The recruitment market is currently booming. In April this year, there were just under 1.3 million active vacancies in the UK, which is 300,000 up from the previous year. It’s a similar picture in the US, as unemployment rates continue to fall and more jobs are advertised every day. We’re currently in a candidate-driven market, especially in the tech industry. No matter where you’re located, recruiting tech vacancies is becoming increasingly competitive, with a vast number of companies fighting for the same limited talent pool.
However, with so many jobs currently on the market and the power lying with candidates, there is one glaringly obvious issue that we all tend to overlook. That is employee turnover.
Employee turnover refers to the number of employees leaving an organisation. In 2018 US companies had an average voluntary turnover rate of 12%. However, this year the rate of employees choosing to leave their employer is snowballing. Glassdoor found that the average voluntary turnover rate in the US is currently 25%, which is almost double what it was three years ago. It turns out that nearly 3.48 million American workers quit their jobs in April 2021 alone, which was almost double the number of those who left a year earlier. So we’re currently seeing the highest level of turnover in a long time on both sides of the Atlantic.
High turnover of staff is a huge issue for employers:
- It’s disruptive. It takes a long time to recruit someone new and to train them to the level of your existing team members. It means that your senior staff have to take time out of their schedules to recruit from screening candidates through to interviewing, but then there’s also a time-consuming onboarding and training process to consider.
- It’s costly. Each resignation can cost a company up to a third of the worker’s annual salary. 67% often comes from soft costs like reduced productivity, but 33% come from hard costs like recruiting and hiring temporary replacements.
- It reflects poorly on your employer brand if your team are constantly leaving, and candidates will begin to wonder why.
Naturally, a high turnover raises questions amongst candidates, like why is this company always recruiting and why don’t people want to stay with them long-term?
The truth is, people always leave their jobs, and there are many perfectly reasonable reasons for this. It’s not like years ago when an employee would work for the same company for their entire career. Millennials and younger generations are more prone to switching companies to gain more experience and take steps up the career ladder. Then there’s the fact that personal situations change constantly and sometimes leaving a job is the only solution.
However, as a result of the pandemic, many career moves were put on hold. The people who naturally would have left companies in search of new opportunities decided to stay where they were as their job was more secure. In an uncertain jobs market, this is entirely understandable. Why would you leave a job you’re happy with when opportunities are limited and no job feels safe?
However, fast forward a year, and the people who would have naturally turned over in the last 18 months are looking to do so now more opportunities are available and there’s less risk. Alongside this, you have people who only now feel ready to make a move and would naturally turnover at this time anyway. From retirement to career shifts, there have never been more people choosing to leave their jobs. Plus, in a candidate-driven market, your existing teams will see more opportunities available, with better compensation and perks, which makes leaving a much more tempting and less risky move to make. Suddenly, the thought of packing up and leaving a secure job, which 12 months ago would have been out of the question, is a more realistic and exciting prospect.
But what are some of the reasons for employees leaving?
After the last year especially, many of us are exhausted. More than two thirds, or 69%, of employees in the US, reported experiencing burnout symptoms while working from home, and it’s a similar picture in the UK. Because we can’t differentiate work and home life, in the same way, we could working in the office it’s easier to work longer hours. Plus, workers often feel they need to work harder to prove their worth, as managers can’t check up on them as easily. Burnout can leave you feeling mentally and physically exhausted, which unsurprisingly can be motivation for finding new work with less pressure.
Then there’s also the natural burnout many of us get with jobs. Sometimes your passion for the role just fizzles out once you’ve been there so long. You become tired of repeating the same tasks and want a new challenge. In a candidate-driven market, there are so many more options for talent (especially in tech roles) that being tempted by a new challenge has never been easier.
Over the past 18 months, employees have grown accustomed to remote working, and many have found it saves them time, money and suits their lifestyle. However, if employers suddenly demand teams go back into the office full time, they may look for options that allow them to continue working in the way they’re now used to. Adapting to a return to office life will be a challenge for many. With hundreds of remote opportunities currently available, they may feel strongly that the promise of working from home is more appealing than their current role.
On the other end of the spectrum, some employees miss the office and crave working as normal again. They like the company of co-workers and are more productive working with people. Working from home does create a culture of loneliness. If some teammates consider going 100% remote, these employees may look for a new opportunity that involves more collaboration and allows them the sanctuary and social aspects of an office.
The pandemic has also meant employees and employers have had to re-evaluate the skills in demand. With millions across the globe being made redundant or laid off almost overnight, we saw a massive shift in the most in-demand skills. While tech skills were always growing in demand, the pandemic accelerated this need, with more industries and skillsets rapidly losing their value. Owing to this, nearly 60% of workers took on their own skills training last year, highlighting an appetite for more excellent knowledge as well as a change in career path. If candidates see high demand in other areas, a career change may not only be an exciting prospect but a more sensible one when it comes to futureproofing their career.
As well as changing careers, a lack of progression in their role is another huge motivation for leaving a job. 21% of employees claim that inadequate career development is their reason for quitting. They feel like they can’t progress within the company and learn the new skills needed to advance, then they’ll likely be able to move up in their careers elsewhere. Employees are now realising that learning and development are vital, especially as the world of work shifts more towards tech and digital. Therefore providing opportunities to grow and learn is becoming an integral part of employee retention.
The combination of remote working and a candidate-driven market has opened up the possibility of higher salaries for many employees. For example, companies in London can now hire remote teams but afford to pay an employee in Manchester a London salary which will be incredibly tempting. Bigger companies are also fighting for the same candidates as startups and scaleups; these enterprise names can afford to pay more for talent and can offer higher compensation or benefits. Although job satisfaction is about much more than salary, and the pandemic has taught many people this lesson, it cannot be denied that it’s a factor.
With any job in any industry, people will always leave for personal reasons. They could be starting a family, relocating or even retiring. So it’s perfectly normal for employers to anticipate that some of their employees will leave naturally. Of course, it’s never convenient but cannot be helped. In the instances of retirement, you can plan a bit more, but life isn’t always this simple. Turnover is natural, and employees will often leave because the job no longer suits their way of life or isn’t fulfilling enough.
What does a high turnover mean for employers?
Having high turnover means that no matter how aggressively employers hire, staff will be leaving, and they’ll have more vacancies to fill. This is causing a massive strain for employers, especially in a candidate-driven market when recruiting tech talent is so competitive. It’s becoming increasingly difficult to find suitable candidates for a job, as candidates have many more options. Plus, existing employees are more likely to leave when they realise just how many options are out there for them. It’s a supply and demand issue; with so much demand, employees leave, but there simply aren’t enough qualified candidates to fill the roles.
Therefore, in 2021 employers really need to focus on retention as well as recruiting. If you truly wish to scale your business hiring new talent isn’t enough. Instead, you need to hold onto the talent you have to escape the cycle of turnover. This means refining your EVP and employer brand, listening to your team’s pain points and concerns, and adapting your culture and offering to meet their needs.
You can outsource recruitment efforts and even have help from an RPO provider to research and refine your EVP but holding onto employees is the only way to break the turnover cycle.
To find out more about our employer brand and EVP offering to help strengthen your company culture or our recruitment process outsourcing to help you fill new roles, contact us today.