According to the US Bureau of Labor Statistics, 4 million Americas quit their jobs in July 2021. Was this the beginning of the Great Resignation? A recent study has found that resignation rates are highest among mid-career professionals. Anthony Klotz, the originator of the term ‘Great Resignation’, believes that employees have more agency now.
All of this has culminated in a vicious cycle where Talent Acquisition teams are under increasing pressure to acquire new employees to backfill these roles. In the post ‘Great Resignation’ world, ‘Employee Retention is becoming the new Talent Acquisition Strategy.’
What is driving the Great Resignation and why?
The causes of resignation vary depending on the organization, industry, and individual employees. Nevertheless, there are some baseline causes leading to the Great Resignation. These include toxic corporate cultures, job insecurity and reorganization, an excessive focus on innovation, and the management’s failure to recognize employee performance. Interestingly, researchers have found that remuneration is not as significant as it is often thought of. Additionally, only a third of employees feel engaged in their job due to a lack of company culture. With the advent of remote working, a lot of employees are also looking for flexible working hours so that they can have a more balanced work-life day.
In a post- ‘Great Resignation’ world, the cost of hiring a new employee is 8-10% higher than retaining an existing employee. Despite large amounts of information related to employee attrition, organizations use it post-fact, i.e., after the employee has left. Ergo, companies get less time to react and intervene appropriately. The entire process is retroactive instead of being proactive. On top of this, organizations need to take into consideration the type of data they possess about their employees. Currently, companies have rich internal benchmarks for employees but lack external information. Similarly, most businesses rely on the attributes of employees while overlooking the potential of tapping into employee interactions, also known as relational analytics.
What steps can companies take and how can they leverage analytics?
The initial step for companies would be to look at things more holistically. This involves using information from inside and outside an organization. Market factors, changing employment landscape, competitor information benchmarking, etc. are some great external data sources.
For example, benchmarking is extremely useful in understanding where one’s organization stands in comparison to the wage gap in the market. Companies need to stop asking – ‘Where are we going wrong?’ and start focusing on ‘How can we do better than our competitors?’ This mindset change is often a deciding factor.
In addition, companies can also implement the following techniques and mechanisms to understand their employees better and thus increase the chances of retention. Workforce management and talent management are key steps in this process. For instance, employees may leave due to a change in management. This could arise due to peers leaving a team or a new manager having a new style of working. This can potentially create dissatisfaction among employees.
Survival analysis, although a relatively traditional method, is still a powerful tool for predicting employee churn. What would make this even more effective is the use of supervised and unsupervised ML. For instance, by using ML we can understand the behaviour patterns of employees and predict attrition almost 60 – 90 days before their official resignation.
Only an ensemble of these tools can help the management and HR departments predict and thus prevent employee attrition and increase employee retention. It is time to transition from HR analytics to people analytics, where talent data is collected and applied to improve critical talent and business outcomes.
How can companies implement people analytics?
Of course, while implementing the above-mentioned changes in their organizations, companies may face various hurdles. To address these, companies should consider the following mechanisms.
Building appropriate ‘consumption’ layers for the business users will let them get the most relevant information and thus work more efficiently. Consumption layers are a tool that sits in between data users and data sources. This makes it easier for data analysts to work. No longer do they need to think about where their data is located, its destination, or how it is being stored. Therefore, analysts with help from AI & ML techniques will be better able to focus on employee satisfaction and attrition mitigation.
Building effective feedback loops is also a great mechanism. A feedback loop improves communication between employees and managers. This has a significant effect on employee satisfaction. It also encourages reciprocal relationships. If people get feedback promptly without fear of reprisal, it gives them time to improve. Companies should stress developing positive feedback loops. As a first step, it is important to create a safe nurturing space.
Additionally, giving feedback in person creates a sense of authenticity. Lastly, employees and managers need to control their emotions when participating in a feedback loop. Good feedback loops increase communication within a company, allowing HR to get a sense of what each employee is feeling and thinking. This data is crucial in predicting the chances of resignation. The goal is not to act once the resignation notice has been filed. It is to predict and intervene so that employees do not consider resignation as a solution.
How do companies use people analytics to mitigate churn?
Understanding employee satisfaction benefits a company on two fronts. Firstly, it solves the employee retention problem. Secondly, it helps address Talent Acquisition issues. People analytics is the equivalent of killing two birds with one stone in HR.
This would also remove pressure on Talent Acquisition to urgently fill roles. As a result, companies will not have to compromise on skillsets while recruiting. At the same time, they will be able to better identify employees who are more likely to stay longer. Employee Retention is the new Talent Acquisition, and companies need to gear themselves for this change.