The great resignation is being fueled by poisonous culture.
At the start of 2021, more than 40% of all workers were going to quit their jobs, and as the year moved on, an unprecedented number of people left their jobs. 1 Over 24 million American workers quit their jobs between April and September 2021, setting a new record. 2 Business executives are finding it difficult to understand what is behind the enormous migration as the Great Resignation continues. More significantly, businesses are trying to find strategies to keep hold of valuable staff members.
We examined 34 million online employee profiles to identify American workers who left their employer for any reason (including quitting, retiring, or being laid off) between April and September 2021 to better understand the causes of the Great Resignation and assist leaders in responding effectively.
Even if the overall resignation rate is high, it varies amongst businesses. Less than 2 percent of the total, too much more than 30 percent of the employees left their jobs during the six months we analyzed, depending on the company. The industry contributes to some of these variations. The disparity between industries is noticeable in the graph below, which displays the predicted attrition rate for 38 industries from April to September. See "Industry Average Attrition Rate in the Great Resignation" for more information. Compared to airlines, medical device manufacturers, and health insurers, apparel retailers lost staff at a rate that was three times higher on average.
Both the blue-collar and white-collar industries are equally affected by the Great Resignation. Amongst all the businesses we looked at, the retail of garments, the fast food industry, and specialized retail are some of the most severely impacted. Comparatively, the Culture 500 industry with the second-highest attrition rate amongst those that employ white-collar workers is management consultancy. The sector with the most significant proportion of engineers and technical workers is enterprise software, which also saw substantial churn.
Some, but not all, of the variation in attrition rates between organizations can be attributed to the industry. We saw notable variations in attrition rates even within the same industry. The chart below contrasts businesses in similar industries with high and low attrition rates. (Read more about how attrition rates for Culture 500 companies vary by industry.) For instance, employees are more than twice as likely to depart JetBlue as Southwest Airlines and are 3.8 times more likely to leave Tesla than Ford. As expected, organizations with a reputation for having a positive workplace culture, such as Southwest Airlines, Johnson & Johnson, Enterprise Rent-A-Car, and LinkedIn, saw lower-than-average turnover during the first half of the Great Resignation.
Despite the short sample size, these combinations suggest a different, more intriguing pattern. Innovative businesses with higher attrition rates than their more conservative rivals include SpaceX, Tesla, Nvidia, and Netflix. Innovative businesses like Goldman Sachs and Red Bull have also experienced higher turnover, demonstrating that the pattern is not exclusive to sectors with a significant reliance on technology. We compared the attrition rates of each Culture 500 firm to the average for its industry to gain a greater understanding of the factors that influence inside sector turnover. We refer to this metric as "industry-adjusted attrition."
As expected, organizations with a reputation for having a positive workplace culture, such as Southwest Airlines, Johnson & Johnson, Enterprise Rent-A-Car, and LinkedIn, saw lower-than-average turnover during the first half of the Great Resignation. Despite the short sample size, these combinations suggest a different, more intriguing pattern. Innovative businesses with higher attrition rates than their more conservative rivals include SpaceX, Tesla, Nvidia, and Netflix. Innovative businesses like Goldman Sachs and Red Bull have also experienced higher turnover, demonstrating that the pattern is not exclusive to sectors with a significant reliance on technology.
We compared the attrition rates of each Culture 500 firm to the average for its industry to gain a greater understanding of the factors that influence inside sector turnover. We refer to this metric as "industry-adjusted attrition." Using the Natural Employee Language Understanding platform created by cultures, a startup two of us (Donald and Charles) cofounded, we also examined the free text of over 1.4 million Glassdoor evaluations. We assessed the frequency and positiveness of 172 themes that employees discussed for each Culture 500 organization. The subjects that most accurately predicted a company's industry-adjusted attrition rate were then examined.
The Great Resignation's top predictors of employee turnover
Employee unhappiness with salaries has dominated media coverage of the Great Resignation. However, amongst all issues, the frequency and positivity with which employees addressed their remuneration rank 16th in terms of predicting employee departure. This finding is in line with a substantial body of research showing that remuneration has only a minimal influence on employee turnover. 6 (However, in some contexts, such as for nurses working in major healthcare systems, compensation may be a significant predictor of attrition.)
Employee perceptions of their salary are generally a considerably less accurate indicator of industry-adjusted turnover than organizational culture. The five factors that predict relative attrition are shown in the image below. See "Top Predictors of Attrition During Great Resignation" for more information. We have benchmarked each component relative to one another to give a sense of their relative relevance.
Toxic organizational culture.
A poisonous corporate culture is ten times more significant than remuneration in predicting turnover, is by far the best predictor of industry-adjusted attrition. According to our investigation, failing to support diversity, equity, and inclusion, workers feeling disrespected, and unethical behavior are the main factors causing toxic environments. In a subsequent piece, we will go more into each of these elements and look at several strategies managers and staff can use to identify signs of a toxic culture. 8 For the time being, it's crucial to remember that the Great Resignation was mostly fueled by poisonous workplace cultures.
Outstanding levels of innovation
Workers leaving organizations with poisonous cultures or a lot of layoffs is not surprising. However, it is unexpected that workers leave creative businesses at a higher rate. In the Culture 500 sample, we discovered that workers were likelier to leave their jobs if they spoke favorably about innovation at work. Nvidia, Tesla, and SpaceX are the three Culture 500 firms with the highest turnover rates, with three standard deviations higher attrition rates than the average for their respective industries.
Employees often need to put in more time, move at a faster pace, and experience stress to remain at the forefront of innovation. Employees are more inclined to comment adversely about work-life balance and a manageable workload when they rate their company's innovation favorably.
Poorly received COVID-19
Employees who spoke negatively about their employer's handling of the pandemic or who cited COVID-19 more frequently in their reviews were more likely to leave. Employees' comments about their employer's policies for safeguarding their health and well-being follow the same general pattern.
Quick Steps to Increase Retention
The strong attrition predictions mentioned above are difficult to alter. It may be challenging to reverse a negative future perspective that leads to restructuring and layoffs; it is too late to undo a subpar reaction to the epidemic; and a poisonous corporate culture cannot be changed fast. Companies like Tesla or Nvidia have a competitive advantage because of their unrelenting innovation, thus they must find strategies to keep their staff while maintaining their innovative edge.
Four steps that managers may do right away to cut attrition were found by our investigation. See "Short-Term Steps for Companies to Increase Retention" for more information. Each bar, like in the graph above, shows the topic's propensity to predict compensation. When compared to the industry, this time, the subjects indicate a company's capacity for employee retention.
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