Employee engagement, not fear, behind the fall in staff turnover

Explanations for a marked fall in employee turnover have largely attributed it to the recession, which, it’s been suggested, has led cautious employees to prefer to stay put in a secure position, rather than risk losing their place in an uncertain job market. However new data published today from the CIPD’s Megatrends research project suggests a more positive picture. The proportion of workers leaving their employer at any given time fell by over two fifths between 1998 and 2012, long before the downturn took hold. And the good news for those concerned with improving the quality of the workplace environment is that increased job satisfaction and improved levels of employee engagement could play a significant role..

The paper, “Has job turnover slowed down,” presents data from the Office for National Statistics showing that in October-December 2012, 2.6 per cent of employees left their jobs, compared with a figure of 4.5 per cent for the same period in 1998.  Most employees leave their jobs voluntarily (due to resignation, retirement and for other reasons) rather than involuntarily (dismissals and redundancies).

Turnover is highest among young people and lowest among the over 50s. Since 2008, average job tenure (the average period that people spend in their job) has been increasing. This is a trend that has been seen in a number of other countries including the USA.

Mark Beatson, chief economist at the CIPD comments: “This is a trend that seems to have crept up on us.  We have been told for a long time to expect the end of the ‘job for life’ and more frequent changes of employers and careers but the data appears to have been moving in the opposite direction.

“We expect job turnover to be low in recessions because people ‘sit tight’ waiting for the jobs market to improve, but in fact turnover was falling well before the recession took hold.

“Our research suggests turnover may also have fallen because of changes that have taken place within the workplace. For example, increased job satisfaction and employee engagement may have reduced the number of disaffected employees jumping ship. Employers have also got better at providing opportunities for people to move within their organisations – giving people opportunities to develop and grow without moving employers.”

He adds that employment legislation might also have played a supporting role. While employers may see lower job turnover as a good thing because less movement between employers means a more stable workforce, a greater retention of ‘know how’ and increases the return employers can expect from investing in their employees, it can stifle innovation he warns.

“Innovative organisations require new thinking and challenges to existing ways of doing things. A lack of new blood means businesses will need to carefully tap into the knowledge and commitment of the existing workforce to generate a culture of innovation – boosted by genuine cultures of lifelong learning and meaningful career progression. It can also be harder to recruit if fewer people are looking to change employer. To deliver business growth and competitive edge in the context of a less ‘footloose’ workforce, employers will need to be ever more creative in their recruitment practices and in widening the pools from which they recruit.

“Looking ahead, we should expect job turnover to increase as the labour market picks up.  However, over the rest of this decade, we expect population ageing to work the other way.  There will be fewer young people in work – who change employers most often – and more over 50s in work – who are the age group least likely to move.  So we may well see historically low turnover rates for years to come.”

CIPD’s Megatrends research project explores and develops the debate on the economic and social trends that will shape the world of work, the workforce and the culture and organisation of workplaces in the future. Click here for more information.