After more than a year of being in the clutches of the COVID-19 pandemic, it seems that the world could finally be on the other side of the tunnel. Global vaccination is slowly taking momentum, and many countries hold the number of infections under control.
Yet, the aftermaths remain. They challenge the way we live and work and demand an efficient response. Hardly any industry escaped the wrath of the pandemic and lockdowns. Business and HR are no exceptions.
Most companies had to align with the new realm, introducing new recruitment strategies, virtual hiring, or remote work. Yet, some consequences are more detrimental for the bottom line.
One of the most intimidating words in every employer’s vocabulary, employee turnover, is at the top of coronavirus aftermaths that affect business health and growth. Even though the job market and employment are entering the recovery phase, that doesn’t prevent workers from leaving their jobs.
In the initial months of the pandemic, most people were terrified of losing safe employment during the crisis. Because of that, many employees stayed in a company although they weren’t satisfied with particular conditions, such as salary, collective, or growth opportunities.
According to Human Resource Executive, the pandemic and lockdown stress played a significant role in making workers feel undervalued, depressed, and burnout. Since more than half couldn’t have an open conversation with HR about these issues, many could decide to look for another employer after the pandemic.
With more job openings being available and the number of infections slowing down, the employee turnover tsunami could be imminent. The most recent data can indicate how likely is this to happen in Australia and New Zealand.
Employee Turnover in Australia and New Zealand
Even though New Zealand has a relatively high employee turnover rate, COVID-19 had a surprising impact on the workforce. The average National Staff turnover rate for 2019 was 19.7 per cent, which is a four per cent decrease compared to 2018.
However, that difference was more drastic in 2020, when this rate fell to 10.3 per cent for the first six months of the year. Three factors could explain the 46 per cent fall: variability across sectors, increased Government support, and unwillingness to sacrifice financial security for happier or more compatible workplaces.
That sounds like a silver lining of the pandemic aftermaths, but it may indicate an anomaly rather than a future trend. The employee turnover rates from 2012 to 2018 show a consistent increase in workers quitting their jobs in the first 12 months of employment.
Hence, unless HR professionals and business leaders put more effort into understanding what their hires need and efficiently improving work environments, the pre-pandemic trend could come back.
On the other side, the employee turnover rate in Australia underwent an increase in the year to February 2020, particularly in the hospitality, rental and real estate, and administrative services industries. However, COVID-19 didn’t influence their decisions because these were the months before the WHO declared a pandemic.
According to Gartner, active job-seeking increased by 5.6 per cent in 2019, while the employees’ intent to stay with their employers fell eight per cent. Pressure to do more with less, long work hours, take work home, and lack of respect was among the most frequent reasons to quit their jobs.
Gartner’s most recent report shows that Australian employees are still dissatisfied, and 24 per cent are actively seeking other employment. Moreover, 25 per cent of the increase in business confidence shows that workers are more confident that better opportunities are available to them.
Since more Australians than ever are working or looking for work, these predictions could turn out to be true. Because of that, businesses should prepare for a potential employee turnover tsunami and its aftermaths.
The Cost and Consequences of a Voluntary Employee Turnover and Replacement
According to Human Resources Director, organisations have to spend $18,982 on average to hire one worker. An organisation usually invests $34,440 into hiring a new executive, compared to $9,772 for entry-level positions. Australian companies usually fill vacant placements within 39.2 days, while that process lasts one week longer in New Zealand (47.2 days).
Turnover can be devastating for an organisation as it affects productivity, increases training time, increases employee selection time, and decreases efficiency. The final damage depends on four factors: cost of termination, employee replacement cost, vacancy cost, and learning curve loss.
The aftermaths intensify when workers leave in the first 90 days of employment because they deliver little-to-no return on investment that employers made to recruit them. Top performers turnover could hinder business as their contribution has a substantial impact on the bottom line.
Moreover, it takes one to two years for a new hire to be fully productive in their role because they have to master various habits, such as taking the initiative, company systems and processes, and learning how to communicate downwards. New employees also require a thorough onboarding to adopt new skills and turn them into automatic and unthinking practices that fuel reliable performance.
Yet, 67 per cent of HR professionals in New Zealand and 46 per cent in Australia struggle to find candidates who meet the basic qualifications requirements due to a skills shortage within their industry. As a result, companies could face unfinished work, unclosed sales, and overworked employees who have to work double to complete all the tasks.
It’s why it’s essential to understand why employees leave in the first place and how to prevent it.
Real Reasons Behind Voluntary Employee Turnover
Work Institute identifies seven preventable turnover categories: career development, work-life balance, manager behaviour, job characteristics, well-being, compensation and benefits, and work environment. Unpreventable reasons for turnover are much less prevalent and include reasons like retirement and relocation.
Why employees leave also depends on gender. For instances, female workers are 28.5 per cent less likely to quit than their male counterparts, and they typically do because of manager behaviour, work-life balance, and well-being. On the other side, compensation and benefits and career developments are the principal reasons men leave their jobs.
According to Work Institute, generational labels don’t have a significant influence on why employees leave. Because of that, it’s irrelevant whether one is a millennial or generation Z. Instead, what influences the decision to quit a job is the stage of one’s personal life and career.
For example, younger workers care more about professional growth and development, while older find retirement to be their priority. Employees between 30 and 39 years old are concerned with career progress, manager behaviour, and well-being, while younger ones also rank work-life balance and compensation high.
Over 1/3 of employees leave the organisation in the first year due to a lack of career development. However, years two through ten are critical for professional progress. It is why it’s crucial companies provide workers with accessible opportunities and digestible learning content.
The most frequent reasons why Australian employees quit their jobs align with the seven categories above. A 2018 Gartner report shows that the critical factor to keeping staff in Australia is work-life balance (61.8 per cent). But Aussie hires also leave due to low future career opportunities, poor people management, lack of development options, office location, and lack of respect from employers.
Most workers quit their jobs for issues that organisations could prevent with the right strategies, initiatives, and tech solutions that help them implement and track their procedures.
How to Stop the Employee Turnover Tsunami From Happening
Each company has a unique work environment, culture, and goals. Because of that, why employees leave could have slight or substantial variations, and it’s crucial to identify how satisfied they are with their schedules, tasks, growth opportunities, and well-being options.
With these insights, HR professionals can develop strategies and gear them towards what workers need to be happy and productive. It’s recommendable to establish collaboration across hierarchy and departments to instill trust and foster collaboration between employees and employers.
Only then companies can address the needs of their staff and implement efficient initiatives that ensure a thriving workplace. A 2015 report found that procedures that encourage employee retention are typically associated with training and development opportunities, flexible work arrangements, performance appraisal and feedback system, work-life balance, and well-being activities.
Although it’s crucial to identify what causes employee turnover in each company and respond with a proper strategy, it’s also beyond significant to have an efficient tech platform that drives these initiatives. Total Calibration's Employee Experience Platform (EEP) does just that by helping mid-sized organisations invested in Microsoft do more with less by inspiring staff, delighting customers and building organisational resilience.
Avoid the risk of a potential employee turnover tsunami and Contact Us so we can find out if there’s some mutual benefit to working together.
About the author
Daniel Campbell is a Business Development Manager at Total Calibration and studying software engineering. His passion for helping organisations do more with less through continuous innovation flows through in the expert content he writes.