Call it the Great Stay.
Employee retention rates just keep climbing, according to a new report, The Employee Retention Index, from Eagle Hill Consulting. The six-month outlook this quarter is the strongest it’s been in 18 months, Eagle Hill found, overtaking the previous record from early 2023 and suggesting workers will remain where they are through the end of the year.
That should be “welcome news” for employers who have spent the past few years bemoaning their uphill battle against turnover, according to Melissa Jezior, Eagle Hill’s CEO. Indeed, per the Bureau of Labor Statistics July update, quits have been down 550,000 year over year, holding steady at 2.2%. The hospitality industry—and other sectors with historically low pay—continue to struggle with retention most.
But in the white-collar world, people are mainly sticking around because they have more faith in their companies and leaders—or, in Eagle Hill’s words—have “organizational confidence.” (Historically, that metric has been the most volatile.) Workers are also becoming more optimistic than ever about their jobs’ culture (up 7% year over year) and their own compensation (up 6%).
Even despite reports showing ample opportunities for job seekers—and the perennial knowledge that a job hop is often the more surefire way of securing a raise—job security is simply too important for most workers to consider the alternative. That’s especially true at companies where flexibility and work-life balance are top priorities.
Flexibility is the answer
“With employees staying put, organizations need to make the most of this quiet period to develop their people, drive innovation, and thrive in a tight talent market,” wrote Jonathan Gove, Eagle Hill’s senior human capital director. “This is the ideal time for leaders to strategically address their workforce.”
Many firms that heretofore had struggled to keep people on board have taken Gove’s message to heart, cementing worker preferences and needs above other strategic objectives.
In 2022, corporate well-being platform Gympass instated a “work from where you prefer” policy, which let their workers self-select their hybrid work arrangement. It led to a 69% drop in voluntary employee turnover. “We prioritize well-being as one of the key pillars, the same as you would prioritize, for example, profits,” Lívia de Bastos Martini, Gympass’s chief people officer, told Coins2Day.
Such programs are not set-it-and-forget-it, Gympass cofounder and CEO Cesar Carvalho told Coins2Day last year, and the onus is on employers to continue iterating and meeting workers where they are.
The story is much the same in retail. Workers “suddenly became very scarce” at Ikea parent Inter Ikea Group, CEO Jon Abrahamsson Ring recounted recently. So his team focused on the big-picture items: better pay and more flexibility. The efforts led to a new low of 25% voluntary turnover by the end of 2023; a year earlier, one-third of employees quit voluntarily.
Taking it a step further, a four-day-workweek pilot in the U.K. Led to a nearly 40% reduction in turnover in the 14-month time frame—and a 53% uptick in job applications to boot.
“Some managers have found that the process of designing and delivering a four-day-week trial has acted as a catalyst for further creativity, transformation, and innovation,” a report on the pilot reads. “Colleagues have improved the efficiency of working practices within teams, used communication tools differently, and as colleagues have ownership of the trial, they have reported feeling valued and finding increased confidence.”