How many times have you changed jobs? If you’re anything like the typical American worker, you’ll have changed employers about 12 times by the time you’re 48. (BLS, March 2015) While a new job every few years sounds great for variety in your career as an employee, it means more headaches for you as an employer. Recruiting is hard work, and it costs businesses an an average of 21 percent of an employee’s annual salary to replace a lost worker. (Center for American Progress, 2012)
With the business problem of employee retention in mind, the Glassdoor Economic Research team undertook an analysis of more than 5,000 job transitions listed on resumes shared anonymously on Glassdoor. Our findings from Why Do Workers Quit? The Factors that Predict Employee Turnover provide validation for some common recruiting wisdom, as well as some surprising insights. Here are the key points from the study, and suggestions on how you can take these findings into your work in HR and recruiting.
Most employees leave their company when changing jobs
As much as companies talk about offering growth opportunities, changing employers is still the best way for individuals to change roles. Our research found that employees are about three times more likely to leave for a new employer than to stay and move into a new role at their existing company. 73% of workers left their employer to change roles, while only 27% stayed at the same employer.
When changing roles, most employees leave their employer
Source: Glassdoor Economic Research
Action Tip: Invest in employee development. Make sure every employee has access to training options, and understands the potential paths forward from their current position.
Job title stagnation makes workers more likely to leave
In our sample of resume data, employees change jobs on average every 15 months, ranging from less than a month to more than seven years in the same job. On average, we found that stagnating in a given role for an additional 10 months is associated with a 1 percent higher chance that the typical employee will leave the company for their next job—a statistically significant impact.
Action Tip: That first year of employment is crucial. Empower employees with training and development options during the first year, and make sure opportunities for promotion or job transfer are clear for each employee and discussed at least once a year. For recruiters: common knowledge is correct--employees who have been in the same job for at least two years may be ripe to consider a new opportunity.
Pay raises motivate workers to change jobs—and to stay
The study found that most job transitions were upward moves, with 63 percent of job moves resulting in the same or higher pay for workers. By contrast, 37 percent of job moves resulted in lower pay for workers.
In terms of retention, the study found that on average, a 10 percent higher base pay is associated with a 1.5 percent higher chance that a worker will stay at the company for their next role—a statistically significant effect.
Action Tip: Don’t underestimate the power of frequent pay raises in your retention strategy. Happy, productive workers appreciate increased pay as a reward. For recruiters: your job description and your company’s culture may be more appealing to the candidate than the potential for a pay increase.
Better culture attracts and retains workers
On average, workers in our sample traded up to companies with better workplace culture for their new roles. In all six measures of company culture we examined, average Glassdoor ratings were higher for the new employers that employees took jobs at, and were lower for their original employers.
At the same time, employers with better overall company ratings, career opportunities ratings, and culture and values ratings on Glassdoor are more likely to have employees stay inside the company when progressing to their next role. A one-star improvement in a company’s Glassdoor rating raises the odds that a typical employee will stay for their next role by 4 percent.
When Employees Do Leave, They Usually Do So for Better Company Culture
Source: Glassdoor Economic Research
Action Tip: Investing in your culture truly is an investment in employee retention, and will help you attract employees from lower-rated companies. For recruiters: look for star employees from companies with slightly lower Glassdoor ratings than yours. You’ll have an easier time selling them on the winning points of your company’s unique culture.
Rates of turnover vary by industry
The industry with the most frequent job changes is the construction, repair and maintenance industry. Employees in that sector change jobs every 10.6 months on average. By contrast, the industry where employees spend the most time in jobs is government, where workers spend 18.6 months on average in each role.
Other industries with relatively high rates of employee turnover in our sample are biotech and pharmaceuticals (12.7 months), real estate (13.3 months), transportation and logistics (13.5 months), and business services (13.5 months). By contrast, industries with relatively low rates of turnover include aerospace and defense (17.3 months), media (16.9 months), information technology (16.8 months), and telecommunications (16.5 months).
Action Tip: For roles that are not necessarily industry specific, such as accounting or software engineering, consider cross-pollinating with workers from other industries. For instance, workers from industries with typically long tenure stretches may be more likely to stay loyal if your industry’s average tenure is on the shorter side. On the other hand, workers from industries that have shorter average tenure may appreciate the stability of a company with typically long tenure stretches.
To view the full report, Why Do Workers Quit? The Factors that Predict Employee Turnover, click here. And be on the lookout for our upcoming Employee Retention Playbook!