Why your people are leaving

5 min readMar 24, 2022

People move on. From friendships, to hobbies, to jobs, transitions are inevitable. When you are trying to operate a profitable business, this reality can feel a bit overwhelming. Employees leaving can quickly become a black hole for your profit margin. Conservative estimates from the Bureau of Labor Statistics put the cost of replacing an employee and training their replacement between one-half and two times their annual salary.

For a 100 person company with a national average and average salary of $50,000 that comes out to somewhere between $660,000 and $2.6 million each year. Employee retention is a $1 trillion problem in the U.S alone.

Let’s go back to the fact that people move on. While this is simply reality, that does not mean that leaders should resign themselves to it. Employees leave for a reason, and understanding why people are leaving your company is the first step toward getting them to stay. So, why do people leave?

You.

Leadership is a vital component of employee retention. In a study of over 1 million US workers, Gallup discovered that 75% of employees who left so voluntarily did so to sever ties with a boss, not their role or company. [1]

This demonstrates a larger truth. Leadership and their ability to cultivate healthy relationships with their employees is a vital component of retention. If employees lack trust or feel unsafe in their current managerial situation, you can expect job dissatisfaction and, eventually, a desire to leave. In fact, 79% of surveyed workers found that bad leadership would be a major factor in their quitting decision, while 40% said they would return if their boss was replaced!

Work Flexibility

Let’s just put it out there — in a world forever changed by COVID-19, there has been a major shift in the workforce and their desire to work in a traditional office setting 5 days a week. As mandates have lifted and companies have begun their return to work initiatives, it remains to be seen how it will impact retention. But here is what we do know:

50% of companies have seen a rise in remote work requests
70% of millennials would leave a job for one boasting more flexible work options
37% of all workers would switch jobs if they could work off site at least part of the time
95% of employees would be willing to adjust the way they work to enable remote work [2]

As the workforce increasingly demands more flexible working environments, companies will have to make a decision that will balance their mission and profitability with the demands of their teams.

Culture

How would you define culture? Far too often, it is conflated with fun work events, happy hours, free snacks, and humorous coworkers. The reality is that culture is far more than a happy, positive climate around the office. Instead it is made up of various dimensions such as feeling valued, alignment with role and mission, leadership, relationships, meaningful work and more.

Employees who feel misaligned with culture demonstrate a serious lack of engagement, which in turn plays directly into their intent to stay with your company. A survey of 34 million workers worldwide analyzed engagement and found that there was a 9 month period between employees feeling disengaged and then choosing to leave, while engaged employees were 59% less likely to seek out a new job over the next 12 months. [3]

Culture also has an impact on the psychological safety and mental health of your teams. An often understated issue, mental health studies have indicated that 60% of men cite mental health concerns as a reason why they would want to leave their role and 60% of all employees will face work-related mental health issues during their tenure. [4]

Creating a culture that aligns and supports your team is invaluable to improving your retention rates. Here are some additional resources to check out if you have questions on healthy culture.

Career Dissatisfaction

Unhappy employees are more likely to quit. That much makes sense. But what drives an employee to be unsatisfied with their role? One key component is a lack of career growth opportunity:

Harris Poll research found that 33% of workers who left their position did so because they did not learn new skills.
Only 26% of employees felt their employers development tools actually delivered
40% of workers leaving their companies cited little hope of future career development
42% of workers are open to new opportunities [5]

If you want to retain your best people, it will require an intentional plan to develop individuals and create career plans that excite them to keep investing in your company!

The money question

You knew it was coming and as a business leader you can’t really get away from it. Your employees invest their time and efforts and in return there are some expectations. Labor is a highly competitive market at the moment and job seekers hold more leverage when it comes to demanding pay, which also means they have less holding them back if they are considering moving jobs. While compensation and benefits aren’t the only reason people leave it is a significant one, and there are some important things to note:

Equity: disparity in pay can cause strong negative emotions. This includes gender inclusivity — 40% of women were unsatisfied with their pay vs 20% of men in one study
Lack of benefits: 16% of those leaving jobs did so because their employer did not offer benefits like health insurance, a 401k and other perks
The most important benefits vary by demographic, so consider your target workforce when crafting a plan and do your research. [6]

Leadership, flexibility, culture, career dissatisfaction, and compensation. Just five of the many reasons that can shape an employee’s desire to leave your company or continue to dedicate themselves to it. But which one is impacting your company most? Well one way to find out is to ask.

Consider conducting exit interviews when someone does leave and identify their reasons. As for your current employees, keep an open dialogue going. This can be a difficult topic to breach and requires a culture of trust and transparency. Start building it today, and drive your retention numbers and profitability in the right direction.

If you have any questions about employee retention, culture, healthy leadership, or our digital tool for gathering cultural data and helping leaders take impactful action, simply click here to contact us.

References:

McFeely, S. (2021, December 7). This fixable problem costs U.S. businesses $1 trillion. Gallup.com. Retrieved March 24, 2022, from https://www.gallup.com/workplace/247391/fixable-problem-costs-businesses-trillion.aspx#:~:text=The%20cost%20of%20replacing%20an,to%20%242.6%20million%20per%20year.
Agrawal, D. W. and S. (2021, December 6). Well-being enhances benefits of employee engagement. Gallup.com. Retrieved March 24, 2022, from https://www.gallup.com/workplace/236483/enhances-benefits-employee-engagement.aspx
Fenton, A. (n.d.). Six in 10 men want to quit their jobs because of poor mental health. Yahoo! Finance. Retrieved March 24, 2022, from https://uk.finance.yahoo.com/news/six-in-10-men-want-to-quit-their-jobs-because-of-poor-mental-health-101340673.html?guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAGPNNm89AaD6TcA2zFDOJ_RrbQRbh6oOR7f1EVvof19A2T5v-iSiCarObKGUW4NJHkq6YuNXkTVUopXBoy4QnyJIWsFxlKQTf4GWNpfBN3eBcuQbKKlHeVXPGTDp28yxfJ_iCmTSw-YEc-obG9PCcARLGC6wbBTS_oYwSuq1UBPk&_guc_consent_skip=1648131733
Mann, A. (2021, May 10). The dream job. Gallup.com. Retrieved March 24, 2022, from https://news.gallup.com/businessjournal/204533/dream-job.aspx
Morris, S. (2022). Lack of career development drives employee attrition. Gartner. Retrieved March 24, 2022, from https://www.gartner.com/smarterwithgartner/lack-of-career-development-drives-employee-attrition
Motivations for employees quitting their jobs. Business News Daily. (n.d.). Retrieved March 24, 2022, from https://www.businessnewsdaily.com/9389-reasons-employees-quit.html