With US national unemployment sitting at an historic low of 3.8%, employee retention is the new barometer of success for SMBs, according to a Wednesday report from Paycor. However, a major disconnect exists between what executives believe drives employee turnover, and the real reasons employees quit their jobs, the report found.
Of the 700 HR directors, CEOs, and CFOs from SMBs surveyed, only 50% said their organization monitors turnover metrics, the report found. Among those that do, many track only voluntary turnover instead of including involuntary turnover as well. This means if the company does have a problem, they might not know about it, the report noted.
SEE: IT jobs 2018: Hiring priorities, growth areas, and strategies to fill open roles (Tech Pro Research)
Here are the top three reasons that executives said they believe employees quit their jobs:
- Compensation (52%)
- Poor career advancement (37%)
- Performance (37%)
And here are the top three reasons why employees said they actually quit, according to past worker surveys:
- Bad bosses: Bad managers account for 75% of voluntary turnover. (Source: SHRM)
- Lack of recognition: Only 1 in 3 employees strongly agree that they are properly recognized for their contributions. And people who routinely feel ignored are twice as likely to quit. (Source: Gallup)
- Burnout: 50% of millennials, 40% of Gen X, and 35% of baby boomers said burnout makes them leave their jobs. (Source: Staples Workplace Study)
This disconnect can be expensive, as the average cost to hire a new employee is $4,425, and 42% of SMBs report hiring expenses in excess of $5,000, according to a 2017 SHRM report.
The report offered the following tips to better track employee turnover and prevent it in the future:
- Build a basic understanding of how many employees leave your organization each year so you can benchmark your retention efforts over time.
- Measure your current turnover rates by pay, length of service, or manager, to identify problem areas and opportunities to improve.
- Track hires and terminations by month, to measure up how hiring stacks against turnover.
- Break down turnover results over different time frames to find areas of improvement and decline, especially as you try out new retention initiatives.
The big takeaways for tech leaders:
- Only 50% of executives said their organization tracks turnover metrics. — Paycor, 2018
- The top reasons why executives believe employees quit are compensation, poor career advancement, and performance, while employees say the top reasons they actually quit are bad managers, lack of recognition, and burnout. — Paycor, 2018
- Interview tips: How to land your next tech job (free PDF) (TechRepublic)
- Tech jobs: How to recruit and retain the best IT workers (ZDNet)
- Cheat sheet: How to become a data scientist (TechRepublic)
- 10 best to-do list apps to keep you on task (Download.com)
- 3 signs you need to quit your IT job right now (TechRepublic)
Alison DeNisco Rayome has nothing to disclose. She does not hold investments in the technology companies she covers.
Alison DeNisco Rayome is a Staff Writer for TechRepublic. She covers CXO, cybersecurity, and the convergence of tech and the workplace.