The true cost of talent migration
“In normal times, the cost of talent turnover can be significant. Every time a business replaces a salaried employee, it costs 6-9 months salary on average. We would argue that in times of widespread talent disruption, the cost may be much higher. Even though it might seem as if you haven’t been affected by this phenomenon, calculate the true cost talent migration has had in your organization.”
Last spring when the “novel” coronavirus was sweeping across the country throwing employers and employees into a tailspin of uncertainty, we decided to reach out and conduct a poll to determine employee sentiment and potential trends regarding talent migration.
What did we find?
Millennials and GenZ workers had a harder time with this transition. While tech-savvy, these folks were less comfortable with remote work, craved connection to people, and felt the heavy pressure of uncertainty related to their future growth opportunities. It made perfect sense. Our youngest workers were robbed of the personal mentorship we all seek as we begin our professional journeys. They lived in small spaces, often with roommates and limited space to roam. My own daughter sometimes took early meetings from a bathroom to avoid waking others.
Many Millennials had recently moved into their first roles with meaningful responsibility only to get their legs cut out by covid. Uncertainty loomed. Add in young families and the need to balance excessive work with childcare and school duties, and the “work-life blend” quickly became untenable.
So, here’s our prediction: A talent migration of generational proportions.
Sadly, we (and others) are on track to be right.
Pre-covid, voluntary turnover in the U.S. had hit an all-time high. According to BLS, a record 42 million employees voted with their feet in 2019, with 4.4 million moving on in August alone. Enter covid, and monthly voluntary turnover quickly fell to 1.7 million employees by April 2020. With layoffs and furloughs, it appeared the U.S. job scene had quickly shifted to an employer’s market. By July, the “quit rate” returned to 3.4 million employees per month, and the latest number reported (November 2020) still sits at 3.2 million.
So, who is quitting?
The premise of our earlier article was pretty simple – talented people always have options. When disruption hits, they consider their options more frequently. With the direct experience of incumbent leadership managing through disruption, they would make their decisions. Employers that handled their business well would be the beneficiaries of this talent migration. Those that did not would be the victims. Millennials and GenZs were the most likely to look and leave. This is playing out all across the country.
“The Work Institute has warned that those employers who haven’t ‘listened carefully to their employees to create an environment where people want to stay,’ are the most at risk. ”
According to LinkedIn News, many economists expect the U.S. to add more jobs in 2021 than any other year since 1939. Oxford Economics is predicting 5.8 million jobs will be gained in the U.S. by the end of 2021. This is still well short of the 9.4 million lost in 2020, but this year is just the beginning. The recovery is expected to gain momentum late in the year as vaccines and economic stimulus (fiscal and monetary) take hold and drive optimism. Combine these elements: 1) increased optimism, 2) a quit rate that returned to historical norms even during the pandemic, 3) interruption in the growth opportunities of Millennials and GenZs (combine for 59% of the global workforce in 2020), and 4) direct experience with incumbent leadership. Hang on, the bumpy ride is about to get bumpier.
The Work Institute has warned that those employers who haven’t “listened carefully to their employees to create an environment where people want to stay,” are the most at risk. This should seem fairly obvious, but many organizations have prioritized the urgent over the important during 2020. Full transparency, we at BU have experienced this in 2020 as many clients delayed our work on employee connection and development indefinitely or at least into 2021.
Now, many are rushing back to regain lost ground in light of talent risks. In normal times, the cost of talent turnover can be significant. Every time a business replaces a salaried employee, it costs 6-9 months salary on average. We would argue that in times of widespread talent disruption, the cost may be much higher. Even though it might seem as if you haven’t been affected by this phenomenon, calculate the true cost talent migration has had in your organization.
As talented job seekers assess multiple options in search of the ideal situation to put them back on the path to success, talent searches may extend. If you haven’t invested in the culture to attract them, however, refilling the talent pool with similar quality may be an exercise in patience. You may have to widen the net and apply more resources to get the job done.
It’s not too late.
It turns out Millennials and GenZs are human too. We just need to treat them as such. According to the World Economic Forum, “To understand how to engage and motivate this new generation of talent, corporations need to examine their needs through a human lens.” Motivation psychologists Edward Deci and Richard Ryan found that all humans have three innate psychological needs essential for well-being: a sense of belonging, autonomy and mastery.
Address these 3 things to create an attractive culture:
If your organization can address a few key needs, you are well on the way to creating a culture where people will want to not just stay, but commit.
1. Sense of Belonging
Deci and Ryan define a sense of belonging as the need for connection and shared experiences with others. Younger workers require connection to organizational purpose and to colleagues who share their values to feel truly at home. A study by the Center for Talent Innovation found that “Employees who feel like they belong are 3.5x more likely to be productive, motivated and engaged” at work. Jenny Chatman (UC Berkeley Haas School of Business) and Francesca Gino (Harvard Business School) speak to the need to “curate and communicate examples’ ‘ of how your organization is living out its cultural values in a co-authored HBR article written in August 2020.
Through this approach, organizations may unify employees and reinforce behaviors sustainably. We have launched our own program at BU to recognize colleagues for living our values to reinforce collective memory and connect people via storytelling. The program is peer-based, personal, and viral. No virtual high-fives or transactional recognition gets swept into a general category of “tech noise”. Our clients have followed a similar approach using our uMap™ software.
According to Gallup, when employees feel autonomous in prioritizing and planning tasks, they are 43% less likely to experience high levels of burnout. Millennial and GenZ workers favor a decentralized environment where they have more control over how things get accomplished. A purposeful practice to support the decentralization necessitated by WFH is to clearly define purpose, timeframes, and desired outcomes to act as guardrails for remote workers to work within. As we share in our training programs, “Accountability is the friend of autonomy.” The more accountable the organization, the more equipped to support autonomy.
We all need to align our personal purpose (skills and expertise) to a learning journey, but none so much as Millennials and GenZs, according to Deci and Ryan. Creating a culture of learning that begins with supporting success as the employee defines it, matching personal priorities with growth-minded resources, creates commitment among the largest component of our workforce. According to a study by Carol Dweck, employees in a “growth mindset” company are 49% more likely to say the organization fosters innovation, an important quality to making Millennials and GenZs stick.
Learning and development has changed forever due to the shift to WFH. In-person platforms have been replaced by virtual training, creating a need for enhanced technology. In November, HR Executive interviewed Genpact’s CHRO, Piyush Mehta, about how the pandemic had changed talent management. The 30-year HR executive emphasized the importance of connecting performance management to learning and development to create a seamless employee experience.
At the same time, Forbes reported in December about the dangers of relying solely on e-libraries to deliver training. Organizations that maintain delivery of personalized development and training tailored to the needs of individuals will retain culture differentiation coveted by top talent. Clearly, tech doesn’t solve everything. It’s the tech that identifies the needs and delivers a personalized experience that will win the day.
At the end of the day, we all want to belong. We all want to make our own decisions. We all want to learn. When you break it down into human elements, it’s pretty simple, regardless of your age. Organizations have access to the tools they need to create places where people want to stay and thrive. Compared to the cost of talent migration, the investment is modest. Not only will the investment reduce turnover costs. It will also repay you multiple times in increased productivity, learning, profit, and JOY.
Get the Culture Check-In Survey
The young and rising leaders out there are directing their careers towards organizations that are focusing on several key factors. Find out what they are.
get a free copy