CPA INSIDER

What makes workers stay

Stagnant pay and duties can lead employees to leave.
By Dawn Wotapka

While new hires often feel thrilled when they land in their new job, many eventually start to stagnate and turn their eyes toward the exit.

That's not entirely bad news for employers. New staffers can provide perspective that helps prevent businesses from getting too set in their ways. "Coming in with a fresh set of eyes, they're going to see gaps or opportunities that people who have been there forever" may miss, said Lisa Barrington, a certified workplace strategist in Phoenix with more than 25 years of human resources experience.  

But too much turnover can rob a company of its institutional knowledge, weigh on the morale of those left behind, and fuel a drop in external job applicants. It can also affect the bottom line: Replacing an employee costs an average of 21% of that person's annual salary, according to Glassdoor, a jobs website with anonymous company reviews and salary reports.

Across industries, the turnover rate in 2015 was 16.7%, according to CompData's BenchmarkPro survey. For banking and finance, that rate was 18.6%. The acceptable rate of turnover varies among industries and companies, Barrington said. While the hospitality industry is known for and can handle frequent personnel changes (the turnover rate was 37.6% in 2015), other types of businesses depend on stability.

In an analysis of about 5,000 cases of workers who changed jobs—whether within a company or by switching to a new company—between 2007 and 2016, Glassdoor found that people stay in the same role for an average of 15 months, with workers in the accounting and legal profession staying in the same role for 13.6 months. Most job changes (73%) involve leaving an employer, and, not surprisingly, most moves were accompanied by an increase in pay.

Here are the three main causes of turnover across industries, according to Glassdoor's research:

  • Workplace culture: Employees at companies ranked higher on Glassdoor's 5-star rating system are more likely to want to stick around and grow within their company. Each one-star increase boosted the probability that the typical employee will stay by 4%—"a statistically significant impact," Glassdoor found.
  • Pay: Money matters. On average, Glassdoor found that each 10% increase in base pay is associated with a 1.5% higher chance that a worker will stay at the company. Bosses shouldn't bestow a fancy new title without extra compensation, and the larger the increase, the more likely a worker would be to remain. A job promotion without a pay increase "may not be an effective way of improving retention," Glassdoor said in its report.
  • Stagnation: Employees who stagnate are more likely to grow bored and leave. Glassdoor found that each additional 10-month period in a position is associated with a 1% higher chance of an exit. "[E]mployees who languish in a [role] too long are likely discouraged about career prospects," the study found.

Employers can minimize this turnover driver by creating clear and predictable career paths that elevate employees, Glassdoor advised. Barrington agreed, adding that there are easy and effective ways to avoid stagnation. Companies can add additional tasks and activities to help develop personnel, move them to another job at the same level, or have them move diagonally. "Sometimes it can be beneficial to step down and across," she explained. "If someone wants to move into a department or function that they've never worked for before, they might have to move down a level to learn the trade."

While most employees change jobs and employers many times, paying attention to workplace culture, compensation, and chances for growth can help retain key talent.

Dawn Wotapka is a freelance writer based in Atlanta. To comment on this story, contact Chris Baysden, senior manager of newsletters at the AICPA.

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