Increasing numbers of workers are quitting their jobs, and many of the rest are contemplating a change. Only half of employees are content with their current jobs, according to an Oliver Wyman survey. About one in four has already switched or is actively looking for a new job. Another fifth are passively looking, suggesting that more attrition is likely in the future.  

The impact on companies is potentially severe. Replacing an employee incurs direct costs from the hiring process and indirect costs from the loss of productivity, as new hires need time to get up to speed. If a knowledge worker making €75,000 per year leaves, replacing them could cost between €37,500 and €56,250 in recruitment, onboarding, and hiring costs. For a bank with 50,000 employees, a rise in voluntary attrition from 2% pre-COVID to 3% post-COVID means around €23 million in additional costs.

The clearest cause of the increase in resignations is the COVID pandemic, which has led people to reflect on their lives and careers. In the survey, 48% of respondents agreed that “What’s been happening has helped me reassess what truly matters to me.” Other comments included, “My health matters so much more than money now,” and “COVID-19 made me rethink my priorities. Life is important, and so is family.” As a result, more people have started to work freelance to achieve a more balanced lifestyle. Others are seeking employers that offer better working conditions.

Remedies

To keep attrition at a manageable level, companies first need to understand their workforce. Young parents have different priorities to employees who are single, for example. For blue-collar workers, pay is important, and at many US clients we have found one of the biggest predictors of retention to be family participation in company healthcare coverage.

Knowledge workers tend to consider pay and healthcare a given, so a more holistic approach is required. This can be developed and refined for each company by institutionalizing exit interviews. Here are three initial steps that could be effective in retaining staff.

1. Adapt Working Practices To The Employees

Many companies have adopted flexibility of location, by accepting some form of remote working. Companies should now become more flexible over other dimensions of work, starting with time. This could take the form of a six-hour day, a four-day workweek, or recharge days – say one Friday a month off. Such a system will need to be designed and implemented with the company’s particular needs in mind. Careful planning will be needed to avoid gaps in customer service. But done right, such a system could lead to better client coverage from fewer working hours per employee.

2. Trust And Empower Employees

Large organizations, such as banks, tend to be hierarchical. This can frustrate talented employees, who might be tempted by jobs in private equity or digital technology, which offer more space to take initiative. Faster promotion can help. It is a sign of trust, and the probability of attrition reduces significantly following a promotion.

People stay where they are being adequately – but not overly – challenged and where they feel they have an impact. So, companies should give employees space, empower them, and create the conditions for a sense of personal accomplishment. In addition, training opportunities are a sign that the company values an employee. These can include education benefits, such as financing a post-graduate or executive-leader program. Leaders should take care to carry out these changes, while ensuring that employees still feel comfortable to speak openly and challenge colleagues and management.

3. Design The Organization For Retention

In our experience, people often leave their bosses or co-workers – not their jobs. That means organizations can make a big difference by pro-actively designing positive work relationships, so it is worth helping managers develop people management skills.

Companies can create a positive work atmosphere right from the start. Employees who have a positive onboarding experience tend to perform better and stay longer. Mentoring programs help create meaningful relationships between junior and senior employees.

Team size and design are also crucial factors in work relationships and employees’ feelings of empowerment. One survey found that managers with more than 10 direct reports have too large a span of control, which reduces the power of their relationships. On the other hand, a span that is too small can lead to micro-management. It is therefore crucial to design teams the right sized that empower their members.

Perhaps most important is people’s need for praise, which can come in various forms. A smart, indirect way is to provide standout employees with platforms – placements in external publications or conference appearances, for example. This can lead to recognition – both public and among an employee’s peers. Senior company leaders can also go out of their way to praise employees, both inside and outside the company.

An Opportunity For Change

The sharp rise in employee turnover has come as a surprise, and organizations have only a short window to act: Around half of the employees actively looking for new jobs intend to leave within the next six months – this figure that rises to two-thirds in China. But companies can turn it into an advantage, by changing their working practices and focusing on how to get the best out of staff – and how to make them want to stay. In the past, most organizations expected employees to learn to fit in. Now, companies are learning to adapt to their workers.