Employees Are Leaving Firms at an Increasing Rate, Here's Why It Matters

The corporate world is gradually slipping into disarray. Companies all around the globe—conglomerates and small businesses alike—are experiencing an exodus of employees. Many of these employees leave on their own volition, and no form of cajoling or encouragement will dissuade them from resigning.

According to the Bureau of Labor Statistics, a staggering 48 million people tendered their resignations voluntarily in 2021 — a number that was previously unfathomable to imagine.

And this trend doesn't look like it will slow down soon.

PwC’s Global Workforce Hopes and Fears Survey 2022, which draws insights from over 52,000 employees across 44 countries, found that 18% of employees seriously consider dumping their present employers. A further 16% of the respondents plan to leave their current place of employment—either permanently or temporarily—indicating an eventual worsening of the attrition rates among the employees further down the road.

So, if you think “The Great Resignation” is over, you are mistaken. Because the phenomenon is still here and still gathering speed. Employees are leaving at an alarming rate, and here is why it matters:

What’s causing employees to resign?

Any time a company loses more than 10% of its employees in any given year, it's a major cause for concern. High employee attrition rates may not always be due to company policies or problems with management; they could also be the result of the cutthroat nature of the industry.

Companies battling high attrition rates need to find out why employees are resigning in droves. Here are the top reasons for increasing employee resignations:

1. Unrealistic expectations and unreasonable workloads

Several companies put their employees through the grinder by strapping them with unrealistic goals. Interns and new hires especially bear the brunt of this practice, although it's also not common for long-term employees to buckle under the pressure.

Expecting employees to go above and beyond their job descriptions and take on additional responsibilities will lead to workplace dissatisfaction — particularly when they are expected to do it without a corresponding bump in their paychecks.

2. Work Culture

In a company that doesn't foster a work culture that makes the employees feel like they belong, the employees will keep an eye out for greener pastures. Employees may feel undervalued if they don't get appreciated for a well-done job or humiliated if they are constantly reprimanded for little mistakes. They might feel embarrassed and helpless if they don't receive help from their co-workers or superiors.

A toxic work culture breeds resentment, lack of motivation, and low morale. Employees will lose all motivation to show up for work and eventually quit.

3. Lack of growth opportunities

When an employee joins a company, they do so to be a part of it. As the company grows, they expect themselves to grow too. They hope to see their careers flourish and rise on the career ladder. Without opportunities to grow, they feel stuck in the proverbial rut. Employees disgruntled with the lack of growth prospects will not think twice about switching to another company with good growth prospects.

4. Unsatisfactory pay

The lack of fair pay is closely linked to the lack of growth opportunities. When put together, it's a recipe for disaster. Just as employees expect to advance in their careers, they also expect periodic increases in their paychecks. With inflation and rising living costs, a salary raise remains the only way employees can support themselves or find new and exciting opportunities elsewhere. And unless you address any salary-related concerns effectively, be prepared to see your company turn into a revolving door for your employees.

5. Lack of faith in management

Employees want to be treated as a family, have their opinions valued, and have their voices heard. They wish to be cared for and respected by the management. When management of a struggling business doesn't pay heed to their suggestions or displays zero inclination to address their grievances, employees disconnect from the company's fate and question their place in it. Lack of faith in the middle and top management is often cited as a primary reason for employees’ discontent with the company.

6. Under-appreciation and non-recognition

High performers feel betrayed when they have given their best and don't get appreciated for their performance. It makes them feel overwhelmed and under-appreciated. They want recognition for their performance and lose their fire to perform if they don't get any. Underappreciation is the first seed of employee discontentment. It leads to disenchantment with their company, leading disgruntled employees to walk out the door.

7. Incompatible workplace policies

Companies must continually adapt to external demands, and one way they respond to it is by changing their workplace policies. This change could be made by increasing the working hours, altering their overtime terms and conditions, or reducing the number of sick and paid leaves. If the management hasn't gotten their employees on board with these changes, the Employees will feel blindsided and may jump ship to another company with healthy work policies.

8. Poor work-life balance

A healthy work-life balance is vital for the mental well-being of employees. They prefer that their work remains separate from their personal life and that their work should never intrude on their time. But if employees constantly stay back after work to beat that impossible deadline or always-on work calls even when they are with their family, they gradually burn themselves out.

9 .Hesitation in returning to work

As the pandemic nears its end and the world gradually settles down, several companies want their employees to return to their offices for work. And to be fair to the companies — not all of them can sustain themselves on the hybrid or the work-from-home models. But some employees may get too comfortable working from home and would rather risk their employment than return to the offices.

A high rate of attrition has many undesirable consequences. It's not just the immediate effect that's damaging; the problem can get worse over time unless the company fixes it.

How does the attrition rate impact businesses?

Every company faces this issue at least once in their lifetime, and the nature of the problem itself is not that alarming. However, if a company experiences high employee turnover for a prolonged period, it will have unfavourable consequences for the business.

• Hiring costs escalate...

Companies spent an average of $4,425 per new hire. These include advertisement and recruitment costs and background checks and may consist of other pre-employment tests such as mental acuity and psychological testing.

When staff turnover is high, a company must continually find replacement staff, which increases cumulative hiring costs. It can take up to six months or more for a company to recoup its investment in a new hire.

• ‍... as does the cost of training.

Finding replacements and hiring new employees is just the beginning. They need to be trained and integrated into the workplace gradually. This onboarding of employees is a long and gruelling process and can last anywhere between one month and four months.

Training Magazine reported that companies spent $92.3 billion on training in the 2020–2021 fiscal year, with the average expenditure on a new hire coming to $1,150 for small businesses. Training expenses include some on-the-job training, skill development, cost of orientation, etc.

• ‍It puts stress on present employees.

It takes up to three weeks for new employees to get up to speed with their job responsibilities and truly become productive. The present employees fill the void during this time and seldom get paid extra for the additional duties.

This runs the risk of the vicious cycle repeating itself. As more and more employees leave a company, the remaining employees have to pick up the slack and get overworked while remaining underpaid.

• ‍Company culture deteriorates.

Watching the other employees leave brings down the morale of the entire workplace.

If the employees still at the company were close to those who left, they may feel unhappy or angry since they no longer have a friend at work. At best, they will feel resentment toward the company or management, and at worst, they will consider seeking employment elsewhere.

If the workplace wasn't already toxic, it could become so.

• ‍Loss of face and credibility

High employee turnover will thrust the management into a severe trust crisis.

Workers will distrust and second-guess management decisions, even if they are solid and taken in good faith. It will be hard for management to impress their employees with policy changes if they have lost their credibility.

There is also the risk of past employees hopping on to employer rating services like Glassdoor and social media and ripping apart their ex-employers. In today's business landscape, where the goodwill of a company is crucial, losing credibility can have disastrous effects.

How to keep employees from leaving

The importance of preventing employee walkouts should be abundantly clear. The best way to do this is by keeping employees happy and satisfied. If you have read this article carefully, you already know what a company must do to keep its employees from leaving.

Even the most loyal employees can leave for different reasons, including not being paid on time or having an office with too much noise or distraction that prevents them from getting work done efficiently. However, it is possible to take several steps to prevent employee walkouts.

• The first step is to create a culture of trust in the workplace. This can be done by showing employees that their feedback and ideas are valued while also ensuring they have professional development opportunities.
• Employees find it challenging to give their all when the management keeps moving the goalposts around. Therefore, companies must set specific targets and communicate their expectations. The outcomes are only as good as the goals you set.
• Companies also need to ensure clear expectations for performance and compensation and strong accountability for both. This will help employees know what they must do to advance in their careers and help employers weed out those who aren't up for the challenge.
• Creating an environment where people feel comfortable taking risks and trying new things without fear of reprisal or ridicule will also help. This allows employees to get creative and come up with better solutions.
• As tasks become more complicated and interrelated, employees appreciate detailed feedback and constructive criticism. Employees must feel heard by their supervisors more frequently than twice a year. There is a positive correlation between employee engagement and regular feedback. The more frequent the feedback, the more invested the employees would be.
• Companies must also put in efforts to highlight growth potential to the employees. If employees understand how they can get from point A to point B in their careers, they are more likely to remain invested in the company. Management must be available to answer questions from the employees, even if they believe it is not prudent to answer them at this particular time.
• Conducting fair and unbiased exit interviews will help companies gain insight into why employees are deserting. This insight will help companies improve their hiring practices and prevent future employee turnover.
• And lastly, companies must learn to leverage the power of appreciation to supercharge employee morale.

One last word

There are many reasons for an employee's departure, but one thing remains constant: employees are leaving in more significant numbers than ever before. Some cite the lack of job security in the modern economy as a primary factor in their decision to leave their job, while others leave because they are unhappy with the way their company is being run.

Whatever the reason, the result is the same: fewer people working for the currently operating companies than ever before. This is not only a problem for the companies themselves, but also the global economy as a whole. Businesses need to keep their employees content with their jobs. And this will be only possible if their concerns are addressed promptly. After all, it’s the employees who make a company.