What Is Talent Turnover And Why Do We Care?
The employee turnover rate is a metric counting the number of employees leaving an organization during a specific time period, and it’s generally measured annually. This metric can be applied even more specifically inside of an organization, taking into account other factors, such as internal mobility, on a department level. However, it never takes into account temporary leaves of absence.
The way employee turnover is calculated follows a simple formula - divide the total number of employees that have left during a time frame by the average number of employees that your organization has had during the same time frame, then multiply the number by 100 to get the employee turnover rate.
For instance, if your company has an average of 200 employees and 32 of them have left, your turnover rate is 32 divided by 200, multiplied by 100, aka 16%.
Canonically, there are two types of talent turnover:
- Voluntary - aka when the employees actively choose to leave the organization
- Involuntary - when the organization decides to end the collaboration.
Historically, companies have been afraid of their turnover rates, especially because they worked under the premise that this metric speaks of their workplace quality. Some of the most vehiculated reasons for higher turnover are thought to be:
- Lack of growth opportunities
- Not enough benefits
- Lack of internal promotions
- Toxic work environment
- Lack of work-life balance
However, during the past years, we’ve learned that the talent industry is undergoing a real paradigm shift, both in terms of time spent by employees in a company and by the overall power ratio between candidates and employers.
The only way to move past the reminiscent HR tendency to hold onto employees for as much as possible is to get a thorough understanding of what motivates Millennials and GenZ in the workplace and what they’re looking for outside of their jobs.
The 5 To 9 And What Makes Young Professionals Tick
Although the richest and by far the most exposed to opportunities of all generations, Millennials and GenZ are also the poorest generation in some sense. The real estate crisis making it almost impossible to dream of owning a house is just one in a long list of examples.
This generation is largely influenced by social media, which is their one-stop shop for everything they have in mind. Recent research suggests that Instagram and TikTok are used for researching information more than Google in this age pool.
They lack both the formality and the patience of other generations - they want a quality life and they want it now. As their email sign-offs often suggest, we’re dealing with a generation that values human contact, genuine interactions and personal approaches more than anything. While this is also true about Millennials, they seem to have assimilated the corporate jargon, while GenZ are very vocal about their new approaches.
The 9 To 5 And The Rise Of Passion Economy
We’ve already talked about it at length, here and here, but the main idea behind the passion economy is that meaning is the most important indicator for the upcoming generation.
Why should your company care, you ask? Because Millennials will make up 75% of the global workforce by 2025. By 2030, there will be an extra 1 billion GenZ professionals in the workplace, as well.
It was true during the pandemic, and it’s even truer now. In 2021, a Deloitte report showed that 44% of millennials and 49% of GenZ had made work-related choices based on how their personal ethics matched the companies’.
Looking at the future, these numbers are only going to increase once these professionals become seniors and start taking over management roles as well.
4 in 5 Millennials consider an organization’s approach to mental health and wellbeing before taking a job, and 83% of employees consider that their wellbeing is just as important as how much they get paid.
Modern Career Paths: From Line To Spiderweb
McKinsey’s latest iteration of the famous American Opportunity Report 'reveals a generational gap in the workplace, with marked differences among how Gen Z and other generations view themselves, their ability to work effectively, and their futures.’
So what is there to do?
Circling back to employee turnover, the rates have increased during the past years - especially in top priority roles such as engineering, sales or operations.
The notion of losing good employees who occupy business critical roles is bothersome for corporations, whose main loss aversion comes from the fact that both talent acquisition and onboarding processes are far from cheap.
By 2030, there will be an estimated global talent deficit of 85 million workers, which will translate into unrealized annual revenue of trillions of dollars.
But what are career paths changing into?
First of all, forget the rigid corporate ladder. Fewer hierarchical layers are expected to replace the old model adopted with the industrial revolution. In their book, The Corporate Lattice, Cathleen Benko and Molly Anderson address the flexibility that is going to become a staple of the digital age. Diversity and technological advancements are turning career paths into fluid journeys.
‘In the ladder model, you’re looking in one direction, which is up. In the lattice organization you can find growth by doing different roles, so you have new experiences, you acquire new skills, you tap into new networks. The world is less predictable than it was in the industrial age, so you stay relevant by acquiring a portfolio of transferable skills,’ says Cathy Benko, who is also vice-chairman of Deloitte in San Francisco.
While these roles are the most challenging to fill, they are the ones that can be easily automated.
In turn, companies can focus their energy into building sustainable talent pipelines that accommodate the new and improved career paths of the younger generation of professionals.
Consider junior roles, for example, which are to become higher-churn positions. Companies can easily translate the tasks and goals into 3-month or 6-month workloads, being prepared to accommodate transition towards new talent fast and as frictionlessly as possible.
Similarly, apprenticeships and scholarships can be created, taking into consideration the desired flexibility of career path creation. Companies can and should start transitioning towards more modular roles, filled based on transferable skills, so that future talent can truly benefit from the magic of internal mobility to the fullest extent.
And perhaps most importantly, consider upskilling. Constantly investing in the professionals you’ve already got in a cohesive, systematic manner shows the company’s commitment to attract passionate professionals looking to expand on their skills.