You could say that many companies failed to focus on the right things during the Great Recession of 2008–09, as the unemployment rolls swelled and the jobs market seemed to favor employers, not jobseekers. Employers mistakenly took for granted their position of strength during the economic downturn and struggled to deploy strategies to retain certain skilled employees. And by 2010, few employers had a retention plan.
eanwhile, employees cited a lack of career growth as the top reason they would leave a job (27%), right after concerns over job security (36%), according to a report by Deloitte. What we saw happening was companies falsely assuming that people would stay put in a jobs market that favored employers.
The High Cost of Turnover
An obvious point to consider is the cost of voluntary turnover. The Bureau of Labor Statistics reported just a few years ago (during a stronger economy) that the average voluntary turnover rate was about 26%. For a company of 100 people with an average salary of $50,000, that equates to $650,000 to $975,000 a year lost to voluntary turnover, using a widely accepted industry standard of 6 to 9 months’ salary to replace an open position.
Looking back again at 2010, Deloitte reported that when nearly 15 million people were without jobs, employers still could not fill about 2.5 million positions with the right candidates. So, what exactly was the major mistake? Employers didn’t invest in the development and growth of their existing employees. And when new opportunities arose, those skilled workers left.
If we fast-forward to today, amid a global pandemic and the worst economic crisis since the Great Depression, tens of millions are out of work, and most businesses are struggling to survive. At the beginning of 2020, job postings outpaced the number of people looking for work. The U.S. jobs market witnessed 19 straight weeks of unemployment claims since mid-March, and many industries came to a standstill due to safety concerns.
COVID-19 Changes the Employment Landscape
For many business leaders, the instinct right now is to retract investments in employees. It’s an intuitive reaction, but these short-term decisions could have long-term negative financial repercussions in the form of voluntary turnover.
Given the number of people laid off or put on furlough since March, many remaining employees are filling multiple roles and likely critical to business survival. It seems obvious that if businesses want to adapt to changing market conditions, improve remote work processes, and maintain productivity with dispersed teams, they need to support their people.
In fact, there’s more pressure than ever on people to produce and help their employers succeed. The question is: Are people equipped to cope with the demands of today’s workforce?
The McKinsey Global Institute reported in 2017 that about 375 million workers (14% of the world’s workforce) will need to switch to a new job or gain new skills by 2030 due to the effects of automation and artificial intelligence. More recently, McKinsey data show that 87% of business leaders report skills gaps or expect them in the coming years. The problem is that most companies don’t have a plan for the future or even for the current crisis, which is requiring many employers to create new business models and work processes to survive.
Investing in Employee Development for Future Success
The solution is simple: Companies must invest in the growth of their people by providing scalable professional development that helps each employee reach his or her potential. Most companies cannot do this alone or with a one-size-fits-all program.
Helping Employee A grow in his or her own job and juggle new roles is a unique endeavor and requires skillful coaching. Preparing Employee B for the skills needed for the future of work will also require one-on-one coaching to guide career growth.
When Employee A feels supported and equipped to succeed, that person is likely to solve problems and more effectively drive business outcomes, not become a voluntary-turnover statistic. When Employee B is guided to new skills and a rewarding career path, that person will be making the impact he or she envisioned when joining the company, encouraging loyalty….
Source: HR Daily Advisor