Worker turnover is poised to pick up, adding urgency to employers’ focus on retention

As the economic recovery chugs along and gives the labor force more reason to be confident in its durability, human resource experts say that highly skilled workers are increasingly willing to abandon the safety net of their current jobs in search of new employment opportunities.

This expected uptick in voluntary turnover, which some employers are seeing already and which experts predict will accelerate in 2013, adds increased urgency to a problem that many employers had already identified as critical: They are struggling to retain their most talented workers.

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At the Reston-based staffing firm HireStrategy, chief executive Paul Villella said he noticed the shift in the fourth quarter of 2012, when calls to his company were no longer just coming from the unemployed or underemployed.

“You start to get phone calls from fully employed people who are at good companies, making good money, doing good things,” Villella said. “But [they] are ready for a change.”

Early 2008 was the last time Villella remembers getting such a high volume of these types of requests.

Experts say the increased interest in jumping ship is driven by a variety of factors, most of which seem to reflect a workforce that has grown weary of the corporate belt-tightening that was commonplace during the recession. Raises were hard to come by. Companies that had streamlined their workforces sometimes made up the slack by piling extra duties on their highest performers.

Many workers seemed to tolerate these less-than-ideal conditions during the recession and its immediate aftermath.

“Employees were stuck where they were, and so they tended to look more favorably at their work environment,” said S. Evren Esen, manager of the Society for Human Resource Management’s survey research center.

But that sensibility appears to have changed. In its annual survey, SHRM found that workers’ satisfaction with their jobs in 2012 was down to 81 percent, a drop of five percentage points from its peak in 2009. Based on those results, the research organization predicts that employee turnover is now poised to return to pre-recession levels.

In 2012, 40 percent of employers reported that they were having difficulty retaining critical-skill employees, according to an annual survey by human resource consulting firm Towers Watson. That’s up from 36 percent the previous year and 16 percent in 2009.

The Towers Watson survey also found that 32 percent of businesses saw their turnover increase in 2012 — the first year it asked that question. Another study by the American Management Association found that 33 percent of employers expect to see increased employee turnover in 2013.

The overall median rate of voluntary turnover had been rising since 2009 in Towers Watson’s surveys, reaching 7.8 percent in 2011 and 7 percent in 2012. Laura Sejen, global practice leader for rewards at Towers Watson, said those figures reflect turnover for all all types of workers, not just critically skilled ones that companies say are a particular challenge to retain.

The greater willingness to leave one’s job is also reflected in Labor Department data showing that the nation’s quit rate has ticked up from 1.4 percent in November 2009 to 1.6 percent in November 2012. It also found that 2.1 million workers in the United States voluntarily quit their jobs in November 2012, up from 1.9 million a year earlier and 1.7 million in November 2009.

“People’s confidence was broken, and I think it’s starting to come back,” Villella said.

‘Career pathing’

As employers dig in to prevent a surge in turnover, they are evaluating and implementing a variety of strategies for hanging onto top workers. Experts say that one of the most effective tactics is what’s known in human resources jargon as “career pathing.” It’s a method in which the employee is given a clear, tangible track for professional growth within the company.

Mary Van Hoose, chief talent officer at the Advisory Board Co. , says that this approach has been a key component of the firm’s retention strategy. In fact, the Washington-based health consulting company promoted about 40 percent of its staff last year as part of that effort.

Advisory Board is also trying to retain workers by revamping its benefits offerings. Last year, after an employee survey revealed that an increased number of its workers had young children, the company launched a backup child-care program.

“We spend a lot of time thinking about what makes this sustainable for people,” Van Hoose said.

Experts say that a boost in compensation can be another effective tool for persuading talented workers to stay put.

International tax and audit giant KPMG, for example, has incorporated new financial incentives into its retention strategy as its talent war with rival “Big Four” accounting firms heats up.

“We just instituted a bonus plan for junior-level professionals to gin up loyalty,” said Candy Duncan, the firm’s managing partner for the Washington area.

Boon for recruiters

While the expected churn in the labor market in 2013 creates a headache for retention-focused employers, it offers an opportunity for those who are in the business of talent poaching.

“For recruiting, this is great,” said Matt Walker, practice leader of talent acquisition at Reston-based Helios HR. “This provides us an opportunity to find some top talent from organizations that may be in direction competition with us.”

And while a rise in turnover is underway at many businesses, it’s not seen in every industry or job category.

Brian Kropp, managing director at Arlington-based corporate research firm CEB, said concern about turnover is more prevalent at companies that predominantly employ highly skilled workers, such as engineering, research and information technology firms. Employers in retail and customer service businesses, Kropp said, have not seen the same pattern.

“There’s this huge split in terms of skilled professional versus non-”, Kropp said.

 
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