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The length of time in one role, the existence (or lack) of progressive pay raises, and workplace culture are the three top predictors of employee retention and turnover, according to a new analysis by Glassdoor.
The employer review site studied 5,000 job transitions from resumes shared on the site from 2007 to 2013. It found that employers that had better career opportunities, culture and values ratings on Glassdoor were more likely to retain employees when they move to a new position.
The study found that every additional 10 months employees stay in one role makes them more likely to leave the company when they finally move on to their next position. On the other hand, a 10 percent base pay increase is linked to an increase in the likelihood that employees will remain with their company when they transition to a new job.
[SHRM members-only how-to guide:
How to Determine Turnover Rate]
"Many reasons employees jump ship are surprisingly simple, and business leaders who don't ask why workers want to go may be unnecessarily losing people who are pricey to replace," said Andrew Chamberlain, chief economist at Glassdoor and co-author of the research report. "Our research shows that employers are partly in control of turnover and that there are clear solutions to reduce it."
Be Aware of Role Stagnation
The study found that workers who stay longer in the same job without a title change are significantly more likely to leave for another company, even after controlling for pay, industry, job title and culture factors.
"The likely reason is that workers who don't see a clear progression from their current role to a better position in their company ultimately turn to opportunities elsewhere," Chamberlain said. "Alternatively, it suggests [that] employees who are a poor fit for the organization to begin with, and who will ultimately leave the company to find a better-fitting employer elsewhere, are more likely to stagnate in a given role."
Employers can minimize the risk of this type of turnover linked to job stagnation by creating clear and predictable career paths.
"An effective career-pathing program provides detailed information into various paths for advancement," said Linda Ginac, the founder and CEO of TalentGuard, a talent management software company based in Austin, Texas. "It also offers clear insights into skill-gap shortages and provides resources to address those gaps. Together, this ensures opportunities for growth, learning and fulfillment are available and readily accessible to each employee, from entry-level to upper management."
Employees want to understand what is required of them to change roles or advance in their careers, but the necessary processes may not be in place, Ginac said. "Career pathing enables employees to see past traditional career hierarchies. It also highlights positions and responsibilities that bring their individual strengths and latent interests to the forefront, boosting workplace satisfaction and their commitment to the company. If employees are left to guess and wonder what steps they need to take, you will likely find them moving to another company that can meet their needs."
Ensure Pay Is Competitive
The research showed that title promotions are not enough to ensure retention. Compensation also needs to be competitive. As employees assume new responsibilities on their upward paths, compensation needs to rise, Chamberlain said. "If managers do not offer meaningful promotions, in both responsibilities and pay, our data suggests employees are more likely to look elsewhere for their next role."
An aggressive total compensation strategy is recommended for businesses looking to use pay to prevent turnover, especially for top performers and high-potential talent, said Leah Machado, director of HR at Rochester, N.Y.-based Paychex, a provider of integrated human capital management solutions for payroll, HR, retirement and insurance services.
"Offering a long-term incentive to high-potential employees will help retain talent and fill roles that are critical for a company's future success," she said. "Your strongest performers have typically earned maximum opportunities when it comes to merit, bonus and recognition. Not only can adopting this type of mentality help to minimize turnover in the traditional sense, it can also drive 'good turnover' as you subsidize those newly open positions with lower or simply consistent performers."
Invest in Improving Workplace Culture
Not surprisingly, workplace culture matters for employee retention. The study found that when employees switch employers, they usually move to companies with higher Glassdoor ratings.
"Workplace culture is a tricky thing," said Nora Burns, a Denver-based hiring consultant and founder of HR-Undercover, an advisory practice in which she "mystery shops" employers' hiring and onboarding processes. "While your overall organization and brand has a particular workplace culture, it often varies from department to department, location to location. The workplace culture of the home office is often vastly different from the culture of your smallest store, facility, office or clinic."
It's important to consider the culture of the smallest subset when looking to improve the overall culture, she said.
The study results also offer recruiters insight into what kind of employees may be ripe for the picking. According to Glassdoor, candidates are statistically more likely to be receptive to recruiter inquiries if they:
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