Post-pandemic talent exodus could cost up to £17bn
Businesses are sleepwalking towards a costly talent exodus, with four in ten employees (38%) looking to change roles in either the next 6 or 12 months or once the economy has strengthened – rising to 55% for 18-34 year olds. That’s according to new research from Personio, the all-in-one HR software solution, which is calling on businesses to prioritise their people as we emerge from the pandemic, or risk paying the price.
The research – based on a survey of 500 HR decision makers and 2,002 workers across the UK and Ireland – finds that while nearly half (45%) of employers are worried staff will leave once the job market improves, only a quarter (26%) state that talent retention is a priority for their organisation over the next 12 months – suggesting many are leaving themselves vulnerable to huge costs.
In fact, economic analysis reveals that, overall, the cost of additional staff turnover over the next 12 months could amount to an estimated £16.9 billion toll on businesses in UK and Ireland – equating to £10,076 per business – with SMEs alone facing estimated costs of up to £5.8 billion.
Resignation reasons
When it comes to reasons for leaving, the research uncovers a worrying disconnect between employers’ perception of what will encourage their staff to leave and their employees’ reality. Whilst employers are right to believe that a pay freeze or cut (28% HR decision makers vs 22% employees) and a worsening work / life balance (20% HR decision makers vs 23% employees) are key factors that could cause workers to look elsewhere in the near future, they drastically underestimate the pushing power of toxic workplace culture. Almost twice as many employees than HR decision makers consider toxic workplace culture to be a significant push factor (12% HR decision makers vs 21% employees).
For employees looking elsewhere, the top two most influential factors forcing them to look elsewhere in the next 12 months are a lack of career progression opportunities (29%) and appreciation for the work they do (29%). However HR decision makers believe these factors to be less significant, with only 17% and 15% stating lack of career opportunities and appreciation to be push factors, respectively.
Indicative of a broader disconnect that could be contributing to a lack of loyalty amongst employees, the research also finds that employers believe they have supported teams better than employees suggest they have. HR decision makers are over twice as likely as employees to rate their business’s support for career development as ‘good’ (64% HRDMs vs 30% employees), and more likely to see its support for work / life balance (70% HRDMs vs 53% employees) and mental / physical wellbeing (68% HRDMs vs 44% employees) in a positive light.
Hanno Renner, co-founder and CEO of Personio said: “The last year has been a challenging one for businesses and HR teams who have often found themselves ‘firefighting’, dealing with multiple new tasks and concerns. For some, this has caused other areas such as people strategy to fall to the wayside – but this negligence comes at a cost. Falling out of touch with the workforce’s problems and priorities means that not only could people be more frustrated and ready to resign, but employers will be poorly prepared to prevent people leaving – resulting in lost talent and productivity, and damaged employer brand.
“As businesses look to emerge from this crisis in a position of strength and turn the tide on the costs of a potential talent exodus, they now need to come up with a long term people strategy. By prioritising their people and taking a more strategic approach to people management, employers can prevent an impending talent drain and drive their business performance as well as the wider economy.”
Ross Seychell, chief people officer at Personio said: “It’s not surprising that people are looking to move roles as the economy improves, as many people have stayed put and put job changes on hold while the labour market was more uncertain. However, now, as the economy recovers and people have more confidence in the job market, not only will people have more opportunity and confidence to leave their jobs for pastures new, but burnout and frustration with lack of employer support during the pandemic may push them out the door. As employers plan their return to the office, they should make sure to handle this process with care and consideration.
“At a time when employees are ready to walk, any change that’s poorly managed could risk setting off a raft of resignations. At this decisive moment, it’s critical that employers involve their employees in what the future of work in their company should look like in order to avoid yet more disconnect and find a way forward that works for the whole business and its people.”
Looming productivity drought
As well as overestimating how well their organisation has handled the pandemic; the research found that employers could also be overestimating their team’s productivity. Three in ten employees (31%) state that the pandemic has made them more productive whilst at work, but a similar proportion state their productivity has fallen (28%). This is notably different to what HR decision makers believe they have seen: over half (52%) say they have noticed an increase in employee productivity, compared to a third (33%) who have noticed a decrease due to the pandemic.
Among businesses in the UK and Ireland that said they suffered productivity losses over the past 12 months, this is already estimated to have caused a significant drop in economic output of around £3,465 per employee, on average – going up to £4,016 per employee in medium size businesses. Meanwhile, on a national scale, overall productivity losses are estimated to have cost UK and Irish businesses £8.176 billion.
Employers’ optimism might mean they’re failing to recognise an impending productivity drought, especially when they may not understand the reasons behind any dips in productivity. HR decision makers are most likely to believe that external factors are driving poor productivity or performance, such as distractions when working (25%) or managing childcare (24%). Employees, on the other hand, are most likely to attribute productivity loss to factors related to their work, such as low motivation and morale (28%), or burnout (22%). Both agree that zoom fatigue is a major productivity drain (19% employees, 26% HRDMs).
The full report ‘Counting the Cost: How Businesses Risk a Post Pandemic Talent Drain’ can be downloaded here.
Top 10 reasons why employees are looking for another job over the next 12 months:
- Lack of career progression opportunities – 29%
- Not enough appreciation of the work I do – 29%
- Poor management – 25%
- Pay freeze/cut – 23%
- Boredom at work – 23%
- Poor work/life balance – 22%
- Toxic workplace culture – 18%
- Lack of learning or development opportunities – 17%
- I want to move to a new industry – 17%
- No bonus – 15%
Top 10 factors that HR decision makers think could cause employees to leave the company in the next 6 months:
- Pay freeze/cut – 28%
- Worsening work/life balance – 20%
- Being furloughed – 18%
- Being asked to go back to the office full time once restrictions have lifted – 18%
- Reduction of benefits could cause employees to leave – 18%
- A cut back of career opportunities – 17%
- Colleagues being furloughed / made redundant – 17%
- Wanting to move to a different industry – 17%
- No bonus – 16%
- Poor management – 15%
