Employee Retention Takes on New Importance as Demographics, Economy Change
Accelerating staff turnover rates pose a challenge to employers across the economy. MLA Companies urge managers, especially those running small to medium-sized businesses, to factor employee retention into their overall business plans.
DAYTON, Ohio, Sept. 8, 2021 /PRNewswire-PRWeb/ -- In 2018, 41.4 million U.S. workers voluntarily left their jobs, creating a national voluntary employee turnover rate of over 27%. This represented an 8.3% increase over 2017, and a staggering 88% increase over 2010.(1) By 2023, an estimated 35% of U.S. employees will leave their jobs each year to go to work somewhere else.(2) "High turnover rates," says MLA Companies co-founder and CEO Seth Morgan, "can have a deleterious effect not only on staff morale, but on a company's bottom line. These figures are a clear indication that businesses should make employee retention part of their overall business plan."
According to a recent study by the Work Institute, notes Morgan, the cost of replacing a single worker is approximately one-third of that worker's annual salary.(3) Part of this is due to lost productivity, but another important component is escalating replacement cost, even for nonprofessional positions. A survey by the Federal Reserve Bank of New York shows that the "reservation wage"—the minimum compensation workers would require to accept a job—was, for those without a college degree, 19% higher in March of 2021 than in November of 2019, an increase of nearly $10,000 per year.(4)
Among the factors at work in this situation, says Morgan, is the still-ongoing workplace disruption brought on by the COVID-19 pandemic and a recent upsurge in labor union activity.(5) Of potentially greater impact, he notes, may be demographics. In 2010, 60% of the U.S. population was between the ages of 20 and 64. By 2030, the proportion of Americans in this age group will drop to 55% as the baby boomer generation continues to age.(6)
For business leaders seeking ways to deal with the changing worker-employer environment, Morgan offers key advice—make your company a great place to work. Taking care of the employees you have, he says, is often your best form of advertising for new ones.
One key to doing this, he notes, is giving employees a sense of ownership. Some of his firm's clients, for example, offer salaried employees a greater level of profit-sharing in lieu of annual pay increases. Morgan reports that many employees take this option, intensifying their focus on initiatives that may not pay off for several years. While deciding how to make cutbacks during COVID, some hourly workers agreed to an across-the-board reduction of their hours per week instead of laying off some and keeping others fully scheduled.
Programs of this sort, Morgan notes, require careful planning to design and implement. "Investing in your people is always the right move," he says. "The trick is first understanding what actually motivates them and then doing it with careful consideration and planning to conserve your capital." To avoid that problem, he recommends that business leaders, particularly leaders of small to medium-sized businesses, consider seeking expert advice as they move to make employee retention an integral part of their company's business plan.
"A good workforce," says Morgan, "is an appreciating asset, not just in operational performance, but in long-term enterprise value. If you're a business leader, you need to make sure—for the company's sake and that of the employees—that you and they are positioned to make the very best of that asset."
About MLA Companies
MLA Companies is not a CPA firm that also does consulting. They are consultants who's customized, value-driven approach offers processes and services that align to client's needs and future growth. Founded in 2006 by CEO Seth Morgan, they are financial experts positioned to understand a client and their business – to protect, guide, and empower. Clients who invest in building relationships with MLA Companies know that their purpose will not change but their service offerings can grow as the business grows. At MLA Companies the discussion with a client is centered around purpose and growth first – then finance and services second. Visit https://mlacompanies.com/
1. Mahan, Thomas F.; Nelms, Danny; Bearden, Christopher Ryan; Pearce, Brantley; 2019 Retention Report; Work Institute; Accessed 08 Sept 2021, info.workinstitute.com/hubfs/2019%20Retention%20Report/Work%20Institute%202019%20Retention%20Report%20final-1.pdf
2. "Post-Coronavirus Employee Retention Strategy." Strammer, 18 June 2020, strammer.com/en/post-coronavirus-employee-retention-strategy/.
3. Bolden-Barrett, Valerie. "Study: Turnover Costs EMPLOYERS $15,000 per Worker." HR Dive, 11 Aug. 2017, hrdive.com/news/study-turnover-costs-employers-15000-per-worker/449142/.
4. Irwin, Neil. "Workers Are Gaining Leverage over Employers Right before Our Eyes." The New York Times, The New York Times, 5 June 2021, nytimes.com/2021/06/05/upshot/jobs-rising-wages.html.
5. Johnson Hess, Abigail; "How the coronavirus pandemic may be causing support of labor unions to rise;" 29 Jan 2021; CNBC; cnbc.com/2021/01/29/support-of-labor-unions-is-at-65percentheres-whats-behind-the-rise.html
6. "Kinder Alternatives for Senior Adults: Options for SENIOR AMERICA." Kinder Alternatives for Senior Adults | Options for Senior America, optionscorp.com/about-us/demographics-and-statistics.
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SOURCE MLA Companies
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