Avoiding the Engagement and Retention Cliff

AVOIDING THE ENGAGEMENT AND RETENTION CLIFF How better career development can keep employees in place and on track. 2023 HR RESEARCH REPORT EBOOK SERIES

It’s still a tough labor market, and that’s not likely to change. True, the economy has slowed since the height of the Great Resignation — and AI and automation are de昀椀nitely taking the edge o昀昀 of some sta昀케ng shortages. But data from our 2023 State of Performance Enablement report shows that employee intent to leave stayed level in 2023 — coming in at 14% vs. 13% last year. Moreover, demographic trends and labor force participation rates predict that the talent squeeze is likely to persist — and even intensify as baby boomers continue to retire. Engagement is also fragile. In an environment of quiet quitting, Gallup has seen active disengagement increase in 2022 by two percentage points over 2021 and four points since 2020 — the lowest ratio of engaged to actively disengaged employees in the U.S. since 2013. Despite this, our 2023 survey saw a majority of employees stepping up their game on engagement and productivity The scramble for quali昀椀ed talent shows no over last year — with 60% of people reporting they always signs of letting up anytime soon. How can go above and beyond in their work — vs. only 41% in 2022. you engage and retain the great employees you have? Employees have signi昀椀cantly Employees who answered that they raised the bar on their expectations from Always Go Above and Beyond employers — and are more willing than ever to walk away if they don’t feel like they have a growth path. An uncertain economy means 41% 60% companies that can’t deliver on the promise of career growth and advancement are in danger of losing talented employees. 2022 2023 2 Avoiding the Engagement and Retention Cli昀昀

A motivated workforce is vital in any economy The reality is, no matter what the economy brings, winning and keeping great employees — and motivating them to do their best work — will always be top of mind. Even when the economy is at its slowest, having the right people matters. You need resilient, skilled employees who are able to be productive and quickly pivot to adjacent roles if one part of the business slows and another picks up. According to KPMG, organizations that attract, engage, develop, and retain top talent tend to drive the most productivity increases, e昀케ciency gains, and cost savings. And of course, when things heat back up, you need people who can get you back to speed quickly and even be able to jump out of the starting gate ahead of your competitors. Employees would prefer to stay and grow in place So what keeps employees motivated and on board? Our data shows that when companies make the e昀昀ort to proactively nurture careers and growth, it pays dividends. People overwhelmingly prefer to grow where they are planted. According to our 2023 research, 75% of employees surveyed said they would rather stay with their company to advance in their careers. 3 out of 4 employees would prefer to advance at their current company 3 Avoiding the Engagement and Retention Cli昀昀

Career development is a top priority for workers But make no mistake, advancing in their careers is top of mind for employees. Even as voluntary turnover is cooling, top performers are more than willing to walk away for better career opportunities. In fact, our research 昀椀nds a lack of career advancement and professional growth are the No. 2 and No. 3 reasons for employees to look for work. Career concerns are driving turnover intent. 2023 Want better pay or bene昀椀ts | 51% Career advancement | 35% Professional growth | 34% 2022 Want better pay or bene昀椀ts | 43% Career concerns can make employees leave, but the opportunity for career growth is just as e昀昀ective at helping them to stay. Workers in our 2023 survey cited Stress and well-being | 30% career advancement and professional development as big factors that keep them with their current organization. These 昀椀ndings are reinforced by a global Flexible work options | 22% survey of 32,000-plus workers by ADP, which found that 40% said career progression is the most important thing to them at work. Why are you thinking about leaving your job? (Check up to 5.) 4 Avoiding the Engagement and Retention Cli昀昀

Employees are frustrated with their lack of career development Unfortunately, many employees don’t have any choice BUT to go when companies and managers are not equipped to advance them in place. And this is an issue for a signi昀椀cant number of companies. More than half of employees don’t see a path for advancement in their current company — a lack of career advancement and professional growth are the No. 2 and No. 3 reasons why employees look elsewhere for work. It comes as no surprise that many don’t 38% feel supported by the organizations. In fact, only 38% of those surveyed in our recent report told us they think their employer fully supports their performance and career aspirations. And even more concerning, 16% of employees outright found their managers to be a hindrance to their careers. This points to the need for companies to get ahead on career development and proactively enable managers to both coach employees around careers and help employees establish and meet career goals as part of regular performance check-in conversations. 5 Avoiding the Engagement and Retention Cli昀昀

Employers must step up on career development Employers who don’t want to hit the engagement and retention cli昀昀 must take a more proactive approach to career development. This means laying the groundwork for important and regular career conversations between employees and managers — and also creating the supporting structure that demonstrates a path forward for employees. Demand for career opportunities is the leading edge of a new normal These are changes employers must get ahead of — and quickly — if they want to keep up with the evolving needs of their workforces. Millennials and Gen Z currently account for 38% of the global workforce — a percentage that will rise to about 58% by 2030 — and they are even more likely than their elders to be seeking career development. Voluntary turnover set new records in 2022 — particularly among younger workers. In fact, according to LinkedIn research, 72% of Gen Z and 66% of millennials are thinking about quitting — compared with only 55% of Gen X and 30% of baby boomers. According to Oliver Wyman data, while Gen Z is more willing to jump for better career prospects than older workers, 70% say they are both “loyal” to their employers and either actively or passively seeking new jobs. Our own Betterworks survey found that when career paths are there, Gen Z and millennials are not that much more eager to jump ship than anyone else: 72% of both Gen Z and millennials said they would prefer to advance in their current companies versus 77% of those 45-60 and 78% of those over 60. 6 Avoiding the Engagement and Retention Cli昀昀

Organizations can encourage managers to: Additionally, organizations can focus on: 1. Talk about careers: Managers should conduct regular conversations, at 4. Mapping and articulating clear pathways: Make sure paths for least quarterly, with employees around career development. development are clear to all. 2. Create a plan and take action: Managers can help employees to 5. Supporting managers with better infrastructure, tools, and training: identify and then take the steps that will build skills and advance Give managers the support they are looking for. their careers. 6. Making it easier for employees to advance: Workers can change roles, 3. Establish accountability: Managers can hold employees accountable try out new roles with low risk, and grow in place. to grow and themselves accountable for encouraging, guiding, and 7. Providing organizational support for changes: Get structures into place monitoring employee development. that will support job transitions both before and after they happen. 8. Proactively calibrate assessments: Ensure workers are being assessed fairly and positioned for advancement, and do this more than annually, if necessary, to retain your star performers. For a deeper dive into these tips, with actions your organization can take to step up on careers, see our complementary Checklist: 8 Ways to Support Employee Career Growth — which o昀昀ers actionable tips on building and maintaining career paths. Read our 2023 State of Performance Enablement report to learn more about employee DOWNLOAD and manager sentiments for performance enablement, feedback, goal-setting, and more. 7 Avoiding the Engagement and Retention Cli昀昀

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