Retention became a focal part of the employee experience conversation last year and it has remained top of mind throughout 2023. Movement in the job market reached record levels in 2022. Job openings rose steadily throughout the year, and the frequency of people changing jobs remained higher than the pre-pandemic norm. Employees continued to question what was most important to them from their employer and were not afraid to look for other jobs when their expectations were not met.
As a result of this great reshuffle, leaders had an appetite for answers, and employees were happy to provide their perspective. We asked over 46,000 employees why they plan to stay with or leave their organizations in 2022 to help guide us in making decisions about retention in 2023.
Why Do They Stay?
As we have seen for the past several years, the opportunity to work with great people was the top reason employees planned to stay. It is no surprise the social context of work is highly related to retention. Feeling integrated socially is well established as an important component of how connected someone feels to their job and the overall employee experience. While the landscape of work has evolved, this fundamental truth has not. Forgetting the importance of social connections is a major risk to an organization’s retention strategy – particularly while portions of the workforce are operating in remote or hybrid environments. Don’t put this on the back burner. Think about how a sense of belonging can be strengthened in these work arrangements. For instance, the informal conversations that happen at the beginning of a video call are crucial to building the connections, friendships, and social ties that make your organization a great place to work. Keep them going! Although those moments might not feel like they are productive or directly impacting the bottom line, they are doing quite the opposite.
Why Might They Leave?
Eighteen percent of the employees we surveyed in 2022 did not agree they plan to stay with their employer for the next 12 months. When we asked these individuals why they would leave, the most common reason was compensation. This trend is consistent with what we’ve seen in previous years, and it has become even more of a focus in 2022 with the movement in the job market and inflation.
Pay is a complicated part of the retention conversation because it is a hygiene factor, meaning employees need to be compensated fairly as a baseline measure of a healthy employment relationship. Pay will not create high motivation or be the driving factor as to why someone loves their job, but it will certainly be a reason why someone would think about leaving.
When we explored the qualitative data from the past year, we found perceptions of compensation were nuanced. A significant concern about pay was related to equity and fairness. As demand increases for more open and transparent information about pay (particularly among the younger generations), employees expect consistent standards. Tensions arise when tenured employees see new hires coming in with a higher salary.
The compensation conversation continues in 2023. HR leaders will need to invite employee feedback to thoroughly understand concerns or frustrations around pay (if these exist) before developing a plan of action. Clients we’ve partnered with to investigate pay perceptions as a part of their employee listening strategy are learning what people value most and where to take the most meaningful action.
The topics in the figure above were self-reported by employees from our client organizations. To take this analysis a step further, we turned to our database to see what aspects across the 2022 employee experience provided the strongest relative contribution in explaining variance in intentions to stay (using relative weights analysis). The top predictors of the intent to stay item were:
- Sense of belonging at work
- Confidence in achieving career goals
- Clear understanding of the company’s strategy and objectives
- Feeling encouraged to come up with new and better ways of doing things
- Having enough information to effectively to the job
The bottom line is to make belonging and social connections part of your retention strategy. This time invested here is worth it in the long run. Also, continue to focus on the obvious necessities like paying people equitably and competitively while working with them to understand their career goals.
During these uncertain times, it is important to listen to employees and continue gathering data to make evidence-based business decisions. Leaders must also continuously share information and have two-way dialogue with employees. Increasing your retention means showing your people they matter. Keep listening, keep sharing results, keep explaining why decisions are made, and keep communicating what is possible.
1. (2023, April 4). Economic News Release: Job Openings and Labor Turnover Survey News Release. U.S. Bureau of Labor Statistics. https://www.bls.gov/news.release/jolts.htm
2. Mitchell, T. R., Holtom, B. C., Lee, T. W., Sablynski, C. J., & Erez, M. (2001). Why people stay: Using job embeddedness to predict voluntary turnover. Academy of Management Journal, 44, 1102–1121.
3. Herzberg, F. (2003, January). One More Time: How do You Motivate Employees? Harvard Business Review. https://hbr.org/2003/01/one-more-time-how-do-you-motivate-employees