For many companies, employee satisfaction is considered as an important driver for success, and so it remains one of the top priorities for organisations globally. (Grigoroudis 72) However, it is becoming increasingly difficult for HR professionals to meets the varied needs of a workforce that is becoming more diverse than ever, with three generations of employees working together with their own distinct set of values and expectations. With resignation rates in the UK increasing steadily since 2012 and reaching a five year high in 2016 at 15.5% (Frith, 2017), it is the millennial generation which is proving the most difficult to retain. This essay will aim to discuss the reasons why employee retention is vital for the success of a company, and detail why there is a focus on millennial retention (characteristics?), as well as evaluating the ways in which businesses can best retain these employees.
Why is retention important?
For many companies, “employee turnover can be viewed as an indicator of stability” (Saridakis 1) and employee retention is a timely and relevant topic in the current adverse economic climate for businesses in both the private and public sectors. (Bowles and Cooper, 2012) This is because employee turnover within a company is often expensive and disruptive, as a study in 2010 revealed that turnover costs can range from 90% to 200% of the existing employee’s salary (Allen, Bryant and Vardaman, 2010). Also, as employee turnover within a company increases, Grotto et al states that the social fabric of the organisation is disrupted, intangible knowledge and skills are lost, operational effectiveness decreases, customer service and quality suffer, and customer satisfaction declines. (Grotto 445) This inevitably impacts the financial performance and stability of the company, so it is comprehensible why many business leaders and human resource professionals place emphasis on identifying the factors that influence employee retention and turnover to ensure that a motivated and engaged staff is retained within the business for as long as possible.
Why millennial retention is important?
So, it is evident that employee retention is a vital component of a successful business. It is a particularly relevant topic in relation to today’s workforce as it is becoming more diverse. It is made up of Millennials, who Robert Walter describes as today’s 20 to early-30-somethings who are already an important part of the working population, as well as Generation X (born 1960-1979) and the Baby Boomers (born 1940-1959) (Robert Walters 2). With such a diverse workforce, there is inevitably differing and distinct set of values, priorities and expectation from each generation of employees.
The millennial generation grew up during the Millennium period, a time of great change, and this inevitably helped to shape their expectations of life in the working world.
Characteristics? Vs stereotypes?
And, in turn, different in terms of retention? They bring wants and needs which differ greatly from the preceding generations.
This generation grew up during the Millennium period which helped shape their priorities and expectations of life in the working world. Therefore there are a few characteristics which separate them from older generations.
Why are millennials important?
It is clear that millennial employees have a unique set of priorities and expectations, shaped by the world they grew up in. Sindhar details that the millennial generation “currently comprise 35% of the UK workforce and are set to represent 50% of the global workforce by 2020” (see refs from page 1 KPMG) In this way, it is evident that millennials do, and will continue to have, a significant impact on the working world, and so, it is important that businesses learn how to attract and engage new millennials employees as they will “bring a new style and a new perspective to the workforce.” (Sujansky 3)
However, this is made difficult for companies as Millennials are known as the job-hopping generation as statistics shows that both the younger millennial generation and female millennials seem more compelled to explore other options. KPMG 13
It is therefore vital for them to understand how they can best retain their millennial employees. It is not an exact science but many studies have flagged up the most important things that many millennials consider when deciding to remain in their current role or move on. One such aspect is the fact that job security is one of the top priorities for millennials who are both employed and looking for a job. A report by Infosys and the Future Foundation (KPMG 12) found that 40% of millennials are anxious about the prospect of their job being outsourced or replaced by automation within the next five years.
A report by Robert Walters (7) also highlighted the importance of career progression for millennials, citing that 69% of them consider a clear path to progression as the most effective way of keeping them motivated and engaged in their jobs.
KPMG (11) also found that a work-life balance is “more important than ever when it comes to millennials,” ranking second after salary when determining the highest priorities when looking for a job.
Why high turnover?
In this way, there is a significant relationship between employee satisfaction and employee turnover in which “models of employee turnover almost universally propose a negative relationship between satisfaction and turnover.” Hom 1995
Therefore, it is important for employers to ensure their millennial employees are engaged and satisfied at work because, “unless organisations are willing to adapt, they risk losing billions of dollars to unwanted turnover and lost productivity.” (Sujansky 3)
For a company to successfully retain employees means that they are more satisfied in their role and so, less money is wasted on the everlasting recruitment cycle.
the reasons why millennials differ from the predecessors as well as detailing why there is a high turnover in millennials employees and their motivations in deciding whether to change jobs