Alexander Heinle
Alex is a marketer at Zavvy. On this blog, he mainly shares insights gained from discussions with selected experts and from helping our customers set up and improve their onboarding or learning programs.
High employee churn is a huge challenge for any business, irrespective of its size or the industry within which it operates. Companies lose $1 trillion in productivity yearly due to voluntary turnover.
But what exactly causes employees to quit their jobs?
Of course, it's no secret that not every employee is happy in their job. While some would be working in their dream jobs at their dream companies, others may want to take a break, relocate to another part of the country, move to a new one, or leave altogether.
However, you should ring the alarm if your best talents are constantly leaving and your employee turnover is startling. So understanding why people quit their jobs can help you create retention strategies that stop the talent bleed affecting your business.
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If your brightest and top-performing employees are continually jumping ship, not only does it affect your employer brand, but the resulting expenses would quickly add up.
The price for fully replacing an employee amounts to $40,000, highlights Oxford economics. This sum includes expenses ranging from:
Couple these figures with a tight labor market and multiple job vacancies, and you realize why it's essential to understand why people quit their job.
Let's look at some of the statistics about why people quit their jobs.
"There are several reasons why people quit their jobs. One reason is that they may be dissatisfied with their current position, which could stem from not being paid enough or the lack of advancement in their career.
Another reason could be personal problems that make it difficult to continue working. For example, employees may be going through a divorce or struggling with addiction.
Finally, some people simply get tired of their job and feel ready for a change. Whatever the reason, it is clear that quitting a job is a significant decision that should not be taken lightly, "says Max Benz, founder and CEO of financial services company, BankingGeek.
While the magnitude of single drivers of turnover changes from study to study, some patterns do reveal the most common reasons why people quit.
Understanding those will also help deduct the top signs an employee is about to quit and react accordingly.
Let's take a look at the most often quoted reasons.
This one topped most of the sources we went through, e.g. as on a 2022 Statista study.
IIf people feel that they've reached a dead end, they will feel less engaged and motivated to come in and give their best every day.
Plus, in too many cases it's considered a smart move to change companies to step up the career ladder.
Offering training opportunities and access to course libraries here is only one (small) aspect: a course itself won't get you anywhere. It's all about the overall perspective and direction that you give your people.
Especially companies like Google and Apple, such with high levels of retention, have perfected this:
"They have highly gamified career development processes, optimized to retain their workers as long as possible."
- Dalton Caldwell, Y Combinator
Thanks to tangible career ladders with small, attainable steps, there's always something to work towards. An inherent motivation to grow - and a built-in reward system.
An Office Team study showed that 66% of employees would quit if they weren't valued. This number is even higher for Millenials: 8 in 10 stated that they would look for new opportunities if their leaders and colleagues did not appreciate them.
"One of the most pervasive culprits when it comes to employees quitting their jobs is a total lack of recognition, appreciation, and positive reinforcement. It's human nature to want to be seen in the workplace and to want our efforts to be noticed and applauded," said Stephen Light, founder of the sleep technology company Nolah Mattress.
"A company that makes no attempt to lift their employees and to recognize their hard work on both an individual and team-wide level is one that will see people looking for different opportunities. This is true on multiple fronts, from emotional rewards to benefits and bonuses. A company that fails to build appreciation and recognition into the fabric of its culture is a major reason for people quitting their jobs, especially if reprimands and criticism are frequent."
Since 58% of employees plan to change their jobs within a year if not appropriately treated, organizations need to take a strategic approach to improve employee recognition.
63% of employees who feel recognized are unlikely to seek a new job, shows SurveyMonkey.
Additionally, Gallup discovered that organizations that double the number of employees they recognize every week will enjoy the following benefits:
It's no secret that employees want to be appreciated and to feel that their contributions impact the organization positively and contribute to its success.
However, only words of encouragement and constant appreciation won't cut it. Apart from your people being employees, they also have a life maintained with tons of bills ranging from house rent to childcare, mortgage, food, clothing, etc.
As the war for the best talents grows daily, forward-thinking organizations know that having the CEO send out a nice memo thanking everyone for their hard work and encouraging them to keep it up won't cut it anymore.
Recently, tech giant, Microsoft, was in the news as it announced its ultimate employee recognition initiative by doubling its employee salary budget to address inflation and prevent talent from leaving.
Satya Nadella, Microsoft's CEO, stresses that:
"Time and time again, we see that our talent is in high demand because of the amazing work you do to empower our customers and partners." Across the leadership team, your impact is both recognized and deeply appreciated — and for that, I want to say a big thank you. That's why we're making long-term investments in each of you."
Nadella adds that the company is making "a significant additional investment in its compensation programs" beyond its regular budget for annual compensation increases.
"Specifically, we are nearly doubling the global merit budget. Based on local market data, merit budgets will vary by country, and the most meaningful increases will be focused on where the market demands and on early to mid-career levels. We are also increasing Annual Stock ranges by at least 25 percent for all levels 67 and below."
The major lesson here is that Microsoft isn't just telling employees how valuable they are but showing support by giving them even bigger paychecks. It separates a company that rides high on the wave of banality from one that crafts unique strategies for keeping its best talents.
The World Health Organization has recognized burnout as an "occupational phenomenon" and defines it as "a syndrome resulting from workplace stress that has not been successfully managed."
Three dimensions characterize burnout:
"Burnout refers specifically to phenomena in the occupational context and should not be applied to describe experiences in other areas of life."
Burnout affects employees' mental and physical health, which in turn affects their professional and personal lives. As a result, this affects their employer's performance and bottom line.
Researchers examined the impact of workplace stress on mortality and health costs in the United States. They discovered that it accounted for about 120,000 deaths and nearly $190 billion in annual spending.
As Maciej Kubiak, Head of People at PhotoAiD, succinctly puts it,
"This FlexJobs survey noted poor work-life balance among the most common reasons for exit. I am a firm believer in the crucial importance of work-life balance, and I'm not at all surprised by that discovery. The less an employee has to think about their job outside their working hours, the smaller the chances for burnout."
The reasons for burnout amongst employees can be dicey because there are various contributing factors, especially when considering the manager and department in which the employee works. A 2017 Kronos and Future Workplace study highlighted the three major causes of employee burnout:
Other contributing factors include toxic work culture, poor/terrible management, and a lack of precise alignment between work and professional goals.
You've probably heard the saying that people don't quit their jobs but their bosses.
And that's true on many levels. Most employees' work lives are horrible because they have bosses who stress them out. Therefore, it isn't surprising that three out of four employees cite their bosses as the worst and most stressful part of their jobs.
Additionally, employees with managers they didn't like were 60% more likely to suffer a heart attack, while 65% of employees said they'd take a new boss over a pay raise.
Mind-boggling, right?
Imagine how much happier and more productive employees would be if they had great bosses.
Many organizations must realize that while a top-performing, highly skilled, and productive employee would contribute to the company's growth, it doesn't mean they would always become outstanding managers.
Therefore, you should invest money, time, and resources in training your leaders to support their team members and not display behaviors that could harm your employees' career prospects and put their promotional opportunities at risk.
Jim Clifton, CEO of Gallup, reinforces the impact of bad leadership on employee turnover:
"The single biggest decision you make in your job -- bigger than all of the rest -- is who you name manager. When you name the right people to manage your company's workplace, everything goes well. People love their jobs, your customers are engaged, and life is great. When you name the wrong person manager, nothing fixes that bad decision. Not compensation, not benefits -- nothing."
Employees form relationships within their work organizations. One of the many relationships they form is with their managers — whose actions can impact their colleague's overall work experience and how passionate they are about their jobs.
Employees want to work with great leaders. People who are
*A Predictive Index report found this is the number one skill employees feel their managers lack.
Gallup's research showed that 37% of employees would switch to a job that allowed them to work off-site, at least part of the time.
Software giant Atlassian conducted an internal survey and discovered that 95% of their employees were willing to change how they worked to enable remote working. This feedback led to establishing a dedicated remote work program that allowed employees to work from home or in the office - based on factors such as their roles, teams, and personalities.
A quick look at many LinkedIn posts today would show one glaring fact: many employees want to work remotely, with many citing that the cost of WFH is cheaper when compared to working in person.
The remote working conversation aligns with the desire to achieve work-life balance or work-life integration. Many remote workers list the benefits of working from home, ranging from stress reduction to spending more time with their loved ones, costs reduction, improved mental health and well-being, and reduction in discrimination (especially for employees from underrepresented backgrounds).
➡️ Check out our guide on how to integrate your remote employees into your culture, teams, and processes. It's your starter pack if you're looking to help your remote employees onboard and acclimatize quickly.
Effective communication is one of the greatest pillars of employee retention. When you communicate effectively with people, it's easier for your employees to understand performance expectations and ask questions whenever they are confused. This is particularly important, especially when the shift to hybrid and remote work has resulted in workplace empathy and communication. Team managers should ensure that their direct reports (whether they work remotely or on-site) should be free to approach them with any ideas, questions, or concerns they might have at any time.
Team leaders or managers should also help promote positive, constructive, and timely feedback across their teams. Plus, ensure that they regularly connect with your direct reports to get a sense of their workload, how they are handling their responsibilities, and their job satisfaction levels.
Tip: We also recommend that you consider the words you use. For example, telling employees that "You need to improve next quarter" isn't as effective as saying, "Next quarter, I'd like to see improvement in XYZ areas, and I'd like to schedule a brief meeting with you to brainstorm on how to ensure you're meeting targets in those XYZ areas."
➡️ Check our 360 (Degree) feedback examples for building an empathetic review culture.
Leadership isn't for everyone. Some people make better employees, but not better leaders. And for some, while they might make exceptional managers, they are simply content with working as a direct report under a supervisor. This is why it's crucial to know and understand your employees beyond their job responsibilities.
For employees who are brilliant at their jobs but do not necessarily want to climb the corporate ladder, you can offer them recognition, growth, and the opportunity to explore something new. This is where upskilling comes into play.
Upskilling your employees allows them to gain new abilities and competencies as the organization and its requirements evolve. Therefore, prioritize investing in your employees' professional development. For example, allow them to attend virtual conferences, pay for work-related books, pay for continuing education, or provide tuition reimbursement.
Zavvy helps you avoid these mistakes - and run powerful people development systems at ease. Without scattered excel tables or manual feedback print-outs.
➡️ Learn how employee development with Zavvy works
Today's employees aren't concerned that your organization just paid its lease rent or re-opened offices. Instead, many still prefer to work at home remotely or leverage hybrid working opportunities. Not giving your employees the option to choose can make them decide to resign and work for other companies that encourage work-from-home opportunities.
If your company cannot offer remote work options permanently, offer a compressed work week (like the four-day work week), flextime, or even a partial telecommuting option. These can help relieve stress and tension on your team and increase employee retention.
➡️ Find inspiration in our guide on how to implement a four-day work week. We included examples and strategies.
Now more than ever, employees are looking for respect in the workplace. No employee wants to feel devalued or disrespected at their jobs. They want to feel respected, valued, treated as important, and as if they matter — because they do matter!
An Employee Job Satisfaction and Engagement report by SHRM found that 72% of employees rated showing respect for all employees as "very important." In fact, it was the top contributor to overall employee job satisfaction. Additionally, CEB's Quarterly Global Labour Market Research discovered that the top five things that employees are looking for in a new job are:
Notice how workplace respect is in the top 3 things job seekers are looking for in a job?
So, how can your organization value and foster respect?
A culture of respect can be fostered by providing more positive feedback and earning the trust of your employees. Plus, encouraging employees to voice their opinions will create a psychologically safe environment.
A safe environment encourages creativity, collaboration, connecting with your team, employee recognition, etc.
It's also vital that you enable your employees to perform at their best. Give them the tools and resources to be the best version of themselves. Don't forget to also demonstrate kindness and thoughtfulness along the way.
While many organizations attest to valuing creativity, it's all words and no action in place. Most times, they hardly have any programs or policies in place to support their claims. For example, Google has a 20% program that allows employees to work on side projects that interest them. The following tips should give you ideas on how to encourage creativity in the workplace:
➡️ Find inspiration in our list of 32 ways to promote diversity, equity, and inclusion (DEI) in the workplace.
Knowing why your employees are leaving is important, especially when a company records a high turnover rate. This could be an indication of job dissatisfaction and could impact employee engagement and retention.
As mentioned above, hiring new employees is costly, and filling these positions with qualified talents takes time. So, organizations should create and implement strategies to keep their current employees.
Knowing why people quit their jobs makes it easier to get to the root cause of this recurring issue, fix it, and make the workplace a more rewarding environment for everyone.
To help reduce your employee turnover rate, check out how Zavvy's employee engagement solutions can help foster performance, culture, and employee well-being.
Upskill your team every week with the best contents and personalized recommendations.
High employee churn is a huge challenge for any business, irrespective of its size or the industry within which it operates. Companies lose $1 trillion in productivity yearly due to voluntary turnover.
But what exactly causes employees to quit their jobs?
Of course, it's no secret that not every employee is happy in their job. While some would be working in their dream jobs at their dream companies, others may want to take a break, relocate to another part of the country, move to a new one, or leave altogether.
However, you should ring the alarm if your best talents are constantly leaving and your employee turnover is startling. So understanding why people quit their jobs can help you create retention strategies that stop the talent bleed affecting your business.
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