your employees' skills and overall potential, in short, leveraging employees' strengths in their day-to-day work.
A Gallup study shows that employees who use their strengths, skills, and abilities every day are six times more likely to be engaged at work and 15% less likely to leave their jobs.
Career development
Having access to professional development can make or break an employee’s decision to stay or leave. When people see a clear path for growth within an organization and feel like their employer invests in them, they are more likely to remain loyal and stick around.
For example, an Ed Assist study on employer-funded education assistance programs showed the impact of investing in team members: 93% of respondents revealed that using their employer’s tuition assistance program helped them develop the skills needed to grow within the organization and 71% rated tuition assistance as the best or among the best workplace benefits offered.
Internal mobility also boosts retention, according to SHRM. Workers who are promoted within three years of being hired have a 70 percent chance of staying.
Work-life balance
A focus on work-life balance policies pays off when it comes to employee retention. Employees are people with lives outside of work – and they want to be treated as such.
A World Economic Forum report showed that almost half of workers (48%) would leave a job if it prevented them from enjoying their life.
Looking for an easy way to improve your commitment to work-life balance as an employer? Flexibility, flexibility, flexibility. According to Global Workplace Analytics, 95% of employers agree that remote work arrangements have a high impact on employee retention.
Perhaps it’s because people are sick of commuting to work. The same Global Workplace Analytics report revealed that two-thirds of employees would take another job to ease the commute.
Improved communication
Finally, improving communication – especially communication between managers and employees – is a key tool in your employee retention arsenal.
A shocking 42% of workers who left their organizations in the past year say that their employer could’ve prevented them from leaving, Gallup reveals.
Even more shockingly, almost half (45%) of the people said that managers and leaders never proactively discussed their job satisfaction, performance or future with the company in the three months leading up to their departure.
Make it your mission to implement best communication practices, from conducting regular one-on-one meetings to running employee pulse surveys on a regular basis.
The Cost of Employee Turnover
Companies spend a lot of time and resources to "fix" retention problems. That's because—as you probably know—the cost of losing employees is high.
The Center for American Progress found that companies can spend anywhere between 16% to 213% of an employee's salary to cover the costs of finding a replacement.
On an even higher level, Gallup found that employee disengagement, on the whole, costs somewhere between $450 and $550 billion each year.
Not to mention the hidden costs of employee turnover – think, decreased morale and a weakened employer brand. Research conducted by Wiley Edge/mthree showed that nearly two-thirds (63%) of organizations reported negative effects on their company culture as a direct result of high turnover.
All of a sudden, the ROI of investing in employee engagement seems like a better use of your HR budget than hiring replacements -- and tracking employee retention rate becomes one of your top priorities.
Final Thoughts: Why Reduce Employee Turnover
Employers may be compelled to treat employees like short-term assets when they are cognizant of today's grim job-hopping statistics. Ignoring workers' deeper human needs as a result. In short, companies think—"why bother," they will most likely leave soon. But these statistics don't paint the whole picture.
In other words, ignoring employee retention is narrow-sighted.
Managers should never forget that loyal employees are among the best assets for a successful company. They bring momentum, stability, and growth to an organization. They ensure the continuity of valuable institutional knowledge. And more importantly, loyal employees serve as prime examples of your company's values and overall employment success.
Want to discuss these statistics with a specialist?
