Employee retention is one of the most important factors contributing to the growth and success of a company. Or is it? For decades retention has been viewed by HR professionals as one of, if not the leading health-indicator of an organization.
As corporate dynamics are shifting in today’s rapidly evolving talent landscape, does retention still measure up? The basic retention metrics HR pros were taught to follow may not be directing time and valuable resources to improving company performance and morale. In this new HR calculus, is retention becoming obsolete?
What’s Behind the Change in Attitude Around Retention?
This is not your father’s job market. Gone are the company lifers from yesteryear who spent their entire careers in a single position within a single company. It’s generally accepted that people no longer start jobs expecting to be recognized with a gold Rolex after 4 decades of service.
Staying in one role for years has become less desirable for both employees and employers. Internet-powered advances along with new ways of working and collaborating are encouraging a large percentage of the workforce to seek alternatives to the job-for-life model. In fact, the average American now spends just 15 months in one role.
So, what’s changed? A few things:
- U.S. unemployment is at a record low: Continued economic growth and talent shortages are pushing unemployment down to record lows. In December, the unemployment rate remained at a 17-year low of 4.1%. In short, it’s a candidate market.
- Freelancing is rising sharply: Freelancing is becoming more ubiquitous than people may realize. 57.3 million workers are freelancing in the U.S. today, outpacing overall U.S. workforce growth by 3X since 2014. Millennials are stoking the flames of the freelance economy driven by the desire for more freedom and flexibility.
- Workers want flexibility: Flexibility and work/life balance are top factors for Millennials when evaluating job opportunities. Thirty-four percent of Millennials have left a job because it didn’t offer work flexibility. But it’s not just flexibility, Millennials are putting an end to the 9-to-5 job schedule. As their influence grows, they’re forcing companies to think beyond traditional roles and job descriptions.
The traditional full-time-come-into-the-office-daily corporate model simply hasn’t kept pace with the changing dynamics and expectations of the current workforce. Workers desire flexibility and growth opportunities supported by learning in diverse environments, the lack of which contributes to high turnover. The most talented professionals have no desire to stay in one role for 3 years, let alone 30.
We’re living in an age of job promiscuity, where frequent job changes are not only tolerated, they’re encouraged. Rather than focus on retaining workers in their current roles, companies should turn their focus towards helping them grow in new roles within the organization.
So, Is Retention Obsolete?
Retention today is viewed as a health indicator, but it’s not a leading one. Standard retention and turnover metrics have never been a helpful leading indicator because by the time the team is alerted to retention problems, it’s usually too late.
One way to help ensure your workers stay proactively engaged is by conducting a ‘stay interview.’ Stay interviews are conducted to help managers understand why workers choose to stay and what might cause them to leave. This helps uncover potential pain points and resolve them before a worker decides to quit, while involving workers in implementing solutions.
So, if laser-focus on retention numbers doesn’t help companies move the ball forward on the key performance indicators that matter most, where should HR’s time and energy be spent?
Retention metrics are becoming increasingly less useful over time. As the workforce evolves and the nature in which people work changes, standard retention metrics will give way to new forms of measurement. Companies will focus on efforts that have the biggest impact on the success of the business, such as revenue contribution, profitability, and other impact metrics.
While retention may be no more than a symptom, it’s still something companies should keep an eye on. In today’s heating economy and rapid shift in worker demographics, companies will compete for talent regardless of their industry.
What Does This Mean for the Future Workforce?
As the workforce continues to evolve and becomes more fluid, companies can expect to see higher turnover. Instead of fighting against the trend, HR can work with it and focus on maximizing the impact and tenure of its most valuable workers therein creating teams that meet and exceed company objectives.
What will these winning teams of tomorrow look like?
They’ll resemble Olympic sports teams. A cadre of world-class athletes who come together to knock a project out of the park. Once completed, team members will move on. They might find themselves working in smaller subsets on a similar project in the future, or never work together again.
Retention is important, if the focus is on the role vs. the work being done. That frame of mind though, is heading the way of the Dodo. Increasingly, HR leaders are demonstrating to their partners in the C-Suite that true business results occur, and have greater impact, when the focus is on the work being done. Over time, as the workforce continues to evolve and companies turn toward project-based teams, retention will become an obsolete metric in determining the growth and success of a company.
Ultimately, the most successful companies are those who have a shared purpose, a deep respect for their talent (whether full-time or external), and put the time and energy toward building a flexible, diverse, and engaging environment. A comprehensive engagement strategy will be the key to helping companies succeed in today’s fast-paced job market.
|Zoë Harte leads talent strategy at Upwork. As such, she has guided the growth of the company’s team by more than 50 percent since its merger in spring of 2014. She implements innovative management approaches and focuses on building a mission-driven culture for Upwork’s team of employees and global network of freelancers. Her team includes HR business partnerships, learning and development, workplace management, recruitment, compliance and onboarding, talent innovation and HR operations. Hart was recently named to SIA’s Global Power 100 Women in Staffing List.|