by Paul Schott
STAMFORD — Most employees do not plan on long stints in their present roles.
A global survey of workers conducted earlier this year by Arlington, Va.-based technology and insights firm CEB found just 33 percent plan to stay with their employer, according to results released earlier this month. CEB was acquired earlier this year by the Stamford IT consulting and research company Gartner.
At the same time, only 16 percent of those surveyed reported “high levels of going above and beyond on the job.” The new numbers point to increasing confidence in the economic climate and a widespread belief among workers that they need to move to another organization to advance their careers.
“It’s a labor market where employees are really in control in a lot of cases,” said Brian Kropp, CEB’s human resources practice leader. “If there’s no opportunity to move up, most employees have a mentality of ‘I’ll do enough to get by, but I’m not going to do enough to really push the organization forward.’”
Leaving to advance careers
In the wake of the 2008 financial crisis, companies across industries slashed costs.
Cutting headcount and limiting raises and bonuses figured among the top ways to rein in expenditures. But reducing the ranks also whittled down middle-management roles, leaving a dearth of positions for those who wanted to advance and earn more.
“Many firms have realized that they can hold salaried compensation down and provide bonus compensation; as profits became thinner and health care costs increased, bonuses were reduced,” said Lisa Mainiero, a professor of management at Fairfield University, in an email. “Many firms also now prefer a flatter hierarchy with teams rather than the former 20th-century hierarchy of many levels in a pyramid shape. Therefore, less opportunities for promotion are available.”
Almost 40 percent of employees who left their jobs in the first quarter of 2017 cited a lack of future opportunities as one of their top reasons, according to CEB. In comparison, about 20 percent in 2010 identified limited prospects for advancement as a principal reason for leaving.
Adding to the appeal of joining a new firm, employees can often expect an approximately 10 percent raise for taking a position in another company, said David Lewis, founder and CEO of the Norwalk human resources outsourcing and consulting firm Operations Inc.
“You’re not seeing employers reacting to this greater level of job activity by looking at it and saying ‘I’m going to compensate employees more as a way to ensure that I can retain them,’” Lewis said. “What happens is when you look at most people’s salary progression, it comes as a result of them leaving the job.”
While raises and promotions have diminished in many organizations, employees also fear redundancy much less than they did in the aftermath of the financial crisis when firms were downsizing on an unprecedented scale. The national unemployment rate is running at 4.3 percent, the state rate at 4.9 percent — levels that many economists view as nearly full employment.
“Employees find themselves in a situation where they say ‘I’m not really worried about the downside risk because the labor market is so good,’” Kropp said. “And they also say ‘I’m not going to get fired if I don’t go above and beyond, so what’s the purpose if I go out of my way to really make a difference?’”
Keeping good employees
HR experts warn companies might be adopting a myopic strategy by passing up on opportunities to reward top workers. Replacing a superior employee could easily entail incurring half of that departed colleague’s annual wages in recruiting and hiring costs. And the replacement would likely earn more than the predecessor.
Giving raises to elite staff who might be “flight risks” could present a more effective and ultimately less costly strategy, Lewis said.
“There are companies sitting there and saying we can’t afford to pay this person 2, 3, 4, 5 percent more, but six months or a year later are paying 10 percent more for a complete stranger,” Lewis said. “I’d much rather spend money on people I know have been successful, to make them happy, rather than spending money on total strangers in the hope that they will be successful.”
CEB recommends offering challenging assignments that build important skills and acknowledging employees’ good work. Recognizing contributions is more effective at improving employee engagement and effort than a cash bonus of $500, according to CEB.
“Realistically, most companies won’t be able to say ‘We’ll double the number of people we promote or move to 10 percent raises,’ ” Kropp said. “They have to come up with alternate ways to drive engagement that are as low-cost as possible.”
CEB’s surveying draws from quarterly polling of more than 22,000 employees in 40 countries.