- A job change is on the mind of nearly half of all U.S. employees
- Employee engagement correlates strongly to employee retention
- Now is the time to rethink your employee retention strategy
A new Gallup analysis finds that 48% of America's working population is actively job searching or watching for opportunities. Businesses are facing a staggeringly high quit rate -- 3.6 million Americans resigned in May alone -- and a record-high number of unfilled positions. And Gallup discovered that workers in all job categories, from customer-facing service roles to highly professional positions, are actively or passively job hunting at roughly the same rate.
|September 2019||March 2021|
|Gallup, Sept. 2019, March 2021|
People are calling it the "Great Resignation," and as the Gallup data show, it's not an industry, role or pay issue. It's a workplace issue -- because the highest quit rate is among not engaged and actively disengaged workers.
Employee resignation and employee engagement
Unfortunately, most employees are not engaged or are actively disengaged. Gallup's State of the Global Workplace: 2021 Report identified a global employee engagement rate of 20% -- 34% in the U.S. and Canada. And disengagement is very costly.
- The lost productivity of not engaged and actively disengaged employees is equal to 18% of their annual salary.
- For a company of 10,000 employees with an average salary of $50,000 each, disengagement costs $60.3 million a year.
- Replacing workers requires one-half to two times the employee's annual salary. So, it costs $9,000 a year to keep each disengaged worker and between $25,000 and $100,000 to replace them.
People are calling it the "Great Resignation," and as the Gallup data show, it's not an industry, role or pay issue. It's a workplace issue.
Considering that most of the currently employed are not engaged, each new hire is liable to land on a less-than-engaging team and probably won't stay long.
That's a self-defeating cycle, but it can be interrupted -- and the most effective interrupter is the local manager. Gallup finds that it takes more than a 20% pay raise to lure most employees away from a manager who engages them, and next to nothing to poach most disengaged workers.
The lost productivity of not engaged and actively disengaged employees is equal to 18% of their annual salary.
Employee retention strategies demand people management skills
To engage workers, managers must fulfill the 12 essential elements of engagement. Those elements range from knowing what's expected at work to having opportunities to learn and grow. And because engagement has a reciprocal relationship with wellbeing, engaged employees are healthier, more resilient and better performers.
They're also more loyal. One Gallup client that focused on propelling organic growth through effective workplace culture found that engagement reduces turnover in critical high-turnover roles by 36 percentage points and reduces the 100-day attrition rate by nine points.
Delivering the elements of engagement and wellbeing isn't difficult, but most managers need help to do it right. Development teaches managers how to conduct meaningful conversations, set expectations and create accountability, individualize performance management to get the best out of people -- and create an employee experience that retains workers.
Pay strategies and engagement
Though pay is important, money alone isn't the solution. Some very well-paid people are among the most disengaged, and disengaged white-collar workers are slightly more likely than others to be looking for a job.
Disengagement is a better predictor than pay of disloyalty -- workers at every level of income are looking for new jobs -- but pay strategies can reinforce engagement or erode it.
Gallup finds that it takes more than a 20% pay raise to lure most employees away from a manager who engages them, and next to nothing to poach most disengaged workers.
Pay structures are most effective when they incentivize preferred perceptions, behaviors and outcomes, but most pay policies don't. Gallup found that employees who feel their pay and incentives are fair, motivate individual achievement or direct them to do what's best for the organization are happier with their pay and more engaged. But, at most, 22% of workers can strongly agree with those perceptions, as shown in Gallup's perspective paper, How to Align Your Employee Compensation and Talent Management Strategies.
Companies have opportunities to maximize pay strategies by calibrating an effective total rewards program with an understanding of how all of the program's components affect various employee perceptions, behaviors and outcomes. It's detailed work -- Gallup's work with clients shows that compensation strategies can undermine talent management strategies -- but it can prevent underperformance, culture and compliance problems, and rapid turnover.
In any case, attributing today's record-high quit rate to pay issues overlooks the bigger picture of the workplace. The pandemic changed the way people work and how they view work. Many are reflecting on what a quality job feels like, and nearly half are willing to quit to find one. Reversing the tide in an organization requires managers who care, who engage, and who give workers a sense of purpose, inspiration and motivation to perform. Such managers give people reason to stay.
In other words, reversing the Great Resignation requires fixing the Great Discontent -- and managers are the key.