Satisfied Workers Stay: Higher Employee Satisfaction Key to Retaining Talent

Key Findings

Amid the Great Resignation, it has become increasingly challenging for companies to retain their top talent. While there are a variety of reasons employees leave, keeping them happy is a good way to limit turnover. In this study, we use Glassdoor data to determine how employee satisfaction affects the likelihood of searching for work elsewhere, and how this varies by salary, sector and other factors.

We find that as employee satisfaction increases, employees are less likely to apply for jobs elsewhere. We examine this by looking at the 1-to-5 star rating employees leave for their companies on Glassdoor. We then look at the Application Rate, which we define as the likelihood that those employees click “Apply” on another job on Glassdoor within one week of leaving a review.

The figure above shows the Application Rate based on the overall rating an employee left in their review. As employee satisfaction rises from 2 stars to 5 stars, employees are less likely to apply for a new job. The Application Rate peaks at 2-star reviews (5.2 percent) and declines steadily to 5-star reviews (2.6 percent). Intuitively, employees who are more satisfied with their current job are less likely to search for work elsewhere.

One exception to the trend is employees who leave 1-star ratings. This group is slightly less likely to apply for a new job than 2-star reviewers. 1-star reviewers may represent a different category of employees who are using Glassdoor to express displeasure or frustration rather than look for a new job. Overall, this result has important implications for hiring managers: satisfaction is key to maintaining top talent, and those employers striving to avoid turnover should provide a better workplace experience for their employees.

How Does the Application Rate Vary by Workplace Factor?

Digging deeper, we look at how job search behavior differs by Glassdoor’s workplace factor ratings such as Career Opportunities, Compensation & Benefits, Senior Leadership and more. The figure below shows the applications by overall rating as well as each workplace factor. The patterns are similar across workplace factors. In other words, regardless of what aspect of the employee experience is examined, higher satisfaction decreases the odds that a worker will seek greener pastures. This is in part because employees often feel similarly across different workplace factors. For example, reviewers who rate their company’s Culture & Values highly tend to rate other aspects of their company, such as Senior Leadership and Diversity & Inclusion highly as well.

How Does the Application Rate Vary by Sector?

While comparing across workplace factors shows little variation in job search behavior, a sector-level analysis shows different application patterns. For this analysis, we grouped together an illustrative subset of similar industries into three larger sectors: Healthcare, Professional & Technical Services, and the Public Sector. 

In all three cases, the Application Rate is highest at two stars and declines to its lowest at five stars. However, the speed of this decline and the average Application Rates differ by sector. Healthcare sees a higher average Application Rate, peaking at 5.9 percent and dropping to 3.0 percent. The stressful nature of jobs in this sector likely contributes to this, as employees frequently work long hours and face high-stakes environments. The high demand for healthcare workers may also be a contributing factor, as dissatisfied employees know they can likely find a job elsewhere.

Professional & Technical Services – which includes sectors like law, financial services and information technology – has a similar pattern, though the overall Application Rate is lower. This likely reflects the high compensation in this sector, as well as educational and skill-based barriers to entry coupled with specialization and certifications, which can shrink the pool of available jobs.

The Public Sector includes jobs in government, education and nonprofits. This sector has the least change in Application Rate (5.0 percent to 4.2 percent), meaning employee satisfaction is a weaker bulwark against employees looking elsewhere for work. One reason for this may be that public sector employers often provide generous pensions and pay based on seniority, which encourages employee retention. These factors mean that Application Rate is less dependent on the employee experience and more dependent on factors like pay and tenure.

Overall, this figure shows that the sector an individual works in has a large impact on job search behavior. This is likely because sectors vary by salary and occupation, attracting different skill sets and preferences. Though this pattern varies by sector, most industries still exhibit the same trend—higher employee satisfaction is associated with less interest in a new job.

How Does Satisfaction Impact Applications Elsewhere?

Given that Application Rate is affected by many factors, it is crucial to isolate and quantify the impact of rating. As a result, the next stage of the analysis uses a regression to show how an increase in rating by one star (for example from 2 to 3 or 3 to 4) affects the likelihood of applying elsewhere while controlling for a variety of factors including the employee’s salary, sector and years of experience. This helps us capture only the effect of the rating, instead of other factors that may also have an impact on the Application Rate.

Between the 2 to 5 star range, an increase in rating by one star decreases the likelihood of applying to a new job by 6 percent. This could have a large impact. For example, reducing the annual turnover rate by 6 percent for a 1,000-employee company with a 25 percent annual turnover rate would result in 15 fewer employees leaving for each one star increase in rating. For a company with thousands of employees, this could represent a significant shift. 

Professional & Technical Services see an almost 9 percent decrease in applications, meaning that law firms and similar employers can retain a much greater share of workers with each incremental increase in employee satisfaction. The Public Sector sees a statistically insignificant decrease of less than 2 percent in applications with each one star increase in rating. This further confirms that the Application Rate in this industry is less tied to employee satisfaction. Finally, in the Healthcare sector the decrease in applications is around 4 percent. 

Conclusion

While there are many factors affecting job search behavior, employee satisfaction is a crucial driver of whether employees stay at their current job or look to switch. For hiring managers worried about high turnover, these results make a compelling and data-driven case that keeping employees happy is an excellent way to keep them from quitting. You can’t stop an employee’s wandering eye, but you can give them reasons not to click apply.

Methodology

This analysis links Glassdoor ratings and job search data. First, we start with company ratings on Glassdoor submitted by current full and part-time U.S. employees from January 2021 to May 2022. Ratings are based on a 1–5 star scale. We focus on the “Overall Rating” in this research, only examining other workplace factors when specifically noted.

We then measure job search activity—referred to as the “Application Rate”— by calculating the percentage of individuals who left a review and then subsequently began a job application on Glassdoor within one week. We selected one week as the time window to make sure the ratings accurately reflected employees’ current sentiment about their job and to avoid other factors affecting their satisfaction, like employees leaving their jobs, getting a raise, etc. 

For our analysis by sector, we highlight three categories of similar industries grouped together into larger sectors: 

The regression analysis is performed using a logit model. We control for past behavior by looking at whether individuals applied for a new job the week prior to leaving a review. We also controlled for log-transformed salary, years of experience and sector. Finally, we filter out 1-star reviews from this regression analysis, focusing on the 2–5 star reviews where the linear relationship is strongest.