4 Reasons Why Employee Retention Is a Challenge

Employee Retention

“Back in the day we used to walk to work, in the snow, uphill, both ways!” Yeah, we’ve all heard it before. The older generation in the workforce had it much rougher than we do today, right? For the most part I would say that’s pretty much true. I look at my father who started his career in the early-70s in a steel mill and maintained the same job, in the same small town, most of his life. Like my father, it was fairly common for workers in the 20th century to work for the same company most of their careers according to a Stanford Center on Longevity study. Employee turnover wasn’t as big of an issue.

Download Employee Value Proposition survey sample and report.

Today the average worker’s tenure is just 4.4 years, according to data from the U.S. Bureau of Labor Statistics with expected tenure of the workforce’s youngest employees at about half that. The average cost of replacing an employee amounts to just over 20 percent of the person’s annual salary according to the Center for American Progress. That can mean millions of dollars for some organizations. So why does employee retention seem to be getting worse?

Here are four reasons why employee retention is becoming more challenging

1. Strong Economy

Employee Retention
The US economy is hot, and isn’t showing signs of cooling off. That’s a good thing right? Unless you’re trying to hire and retain good talent. The economy is growing and Forbes expect an even stronger economy in 2018.

In May of 2017, job openings exceeded hires, meaning there are more jobs available than can be currently filled, according to the US Department of Labor. Quit rates are also increasing accordingly as workers are finding better opportunities in a better economy. With unemployment rates falling and job opportunities increasing, the power is shifting out of the hands of the employer and into the hands of the employee. Organizations can no longer assume that people NEED them. Top talent will go wherever they choose and with whomever offers them the best fit culturally and financially.

2.Changing Workforce

Millenials, it’s always about those darned Millenials, right? Millennials (adults ages 18 to 34) recently became the largest generation in US Workforce.
Ninety-one percent of Millennials expect to stay in a job for less than three years, according to the Future Workplace “Multiple Generations @ Work” survey.

Younger workers historically have lower tenure rates and are more willing to bounce from job to job. Most younger workers are more mobile with less obligations holding them down. Many aren’t married, don’t have kids, and don’t own a house yet. This frees them up to try new things and live in new places. They are also looking for growth opportunities early in their careers to set them up for success in the future. Younger workers also tend to job-hop more than older workers as a means to quicker career advancement. Now that they comprise the largest segment of the workforce, expect to see the overall tenure rate to fall.

3. Technology

Technology makes it easier for people to instantly find and apply for new job opportunities. A few decades ago workers turned to the want ads in newspapers to find jobs. Hot jobs included titles like typists, switchboard operators, mimeograph repair technicians (what?), keypunchers (Doesn’t everyone punch keys nowadays?), and elevator operators. Newspapers even had separate job listings for men and women.

smartphone user

Today’s available jobs sound more like Web Developer, Content Marketing Manager, or Search Engine Optimization Specialist. Job seekers no longer turn to newspapers. They turn to the Internet and sites like Indeed, Monster, Glassdoor, and LinkedIn. Qualified job seekers don’t even have to seek nowadays. They can sit back and receive email or text alerts for available jobs that might fit their skill set or interests. Madness I tell you! Employees can browse job sites directly on their smartphones during lunch hour, in the break room, bathroom, or at their desks.

4. Side Incomes

Making money in your pajamas is the true American Dream, right? Non-traditional side incomes are ending the nine to five job where employees once made the slow climb in a company as the once accepted career path. Freelancing and self-employment are ways that modern-day workers are pulling in extra money or even a creating a full time living. People can now start a business at the drop of a hat and at little cost. Bloggers, YouTubers, Esty’preneurs, and more are setting up shop and producing content online pulling in viewers, customers, and advertisers galore. Shay Carl’s family YouTube channel brings in over $1 million per year by simply filming and posting daily videos of their family’s life. According to Craftcount, the successful Etsy shop, ThinkPinkBows, an online shop selling baby hair and clothes accessories, brings in $2 million in sales. Many people are waiting to leave the traditional workforce as soon as their online side-business can replace their income. It’s the American Dream served up on your personal computer in your very own living room.

What can organizations do to improve employee retention?

Now, more than ever, organizations need to focus on the overall Employee Experience. The Employee Experience consists of all of the experiences an employee has, whether predicted or not, that become pivot points or moments of truth. These experiences shape an employee’s beliefs about the company, its leaders, the brand, and the employee’s overall success in the organization. Consider these questions: team employee experience

  • Does your hiring experience excite applicants or does it require them to jump through a series of “hoops” where they feel lucky if they receive any communication from HR.
  • When new employees are on-boarded, do they feel prepared to be successful or are they thrown into the pool to learn how to swim?
  • Are employees excited and energized as a result of performance reviews or do they dread the process?
  • Are your employees engaged by their work and the mission and values of your organization or are they working for the weekend?
  • Are you using people analytics to understand how your Employee Experience is impacting your business metrics?

Start by finding out how these experiences are perceived by your employees and take the steps needed to improve. Become forward thinking, similar to those in academia who embraced mobile devices and integrated them into the learning process rather than banning devices. They understood it would require additional preparation to make class time more interactive and interesting so as not to compete for attention with mobile devices.  The current job market is in a similar situation. What got you here, will not get you there.

Employee Engagement Survey

VIDEO: 5 Employee Engagement Best Practices


5 Employee Engagement Best Practices

In the VIDEO: 5 Employee Engagement Best Practices I share 5 employee engagement best practices from our 2016 State of Employee Engagement Report.

To compile this report, we surveyed HR professionals from over 200 organizations around the world on what they were doing to address employee engagement.

Join the WEBINAR: “Employee Engagement Survey Best Practices” and get HRCI or SHRM credit

For one of the questions, we asked, “Based on any employee survey results over the past 3 years, has the overall level of employee engagement in your organization trended upward, stayed the same, or gone down.” 32% of organizations reported engagement trending upward, 28% stayed the same, and 17% reported engagement had actually decreased. 

Companies with Employee Engagement Trending Upward


When we looked at the 32% who reported engagement trended upward over the past 3 years, here is what we found:


1.         Successful companies consistently measure employee engagement.

Most companies with rising levels of employee engagement have measured it at least every year for the past three years or more.


2.         Successful companies do better at involving managers in the action planning process.

Companies with upward trending levels of employee engagement also reported that more managers are involved in action planning.

Involve Managers in Action Planning

3.         Successful companies train managers on employee engagement.

Training managers on employee engagement, and training in general, were two similarities among companies with rising levels of engagement. So investing in the development of your managers pays off in increased engagement.

Train Managers on Employee Engagement

4.        Successful companies measure the ROI of employee engagement.

Specifically, companies that compare their engagement efforts to retention and other performance metrics do better at increasing engagement overall.

Measure the ROI of Employee Engagement

5.         Successful companies work with an outside provider.

Almost 60% of companies with rising levels of engagement report that they partner with service providers to enhance employee engagement. So if your employee engagement program has stalled, you may benefit from the expertise of outside engagement professionals.

Companies tend to work with Employee Engagement outside partners

Want to learn more? Download our 2016 State of Employee Engagement Report to learn about other best practices and to see how your organization compares. This 58-page report shows specifically what organizations are doing to measure and increase employee engagement. 

Take a look at more videos to assist in building a better organization:

VIDEO: 5 Employee Engagement Best Practices

VIDEO: Employee Satisfaction and Engagement. What’s the Difference?

VIDEO: The Influence of Managers on Employee Engagement

VIDEO: The Impact of 360-Degree Feedback Coaching


Thanks for reading or watching and best of luck in your efforts to create an engaging workplace.

Employee Engagement Survey