In America

As economy recovers, turnover begins to creep up

During the economic recession, which began in December 2007, many organizations encountered budget constraints, significant profit losses, and a steady loss of sales and customer loyalty. As a result, companies, large and small, were forced to reduce their employee headcounts and layoff hundreds, or even thousands, of experienced and dedicated workers, some of whom had been working for the same organization for 20 years or more.

Throughout the recession, layoffs were occurring at an exceedingly high pace and were nearing all-time records. If companies weren’t laying off their employees, they were likely reducing their salaries instead – and at alarming rates. At the time, some organizations were cutting back their employees’ paychecks by up to 25 or even 50 percent, just to make ends meet.

For many employees it was considered too risky to actively pursue new job opportunities in such a volatile job market. Even when their salaries and benefits were being cut, many opted to remain with their current employers for stability and security – and a steady, albeit diminished, paycheck. But, while employees may have stayed, they haven’t necessarily been happy.

With the economy signalling recovery, we’re now seeing signs that employees are feeling more confident and are starting to actively look for greener pastures. According to the BLS’ “Job Openings and Labor Turnover – November 2011” report, the number of voluntary quits rose from 1.5 million in January 2010 (the most recent trough) to 2.0 million in November. Will unhappy employees begin quitting in larger numbers to pursue more satisfying employment?

Some organizations place a premium on employee satisfaction and take formal measures to engage and retain their employees. According to Fortune magazine, despite increasing voluntary turnover numbers, some organizations retain roughly 95 to 98 percent of their employees annually. Since 1998, Fortune has released its “100 Best Companies to Work For” list, which includes companies of all sizes that serve a wide range of industries. Last year, organizations such as Scottrade, Dreamworks Animation SKG, and Zappos.com, were included on the list primarily for their annual job growth, which was typically much higher than the national average.

Aside from job growth, why were each of these 100 companies included on the list? And, why have a majority of the companies been included more than once or, in some cases, every year since the list was first published?

Quite simply, each company is dedicated to ensuring their employees feel valued and that they realize just how vital they are to their company’s success. Whether the companies offer substantially higher annual salaries than a majority of other nationally-based organizations, or extraordinary perks, a majority of their employees generally feel a sense of appreciation for their efforts, talents, and contributions. And, of course, that tends to lead to loyalty, as many employees have decided to dedicate their entire careers to their companies.

By offering perks such as sabbaticals, telecommuting, and on-site child care centers, most of the top 100 organizations had turnover rates as low as two or three percent from January 2010 to January 2011. But, the most compelling statistic of Fortune magazine’s report shows that the employers are also particularly loyal to each of their employees. According to Fortune magazine, 15 of the organizations have never had a layoff since they were first established – never!

In recent years, more and more American companies have been innovating with new programs to improve employee loyalty. As a result of offering their employees improved health benefits, improving their work-life balance and offering opportunities for growth, employee loyalty is higher than it ever has been. They are enjoying the responsibilities of their positions, striving to contribute more to their companies, and having more time to spend with their children and spouses.

Even as the economic forecast brightens, companies will struggle to take advantage of improving market conditions if they don’t have a strong, engaged workforce driving their success.