A new study, Why Do Workers Quit?, conducted by Glassdoor Economic Research, finds employees that stagnate in a job too long are more likely to leave their employers rather than move to a new role within the company. The economic research arm at Glassdoor, the job site, looked at more than 5,000 job transitions from CVs submitted to the site and combined that data with company reviews and salaries shared by employees to understand the statistical impact of various factors on employee turnover.
The report also finds high employee satisfaction, better opportunities for career advancement, the quality of an employer’s culture and values and higher pay lead to better employee retention. This comes as a valuable warning sign to employers because on average, employee turnover costs 21 percent of an employee’s annual salary. Workplace factors like work-life balance, senior leadership and the quality of compensation and benefits packages have no statistical impact on employee turnover.
“Employee turnover is costly for employers. Although you can’t control everything when it comes to turnover, Glassdoor data confirms there are many ways you can control whether employees stay or go. Employers that work to improve company culture, offer competitive base pay and regularly promote and advance employees into new roles will retain them longer,” said Dr. Andrew Chamberlain, chief economist of Glassdoor. “In addition, these findings tell recruiters and employers looking to hire what to focus on to bring candidates in the door. For example, focusing on passive or active candidates that have been in their roles for quite awhile or are at companies without strong company culture could help bolster recruiting efforts.”
High Satisfaction with Company Culture Retains Employees
A recent academic study showed a strong employer brand leads to more applicants, and this study reveals the same is true if employers want to retain existing workers.
A 1-star increase (on a scale from 1 to 5) in the overall company rating on Glassdoor boosts the likelihood an employee will stay at their employer by a statistically significant 4 percent when they transition to their next job. In addition, past research has shown that both the quality of career opportunities and culture and values of a company drive overall employee satisfaction.
This study confirms that these factors also drive retention. A 1-star increase in career opportunities and culture and values ratings on Glassdoor raises the odds that employees will stay at their companies when moving into their next role by 5 percent, respectively.
Three workplace factors studied did not have a statistically significant effect on employee turnover: work-life balance, senior leadership and compensation and benefits ratings.
Increased Pay, Increased Likelihood of Employee Exits
Salary continues to be an important part of an employee’s decision to move into a new role. According to our study, when changing jobs, employees earn a 5.2 percent pay increase on average when they make a job transition. The statistical analysis in this study found that a 10 percent increase in base pay increases the odds an employee will stay at the company by 1.5 percent.
“While it is important to provide upward career paths for workers, a simple job title promotion may not be enough. Maintaining competitive base pay is an important part of reducing turnover,” Chamberlain added. “For recruiters, understanding competitive market value for potential candidates could be the difference between making the hire and losing the talent to an internal move within their current company.”
Job Stagnation Leads to Turnover
While the average worker spends 15 months in one role, employees differ when it comes to the industries in which they work. Workers in government (18.6 months), aerospace and defense (17.3 months) and media (16.9 months) spend the most time in their roles, while employees in real estate (13.3 months), biotech and pharmaceuticals (12.7 months) and construction, repair and maintenance (10.6 months) turn over more quickly. Stagnating in a role too long can impact retention. Adding an additional 10 months in a role increases the chances of an employee leaving the company for their next job by 1 percent – a statistically significant finding.
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