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Are You About to Lose Your Most Valued Employees?

Mark Royal|Co-author, "The Enemy of Engagement"
Wednesday, 25 Jul 2012 | 12:19 PM ET
The Enemy of Engagement
Source: Amazon.com
The Enemy of Engagement

In mid-June, the U.S. Department of Labor’s Bureau of Labor Statistics released its latest Job Openings and Labor Turnover Survey report. The report indicates little movement in labor market conditions over the last year.

For the 12-month period ending in April, the hires rate was unchanged in both the private and government sectors. Likewise, the quits rate (a measure of workers’ willingness or ability to change jobs) was relatively flat over the period.

Taken together, these results might be seen as suggesting that U.S. employees aren’t going anywhere. If that’s the case, then why worry about employee turnover?

Data from Hay Group’s employee opinion database, including responses from over 1,696,000 U.S. employees working in 152 organizations, provide leading indicators of future turnover trends.

And the picture is less comforting.

The percentage of U.S. employees indicating an intention to remain with their current companies has declined 8 percent since 2009, with 44 percent now reporting plans to change employers in the next five years. Perhaps in touch with these shifts, fewer U.S. employees are confident about the ability of their companies to retain high-quality employees, falling from 56 percent in 2009 to just 43 percent presently.

What accounts for these turnover signals? Shaken confidence in the outlook for their companies may be one factor.

Today’s employees are unlikely to bind their futures to organizations unless they view them to be headed in a positive direction. Yet, currently only 65 percent of employees indicate that their employers have an appropriate focus on the long term, a significant drop from 76 percent in 2009. Likewise, employees’ confidence that their companies have a clear sense of direction has dropped 7 percentage points from 2009 levels.

"Those organizations that fail to identify and act on issues negatively affecting employee commitment during this break in the storm are likely to find employees exiting in increasing numbers as other opportunities become more plentiful." -Co-author, "The Enemy of Engagement" , Mark Royal

There are also signs that employees are growing more concerned about their ability to get things done. Perhaps reflecting downturn-related shifts that have upset established roles and work processes, employees give their organizations lower marks than in 2009 for effective organization of work (falling from 63 percent favorable to 58 percent favorable) and for operating efficiently (falling from 64 percent favorable to 57 percent favorable). And nearly half (45 percent) of employees now express concerns about organizational barriers to their ability to succeed in their jobs.

Over time, engaged employees who are struggling to accomplish objectives may either stop trying — or vote with their feet and leave. High performing and high potential employees, who can find alternative opportunities even in tough labor markets, are particularly likely to be turnover risks in the face of workplace frustration.

Finally, employees are voicing increasing concerns about the balance between what they give and what they get back. Amid the downturn, organizations have asked employees to do more at a time when their ability to reward extra efforts has been constrained. Concerns about external pay equity have grown by 8 percentage points since 2009. And only 44 percent of employees currently say that their companies are doing a good job in matching pay to performance, compared to 48 percent in 2009.

The message for U.S. employers?

A weak labor market associated with challenging economic downturn may have held down turnover rates in many organizations. But it could be argued that we have been in the eye of a turnover storm. Those organizations that fail to identify and act on issues negatively affecting employee commitment during this break in the storm are likely to find employees exiting in increasing numbers as other opportunities become more plentiful.

The companies that are successful in keeping their best people will need to foster a positive view of their future prospects, focus on structuring work environments to support employees’ success in their roles and reinforce the balance between employee contributions and rewards.

Mark Royal is a senior principal in Hay Group’s employee research division and a co-author of the new book, "The Enemy of Engagement: Put an End to Workplace Frustration — and Get the Most from Your Employees."

Email me at bullishonbooks@cnbc.comAnd follow me on Twitter @BullishonBooks

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