For industries with talent gaps such as Cyber Security, employee retention is becoming critical. Yet as Millennials become the dominant age group in today’s workforce, the trend of high turnover rates is primed to continue. Already, Millennials account for the largest segment of the workforce and are projected to make up 75% by 2030 (source). As you’ll see, unless significant adjustments are made in workplace culture, employers are in for a bumpy ride.
According to The 2019 Deloitte Millennial Survey, analyzed by Forbes, 49% of Millennials quit their jobs within two years. If this trend continues, we can expect major disruptions to business continuity. As soon as a new employee is fully ramped, there is a 50% chance they’ll leave.
In this blog, I’ll review the following subjects.
- Social and cultural shifts leading to high turnover.
- Recommendations for implementing employee retention plans.
- Historical precedent and forecasts exhibiting the consequences of inaction.
Social and Cultural Shifts
Analyzing Reduced Employee Retention Rates
There is a mindboggling amount of content with analysis on why Millennial turnover is so abundant; most of it is focused on debating whether high turnover is a product of outsized ambition or entitlement. I submit that these arguments aren’t looking at the big picture. Millennials began transitioning into the workforce at the same time high-speed internet adoption exploded. The connected world in which we live today provides a glimpse into options that the pre-internet workforce wouldn’t have dreamed of.
The fact is, we’re living in a period of rapid social transformation and businesses will need to adjust to remain relevant. When reengineering your company culture with the goal of boosting employee retention, considering the mindset and perspective of this generation’s worker is key.
Understanding the Reciprocal Mindset
The top three reasons for the high level of turnover identified by the Deloitte survey:
- Lack of career advancement
- Lack of professional development
While the Deloitte use case is focused on Millennials, it’s my experience as an executive recruiter that these reasons apply to everyone. If ambitious people – regardless of when they were born – don’t feel they are getting value, they will move on.
Let’s think about it. Cyber Security, for example, is experiencing an employment gap estimated to be 3 million today. Employees with expertise in rapid-growth industries have skills that are in high demand and they’re looking for fulfillment and growth. In return for professional growth, they work to advance their employer’s interest.
When employers neglect the needs of their human resources, employees will reciprocate in kind.
Employee Retention and The Bottom Line Aren’t Mutually Exclusive
As an executive recruiter, I listen to the frustrations of individuals and I’ve noted a direct correlation between poor leadership and the mass exoduses of employees. The common denominator in these scenarios is leadership will prioritize the bottom line over its employees.
A recent study by Baylor University explores bottom line management (BLM) further. The results show that managers driven strictly by BLM do not focus on the people they’re supposed to be leading. This inevitably lowers morale and motivation causing employees to withhold performance.
So, while yes, the bottom line is eminently important, considering ways to keep your employees engaged in the business will improve the bottom line in the long run.
It’s Time for Employers to Recognize Leverage Has Shifted
Combining the reciprocal mindset, the abundance of career opportunities, and armies of recruiters – like me – reaching out daily to top Cyber Security performers, it is time employers adjusted. Skilled employees know that their departure from your organization will have a negative impact and, as the statistics show, they’re not shy about jumping ship when it suits them. Gone are the days where employers held all the leverage.
A new generation of informed and in-demand employees are shifting the leverage in their favor. The time of authoritarian workplace environments is over. New models will need to be identified and implemented in order to retain a competitive edge through employee retention.
Implementing Employee Retention Plans
Reengineering Workplace Culture
Serial tech entrepreneur, Daniel R. Odio, compares workplace culture to your company’s operating system in a VentureBeat post. Mr. Odio argues that employees want empowerment and provides suggestions on how to give it to them.
- A company-wide transparency default
- Freedom to decide and act
- Financial transparency
- Spending guidelines
These suggestions are intended to give employees the notion that they have skin in the game. I highly suggest reading Mr. Odio’s post.
A Focus on Retention
A comprehensive focus on retainment policies is outlined in a Dark Reading article authored by two Ernst & Young consultants.
- Stay competitive with compensation and benefits
- Have a well-defined hiring strategy
- Provide continuous education
- Redefine purpose
- Create an employee career map
- Utilize HR analytics
From my lens as an executive recruiter focused on Cyber Security, employers that neglect these points are actively sabotaging any retention efforts that may actually be in place. In addition to the analysis provided in the Dark Reading article, here is insight based on my research and daily conversations with Cyber Security talent.
- Staying competitive with compensation and benefits:
- The rising costs for acquiring and retaining talent is outlined in my blog, Navigating Candidate Driven Markets. People that switch jobs in the IT sector can expect pay increases ranging from 9.1-9.4%. Comparatively, employees who stay with their current employer generally see pay increases of 3%. Employers: Narrow that gap!
- Have a well-defined hiring strategy:
- In my blogs about mapping hiring processes and implementing a stellar candidate experience there is an emphasis on strategic planning. Too often, structuring the process, creating cohesive messaging and focusing on the candidate experience are afterthoughts. Creating a succinct hiring process, before you start recruiting, needs to be baked into the ramp up to hiring.
A strategic approach to hiring will help employers and candidates evaluate whether there is a long-term fit resulting in employee retention.
A Look at History and the Future
History Does Not Favor Those That Shun Innovative Change
History is full of revolutions that upended incumbent powers because they were unable or unwilling to change. For example, preceding events leading up to The French Revolution were as close to a historical crystal ball as you’re going to get.
- Europe was experiencing significant cultural and economic changes at the time.
- The French just finished helping the American’s win their Revolutionary War.
- It was widely known at the time that France was insolvent.
Yet King Louis XVI was indecisive and backtracked in moments that required brave leadership. The King lost his head (literally) and the storied French monarchy was lost to history.
A Glimpse into the Future
Going back to Daniel R. Odio’s VentureBeat post, corporate tenure within the S&P 500 is analyzed. The results clearly telegraph the future to incumbent corporate powers. Spoiler Alert: It doesn’t look good.
- The average tenure of a company on the S&P 500 was 61 years in 1958.
- By 2016, that number had dropped to 24 years.
- At the current rate, about half of the list will be replaced in the next decade.
It’s important to note that there are surely additional factors outside of employee retention contributing to these statistics. That said, ignoring the significant social changes impacting a company’s most important asset – human capital – would be akin to burying your head in the sand. King Louis XVI did that and it didn’t work out too well for him.
It’s time to decide whether your company will be a casualty of diminishing tenures, or if it will be a model of success for reengineering workplace culture and boosting employee retention.
Pinpoint Search Group is an executive search firm that recruits leaders and builds teams in the Cyber Security, Cloud and RPA markets.