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In 2021, over 47 million Americans voluntarily left their jobs. COVID-19 escalated the exodus from many industries, especially those involving customer service. As a result, businesses across the country have had to scale back operations because of employee shortages.

Anyone involved in workforce management should be concerned. The pandemic can’t take all the blame for dropping retention rates—the Great Resignation is part of a 10-year trend.

To understand why employees are leaving, experts suggest companies study their retention rate rather than the reasons their employees quit.

Dropping Retention Rates

A company’s retention rate is a percentage that relates to the number of people who don’t quit over a specific time compared to the total workforce size during that time. For example, if a company of 100 employees has ten people separate, and 90 stay, in the past year, its retention rate would be 90 percent.

Workforce management shouldn’t focus on job satisfaction as the only reason people stay or leave. Most satisfied employees will stay with a job until a negative factor overcomes their desire to stay. The Harvard Business Review lists these five key factors influencing a company’s retention rate:

  • Retirement from the workforce
  • Switching to a different career
  • Pursuit of work/life balance
  • Reluctance to return to in-person workplaces
  • Relocation to a different area

Besides these factors, there are always some employees who quit after a negative event like a poor performance review, being passed over for a promotion or clashing with their manager.

To increase its retention rate, a company needs to adopt practices that will cause employees to stay even when tempted to leave. This means finding which of the above factors are contributing to turnover in their organization and developing strategies to compensate.

Managing for Employee Retention

Instead of concentrating on the reasons employees leave, a more positive approach is to find out why they stay. Workforce management can improve the retention rate by managing for retention. According to the Society for Human Resource Management, “A comprehensive [end-to-end] employee retention program can play a vital role in both attracting and retaining key employees, as well as in reducing turnover and its related costs.”

Understanding why people stay with a company requires an analysis of personal values that play a vital role in job satisfaction. Individual values determine just how much each person will put up with at work before they decide to quit. “From the viewpoint of a company’s policies on employment and turnover, the reasons why people stay in their jobs are just as important as the reasons why they leave them,” says the Harvard Business Review. “An obvious point in evidence is that one individual will stay in a job under conditions that would cause another to start pounding the pavements.”

To keep employees, management must understand the balance between each employee’s job satisfaction and the strength of outside forces that would cause them to quit. Disrupt the balance and the retention rate may go up or down.

Upsetting Employee Inertia

The term inertia describes the tendency of employees to stay in a job until conditions cause them to leave. An employee’s inertia gets stronger when company values align with his or her values and weaker when they diverge. Rewarding workplace relationships increases inertia, as does having one’s identity tied up with their company. Other ways to strengthen inertia and increase retention include recognizing employees for their achievements, providing great benefits, and giving employees opportunities to move around within the organization.

Inertia can be a positive or negative quality in an employee. When an employee is engaged and productive, management should encourage inertia. It’s a different story for employees who are less productive than they used to be and just waiting for retirement. Management may decide to disrupt their inertia with an incentive like an early retirement program.

Tailored Workforce Management

As the next generation enters the workforce, many are creating their own opportunities and avoiding companies that use a cookie-cutter approach to workforce management. They want employers to focus on individual values and accept people with different values. Organizations that don’t recognize the importance of this changing attitude may find their retention rate moving in the wrong direction.


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