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Turnover During the Coronavirus Crisis? 4 Reasons Employees Quit and How to Stop It

Employee turnover is always a hot topic of discussion among business leaders. Turnover is expensive, disrupts workflow and is the cause of heartburn for many HR professionals.

Right now, in the wake of the coronavirus, the job market can be described as “uncertain” at best and “dire” by some. This was very different just weeks ago. According to PayScale’s 2020 Compensation Best Practices Report (CBPR), in December and January, there were more job openings than available talent in the labor market to fill them. An economic recession was predicted to come last year, but instead, 2.1 million jobs were added to the economy and the unemployment rate dropped to 3.5 percent, the lowest it’s been in the United States in 50 years. According to Global HR consulting firm Mercer, 54 percent of employees who were voluntarily leaving organizations were Millennials/Generation Y (born 1978-1998), with “better job opportunity” being the most common reason for leaving.

In just a few weeks, things have changed dramatically, but the situation is also strange and unique. Managing turnover during the coronavirus crisis is therefore difficult. While the coronavirus pandemic is causing many businesses to tighten their belts, it is unclear how long the situation is going to last. In addition, some jobs are surging as a result of the coronavirus, with certain kinds of businesses frantically hiring to meet demand.

Even in times when layoffs are being announced, turnover during the coronavirus crisis is a concern. Every company has key players that are critical to the operations and success of their business and losing those people during a crisis can be a real blow, especially when many companies are also announcing hiring freezes. In addition, some types of jobs are always going to be competitive, even in a down economy. This means that turnover is still important, especially unproductive turnover. According to the 2020 Compensation Best Practices Report, a majority of organizations felt that less than 25 percent of turnover was good. Managing turnover during the coronavirus crisis means doing what you can to retain the other 75 percent.

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In a recent study, LinkedIn surveyed more than 10,000 of its members globally to find out their reasons for changing jobs. The study found the following as the top reasons why people leave their jobs:

  1. Dissatisfaction with Compensation and Rewards
  2. Lack of Career Advancement
  3. Desire for More Challenging Work
  4. Unhappy with Work Environment or Workplace Culture

When you look at this list, you might feel discouraged and overwhelmed. How could anyone possibly solve all of these issues in order to prevent turnover, especially during a crisis? How do you even know where to begin?

We have good news for you. There is actually a simple solution to each of these problems: pay communications. Pay communication is the organizational practice that determines how pay information is shared and communicated to employees. Simply put, pay communication is how you talk about compensation with your employees. A proactive pay communication plan can help your employees understand how much your organization values them. When they feel valued, anxiety around compensation and other job aspects decreases and trust in HR increases. This trust can lead to open communication and more opportunity to keep an employee who might have been feeling frustrated or anxious.

Keep reading to see how communicating your organization’s compensation plan can address turnover during the coronavirus crisis.

Dissatisfaction with Compensation and Rewards

While many employees cite underpayment as their reason for leaving a job, a previous PayScale study found only 45 percent of those who indicated they were underpaid were actually earning less than their peers in similar roles. Additionally, last year’s CBPR found 82 percent of employees are satisfied with lower pay as long as the rationale is explained.

This data means that the perception of compensation is just as, if not more, important than the actual figures on a paycheck. Telling your employees how their current pay actually compares to the market is the simplest way to combat misconceptions about pay equity.

While there are a few options for the level of transparency you may want to model in your organization, one thing is certain: if you are not communicating to your employees about how you determine pay in your organization, they will fill in the gaps on their own and, typically, with incorrect information. Employees who understand the factors that determine pay for their position in an organization are less likely to believe the grass would be greener somewhere else.

When we talk about pay communication and transparency, we aren’t saying you must present pages of compensation information and market data to each of your employees in order to shed some light on comp practices. Simply letting your employees know that your organization is doing a 3rd party market study, or even sharing a summary of the market value for their job (and how internal pay practices align with the market) – is a great start.

Lack of Career Advancement

When an employee believes they are being unfairly paid, they are less engaged in their work. So, what they might see as a lack of opportunities for career advancement could just be their own apathy leading to stagnation.

By communicating your organization’s pay strategy, you can help stop this stagnation before it begins. It’s important to offer your employees visibility into pay strategy and into their potential career paths. A well-organized comp plan includes clear distinctions of job levels and pay ranges and serves as a blueprint for career paths within your organization. If an employee does not have visibility of their career path, it’s no wonder that they would assume there is no opportunity for growth. Lack of information again results in employee turnover.

A well-defined career ladder has many benefits. A career ladder provides role clarity and lays out potential opportunities for advancement, which can motivate your employees to continue to learn and grow and invest their talent within your organization instead of looking for opportunities for advancement elsewhere. Plus, this defined career progression can help you better understand where you need to invest in employees’ training and development. Studies have shown even a small employer investment in development can lead to fewer instances of employee turnover.

To learn more about developing career ladders, check out this article.

Desire for More Challenging Work

Often, when an employee doesn’t understand where they could advance their career, they begin to feel dissatisfied with the work they are currently doing. Another common reason for employee turnover is an employee’s desire for more challenging work. You can ensure you are offering challenging opportunities to your workers but it’s even more important to communicate those opportunities.

Communicate with your employees about what opportunities are available to them and they will begin to see they are not stuck in a dead-end job. Be honest about the factors that will go into a pay increase or promotion. Here are some ways to do that:

  • If you’re a growing company without clear job levels and career paths defined, that’s okay. Be clear with your employees about what being a ‘top performer’ means at your organization. Be specific about how they can achieve success, whether success is a promotion, more challenging work or different responsibilities.
  • If you are a scrappy, budget-conscious organization where promotions typically come with a title bump instead of a pay increase, set that expectation with employees now. Be clear about what goes into their entire compensation package, including both direct and indirect
  • If this is a new or under-performing employee requesting a promotion you feel they haven’t yet earned, have that tough conversation now. Your employees will be grateful to know not just where they currently stand, but what concrete actions they can take to reach their goals. People can’t fix what they don’t know is broken.

Unhappy with Work Environment or Workplace Culture

Your employees’ happiness with their work environment or workplace culture may not be directly tied to pay. But, if your organization is a closed book when it comes to pay communication, it’s probable that lack of communication is an underlying factor in your overall environment or culture. Lack of open communication is often a factor that leads employees to feel that they can’t trust, and don’t like, the place they work and/or the people they work for.

A market based pay strategy, one that is supported by executives, well managed by HR and clearly communicated to employees by their managers, goes a long way toward ensuring employees feel valued. It also establishes an open line of communication for any other issues that may be lingering now or could arise in the future. Plus, establishing true transparent communication likely lines up with your organization’s stated mission and values.

 

How to Improve Pay Communications

Now that you understand why pay communication matters for retention of your best employees, it’s time to make a plan for how to improve your organization’s current pay communication strategy.

You may decide to start with research on market salary data. Then, you can train managers how to talk to employees about compensation or, if it makes more sense for your organization, set up these conversations as a standard function of HR. To improve pay communication, you must be intentional. The most important thing you can do now is to end the silence and secrecy around pay decisions. Your employees want to know they are being paid fairly, yes. But even more than that, they want to feel valued and they want to grow. The right pay communication strategy should end reactive conversations around how pay is decided and pave the way for planned, strategic and transparent conversations about pay.

To learn more, here are five ways to improve pay communication within your organization.

Conclusion

Navigating turnover during the coronavirus crisis is something new that every individual organization has to figure out. While seeking to retain every employee may not be realistic, it also might not be strategic. There are definitely instances where turnover is a good thing. But, for the purpose of improving retention of top talent,  it is worthwhile to focus your retention effort on those employees who are in the mission-critical roles that your organization can’t live without.

While formulating a communication plan about your compensation plan may seem like a lot to take on, don’t forget that good communication doesn’t have to be complicated. Start small by telling your employees what your organization’s approach to compensation decision making is, and watch the benefits of open communication unfold before you.

Are you ready to take the pay transparency challenge?

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