Americans Are Quitting at the Highest Rate Since 2001. Here's What This Means to Business
March 17, 2017
As the LinkedIn Workforce Report shows, the American economy is strengthening and hiring is up. And you know what that means?
More people are quitting their jobs, interestingly enough. In January, 3.22 million Americans – 2.2 percent of the workforce – quit their job, the highest quit rate since February of 2001, according to the Department of Labor.
A high quit rate is a sign of a healthy economy, the DOL explained. Because generally people only quit their jobs if they’ve secured another or have high confidence that they’ll find another.
And while all of that is great, it has major ramifications for business. With quitting on the rise, businesses need to increase their efforts to retain their employees.
How businesses need to react to this news
Losing an employee is expensive. In her course Organizational Learning and Development, Dr. Britt Andreatta cited research from SHRM on the high cost of losing an employee. Specifically, SHRM found that replacing an entry-level employee generally cost 50 percent of that person's salary and benefits, whereas replacing a technical or leader-level employee generally costs 250 percent of that person's compensation package.
With the quit rate going up, those costs can add up, fast. And even beyond the dollars, it becomes impossible to build a winning team if people are constantly coming and going.
So what should businesses do in response?
Well, LinkedIn research shows the biggest reason people quit their jobs is for career opportunity, or lack thereof. And, with the economy improving, there’s a lot of opportunity out there, particularly for your best employees.
So, it’s essential to develop the careers of your people. To make that happen, managers should have career conversations with their employees, and your company should offer them the tools and opportunities so employees can advance their career within your own organization.
To that point, we used LinkedIn data and research in 2016 to uncover the companies people were most eager to work at and had the highest retention rates. A key quality these companies shared is that they invested in their employees’ career development.
For example, Coca-Cola and Pepsi – two of the 20 most in-demand companies to work for – both have their own internal universities that give junior employees the skills they need to move up the ranks. Shell, another one of the most in-demand companies to work for, has a lauded program for new graduates that includes continual rotations and training for up to five years.
Doing something similar at your organization is critical. First off, it’ll help your employees develop and improve. But it’ll also keep employees retained and engaged, as it shows you are invested in their future.
Bottom line, with the quit rate skyrocketing, employee attrition needs to be a concern for all organizations. And the research shows the best way to address it is ensuring people can grow at your company, instead of having to advance their career somewhere else.
*Image from Jeff Djevdet, Flickr
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