Thursday, May 26 , 2022 | Karen Kislin, Strategic Advisor
Why are so many people quitting their jobs, and what can financial institutions do about it? According to the Bureau of Labor Statistics, more people quit their jobs in 2021 than ever before, and the first quarter of 2022 show no signs of this trend slowing down. Understanding the “Why?” behind the workforce leaving is the first step for organizations in solving how to reengage the workforce. Reducing the degree of attrition and fostering an engaged employee base is achievable when leadership takes action to nurture a culture of trust.
According to recent research from Raddon, the predominate reason for the workforce changing jobs is because workers are seeking higher pay, followed by more flexibility. These top two reasons for changing jobs align with two fundamental needs: having enough money to pay for bills and knowing that we are cared for. As inflation continues, the need for enough money to cover expenses will increase, which is why we will continue to see higher than average quit rates as people seek new, higher-paying jobs.
Source: “The Battle for Talent,” Raddon Research Insights, 2022
A recent article from Vox suggests that the ongoing elevation of quit rates has to do with a shift in who is actually quitting as time goes on. A predominately younger workforce made up of people who traditionally hop from one job to the next for greater pay and more experience initiated the onset of the “Great Resignation.” The majority of these quits occurred in customer-facing service industries such as food service and retail. Historically for financial institutions, the position with the greatest turnover is the teller, which aligns with this trend. The stresses of the pandemic and the increased customer service expectations of frustrated customers are two major reasons why this workforce is leaving. The availability of flexible work options such as driving for DoorDash, Uber and Lyft, with seemingly better pay, attracted some of this audience. Additionally, nontraditional day-job options or “side hustles” seemed to gain popularity over this time.
Well into the second quarter of 2022, the quit rates seem to have shifted to the more experienced workforce. The writer of the Vox article highlights the change in quit rates from the first quarter of 2021 to the first quarter of 2022 in the graph below.
Source: Molla, R., “The Great Resignation is becoming a ‘great midlife crisis,’” recode by Vox, May 3, 2022 – https://www.vox.com/recode/23042785/the-great-resignation-older-tenured-higher-paid
The pandemic environment seems to have impacted this mature workforce’s reflections on work-life balance and their own mortality. More knowledge-based employees are finding flexible work options, starting their own businesses or consulting instead of returning to the office. Having the security of a spouse who can cover health care benefits is aiding this shift. It also appears that more baby boomers are deciding to retire and even retiring early. According to a survey Raddon conducted with 90 different credit unions and banks, only 22 percent of the overall quit rates is due to retirement.
Better pay and more flexibility are merely the top two reasons employees have referenced for changing jobs. The reality is, there are several contributing factors as to why so many are changing jobs or leaving the workforce entirely. The first step in helping to reduce the degree of attrition is to ask the hard questions and be willing to accept candid feedback from employees. Eighty-two percent of financial institutions surveyed by Raddon said they measure employee engagement annually. Among those, 70 percent reported an increase in engagement in 2021.
Source: “The Battle for Talent,” Raddon Research Insights, 2022
First, every organization should be asking their employees for feedback on a regular basis. Second, if your organization does survey employees and those results show an increase in satisfaction while your annual attrition is greater than 20 percent, there is a serious breakdown in trust in your company. This would suggest that employees are not comfortable providing candid feedback. Also, it is possible that the survey does not ask the right questions. Leaders must have the courage to ask for candid feedback. In order for employees to trust the process, they must see their leaders actively responding to the feedback without negative repercussions. Ultimately, leadership must make the necessary changes to improve the organization’s overall engagement.
National research from Raddon and other entities, regardless of industry, is undeniable. Companies must be willing to pay for the talent they desire. As resignations continue, addressing existing merit increases is key to improving employee engagement. Being able to promote existing employees and develop future leaders is another way of retaining quality talent. Financial institutions should examine the degree of their employee development opportunities, including formal leadership training, as well as opportunities to work with other departments throughout their workforces. Some employees may be eager to learn new things and be exposed to different challenges, while others require opportunities to build greater connections with new colleagues.
To address the workforce’s desire for greater flexibility and hours, financial institutions need to challenge their status quo. If your organization allowed knowledge-based employees to work remotely during the onset of the pandemic, consider maintaining that option or instituting a hybrid workplace opportunity. For customer-facing associates, consider a hybrid position. For example, a teller position could be in-person at the branch three days a week. The other two days (three if your organization is open on Saturdays), they might be able to work remotely as a call center representative or answering interactive teller machines.
This hybrid approach, combining in-person and remote opportunities, appears to be a common trend throughout service industries. The challenge for leaders is managing engagement in this new environment. The number one action that improves employee engagement is aligning the employee’s job with the company’s mission, vision and values. Your company mission must be a living, breathing organism, and not just words on a wall at the corporate office. Leaders must be very intentional in their words and actions so that they actively demonstrate the mission. Every goal and every employee evaluation must align with the mission and use the same language as the mission. The words of your mission should occur naturally in everyday conversations among employees. This is what it means to cultivate your culture.
Leaders must comprehend the degree of change their workforce has experienced over the last two years. That change is only compounding and has ultimately transformed your employees’ mindsets, desires and priorities. What worked for you in 2019 to engage and attract quality talent will not be as successful today. Financial institution leaders must make their mission and values central to all business decisions and goals, personify them with their actions and make them visible through transparent communication and employee expectations. When leaders deliver on their promises and set examples of the expected values, they will nurture and grow a culture of trust.
Join us for the upcoming “The Battle for Talent” webinar detailing this research to learn more about how you can reduce attrition, retain quality talent and manage your company’s culture.