Achieving Low Attrition Rates through Employee Engagement
In 2021, the “Great Resignation” made headlines when 3.6 million people quit their jobs in May alone, according to the U.S. Department of Labor. For each employee lost, the cost to a company could be 50%–250% of the employee’s annual salary (SHRM). Next “Quiet Quitting” was the new headline, as U.S. worker productivity data posted its largest annual decrease in the second quarter of 2022. Gallup has estimated that a disengaged employee costs an organization approximately $3,400 for every $10,000 of salary, or 34%. Now in 2023, with a recession on the horizon and layoffs making headlines, we are led to believe fewer employees are quitting. However, while quitting is receding, a majority, or 4.1M of 5.9M employee separations as of November 2022, were still due to voluntary departures.
With the threat of resignation, employers are encouraged to analyze wages and ensure salaries are competitive and that benefit packages are adequate, however, compensation is only one piece of the employee recruitment and retention puzzle. Nick Morrison, Cardinal Group’s Director of Talent Acquisition shares his valuable insight on what goes into avoiding employee turnover and achieving a healthy attrition rate in today’s day and age.
Question: What is the first thing you recommend analyzing when seeing a high employee turnover rate and why?
Answer: First thing first, look at the company’s employee engagement scores. If the company does not track those then first take a look at what upskilling or education opportunities you are offering your workforce. Over 60% of Gen Z employees surveyed said that they would leave a job if they didn’t have an education component. If you are relying on managers to teach the processes then you are immediately behind the curve.
Quickly following engagement and education is pay equity. While employees are not necessarily jumping for the highest-paying jobs at the moment, they still need to be taken care of. Look at the full compensation package – what is being offered in terms of 401K, benefits, etc.
Question: Are you seeing issues with recruiting and hiring qualified candidates?
Answer: Recruitment and hiring is not necessarily the issue. The issue lies in the frequency of turnover and high attrition rates in what remains a fluid employment landscape. According to SHRM, the average time to hire is 36 days and currently, Cardinal Group is averaging a nine-day period.
My piece of advice is frequent interaction and engagement with applicants. Success should be measured from the applicants’ experience and not the hiring team’s time commitment. We need to focus on striking while the iron is hot. In order to do this, we build qualification questions into the application process. This not only helps to remove inherent bias, but it provides an opportunity to zero in on a candidate that has intangible qualities. These qualification questions could be a writing sample, math problems, or even as specific as explaining the theory behind reclass and accruals. Moral of the story, don’t wait to gather the information you need to make a decision, and don’t put up additional roadblocks in the hiring process through unnecessary, elaborate interviews. Use the tools to qualify applicants early in the process.
Question: Have you observed any trends, even outside of the industry, as to why employees are looking for new jobs or resigning?
Answer: Stability. We are at the very beginnings of the “Great Return” instead of the “Great Resignation”. Some employees wanted to take a chance and follow the money, but are realizing that many of the newer, more sleek VC backed companies are just focused on the bottom line, not on building and sustaining culture. With the realization that there is a very real possibility of a recession, as well as concerns about interest rates, inflation, etc., stability and culture are what employees are returning to. It isn’t just about the amount of money on the table or if you have foosball, although we have one of those at Cardinal too, it is about employee engagement and job security. Prospective employees after all don’t come to work just for themselves, but oftentimes come to work to take care of the people in their lives who rely on them.
Question: Why is now, more than ever, an important time to retain employees?
Answer: It is both the hard costs and soft costs. Hard costs being the expense of eventually replacing them. However, most of the spend is going to be the soft costs, the loss of institutional knowledge. If you look to layoffs as a cost-saving measure then you risk losing the tenure value of the training, company experience, and relationships that already exist. By dropping employees completely you have to reinvent the entire process. Best case is you have a variance in how the company is understood, and worst case is that you are left with a workforce whose identity is born from variance at all levels. You then have to spend the money, and time, rebuilding the company and the culture.
Through the pandemic, Cardinal’s top priority was to avoid furloughs and layoffs – and we were successful in doing so. It took tough conversations with teams and clients, but we did it. We recognize that our team is the force driving us to the future and we have worked hard to build, and more importantly, maintain cohesion, buy-in, and agency. It would have cost us far more time, energy, and money to recoup our culture if we had to dismiss team members.
Question: How do we, as a company, invest in our teams and support employees?
Answer: By doing the right thing for the people of the organization we ensure inclusivity. We support our teams through education, programs like Carrot, which provides employees with fertility coverage, and tuition reimbursement. When you invest in your people you can stem a lot of attrition, and you can create a culture of collaboration and informed discourse. When a person experiences success themselves, that contributes to the success of the company, which then trickles down to other team members, clients, and residents.
Question: Without giving away Cardinal’s secret sauce, what can employers do better to retain employees?
Answer: Admit that norms for employee retention pre-pandemic no longer exist. We are no longer the smartest person in the room, the smartest person is the last person that started at the company. They see and experience what you have become with no blinders aimed towards what you were. Make sure you are completing 90-day follow-ups, promoting engagement, scheduling check-ins, and providing realistic and consistent growth opportunities in the first year and beyond.
Of Cardinal Group’s employees, 52%, are under the age of 27 and 85% of team members work on-site. We have to ask ourselves, are we responding to the needs of the demographic? Employees are seeking education opportunities that will allow them to excel in the organization. It is imperative that as a company, we ensure we are pay leveling and providing proper recognition.
Takeaway #1: The ease of the hiring process is critical in securing talent. Be upfront with the compensation package, and required qualifications, and engage with applicants throughout the process.
Takeaway #2: Creating culture and fostering employee engagement is essential in retaining employees. The current workforce is not only seeking competitive pay, but also stability, education, and growth opportunities.
Takeaway #3: We must ask ourselves what are we doing to capture long-term engagement. Are we responding to the needs of our main employee demographic? Attrition will be directly tied to not only compensation but overall engagement.
Cardinal Group Companies was founded on the passion to be the best place to work in any industry, for anyone so that our clients and residents can thrive. With passionate team members, commitment to DEI, and a focus on health and wellness, we continue to strive to be that company. Cardinal Group was recently recognized among the top 100 Best Places to Work in the United States and a winner of the annual Glassdoor Employees’ Choice Awards, a list of the Best Places to Work in 2023. Cardinal is proud to be recognized for the first time as no. 54 in the category for large U.S. companies whose teams consist of over 1,000 employees.