Postmodernism describes the generational reaction to the current state of the industry, as millennials enter the workforce the effects of postmodernism are becoming increasingly relevant. Employee retention rates are sharply declining, as 43% of millennials plan to resign from their current positions, as reported by Zack Friedman of Forbes2.
Retaining the current workforce, and superseding the cost of the vacancy life cycle, is imperative to manage the increasing value of Human Resources and maintaining a purposeful output.
To understand why employee retention initiatives are necessary for the future of business, one first needs an in-depth understanding of millennials, the role of culture, and the cost of losing employees.
Millennials are defined as born between 1981 and 1997, a strong sense of purpose and morality, yet are more likely to accept risks associated with their professional career.
The postmodern workforce of millennials is largely unlike any previous generation, leading to a clashing set of ideas between those entering the workforce and the more tenured leaders. A lack of corporate loyalty has characterized this new working generation, often moving positions within two years or less according to Chelsea Ritschel of The Independent4. However, in adapting to this emerging workforce, lowering turnover and the cost associated with it is paramount to the long-term success of a company. A study conducted by Deloitte records staggering distrust millennials harbor toward corporate sectors, leading to uncertainty in the career paths, and eventual resignation3. Evolving to retain younger employees relies upon creating a culture of learning, engagement, and personal growth. Failing to do so, however, is much more costly than the more obvious financial burden.
The Cost of a Resignation
Empty seats within a company cost far more than initially perceived. There is both the individual costs of the position itself and the real cost, the effects of the vacancy from more than a financial perspective. The individual opportunity cost of the position is often three times more than the salary of the individual1. However, there is a higher likelihood of resignations within the same department as a recent resignation. Productivity, team cohesiveness, and efficiency are directly affected by the vacancy. Managers are more likely to resign due to larger workloads, less departmental bandwidth, and output less quality work. All of these effects in proportion lead to analyst and competitors receiving a company as wounded, directly affecting the standing of the company. A resignation is costly.
Retaining Employees: A Learning Culture
A culture of learning hinges on developing the talent and knowledge of a workforce. Millennials require engagement, in the form of learning or professional challenge. A culture that encourages managers to learn new things alongside their departments engages multiple structural levels within an organization. Also, challenging employees within their process and work, to temper their abilities and spark transformative professional improvement is critical to developing this new workforce. This method of creating a positive culture focused on talent reinforcement is dually beneficial. Developing an engaging culture will retain younger employees and developing not only those entering the company but the more tenured leaders as well. As documented by Degreed and talent culture, a learning culture also developing a competitive advantage across industries, as all of the business is suffering from high turnover and a less than engaged emerging workforce1. Bettering the ability of employees and reducing the effect of workforce turnover is a strategic advantage over the multitudes of other entities struggling to retain younger employees.
Investing in the future of the entering workforce starts with improving employee retention rates. Fortunately, Millennials are driven by personal development and challenge. In engaging, and investing in the growth of the younger emerging workforce, they will, in turn, find contentment in their positions. Netflix creates a projected sense of growth for entering employees to set learning goals and to ensure development. Empower the entering employees to make decisions, and develop their ability through challenging work. The generation joining the workforce aspires to lead, and one day inevitably will invest in their development, and you can cut the opportunity cost of their resignation.