September 21, 2021 by Jason Contant
The global COVID-19 pandemic has spurred a tidal wave of people quitting their jobs in what’s being called “the Great Resignation.”
What can employers do to combat this wave of resignations? Take a three-step, more data-driven approach to retention, said Ian Cook, vice president of people analytics with Vancouver-based analytics software firm Visier.
First, employers should quantify both the problem and its impact on key business metrics, Cook wrote in Who Is Driving the Great Resignation? a blog published last week on Harvard Business Review. Next, they should identify the root causes that are driving workers to resign. Finally, organizations should implement targeted retention campaigns designed to address the specific issues that they struggle with the most.
Cook and his team conducted an in-depth analysis of more than 9 million employee records at 4,000 global companies. The dataset included employees from a wide variety of industries (including financial services and insurance), functions and levels of experience. It revealed two key trends:
These trends highlight the importance to taking a data-driven approach to determining not just how many people are quitting, but who exactly has the highest turnover risk, why people are leaving and what can be done to prevent it, Cook wrote. The three steps Cook recommends to improve employee retention include:
Quantify the problem
Calculate your retention rate using the following formula: Number of Separations per Year ÷ Average Total Number of Employees = Turnover Rate
You can use similar formulas to identify how much of your turnover is coming from voluntary resignations, versus from layoffs or firings. This will help you gain visibility around exactly where your retention problem is coming from, Cook noted.
Next, determine the impact of resignations on key business metrics. “When employees leave an organization, remaining teams often find themselves without key skillsets or resources, negatively impacting everything from quality of work and time-to-completion to bottom-line revenue,” the blog said. “It’s important to track how increased turnover correlates with changes in other relevant metrics in order to get a full picture of the costs of resignations.”
Cook used the example of a trucking company that identified what appeared to be a small increase in turnover due to a nationwide driver shortage. In fact, it was costing the company millions of dollars in hiring and training resources. “Quantifying the problem both helped leaders get the internal buy-in necessary to address it, and informed decisions around what kind of retention interventions would be most effective.”
Identify the root causes
Explore metrics such as compensation, time between promotions, size of pay increases, tenure, performance, and training opportunities to help identify trends and blind spots within your organization. You can also segment employees by categories such as location, function, and other demographics to better understand how work experiences and retention rates differ across distinct employee populations.
This analysis can help you identify not just which employees have the highest risk of resigning, but also which of these employees can likely be retained with targeted interventions. For example, after extensive analysis, the trucking company found that drivers who had less experience and a remote supervisor were much more likely to resign than more-experienced drivers and those receiving in-person support.
Develop tailored retention programs
Create highly customized programs aimed at correcting the specific issues that your workplace struggles with most. For example, if you discover that people of colour are leaving your organization at a higher rather than their white peers, a diversity, equity and inclusion-focused approach may be called for. If the time between promotions correlates strongly with high resignation rates, it may be time to rethink your advancement policies.
After implementing a targeted retention campaign, the trucking company saw a 10% reduction in driver resignations, even in the face of fierce competition from other employers.
“Adopting a truly data-driven retention strategy isn’t easy, but it’s worth the effort to do it right, especially in the current market,” Cook wrote. “With greater visibility into both how serious your turnover problem really is, and the root causes that drive it, you’ll be empowered to attract top talent, reduce turnover costs, and ultimately build a more engaged and effective workforce.”
Feature image by iStock.com/AndreyPopov