The Great Resignation continues to impact portfolio companies throughout the country. So far, in 2022, four million people have left their jobs each month without any sign of slowing down. Employees are leveraging the current labor market to jump to new opportunities, but what’s making them leave in the first place?
Review these four common reasons why employees quit their jobs to understand how your portcos can limit turnover.
1. Lack of Growth Opportunities
When companies fail to offer a clear path for employee development, they will likely lose talent. A study conducted by McKinsey & Company revealed that the number one reason employees left their job last year was lack of career development and advancement.
To avoid losing talent, employers should focus on development opportunities by creating a company structure that allows employees to learn and grow. An excellent way to create a trajectory path is to discuss goals, interests, and skills with employees to develop a customized career plan.
Portfolio company leaders should consider investing in resources and technology that help employees do their job and provide professional development opportunities. Opportunities for continuing education and skills development will motivate people to stay with the organization, especially if they see a path to promotion through these efforts.
2. Inadequate Compensation
In recent years, employees have begun to value company culture and flexibility over financial compensation. However, due to soaring inflation rates, money isn’t stretching as far as it used to, leading employees to feel underpaid relative to the market and opportunities available elsewhere.
57% of Americans say pay raises aren't keeping up with inflation.
With the high demand for talent, businesses are offering inflated wages and have become more lenient on job requirements – making it easier for job seekers to secure a new opportunity.
Great employees don’t need to wait for somebody to give them the pay, promotions, or other good things they deserve. The current market allows them to find another job in a heartbeat — and if you don’t take care of them, others will.
Bottom line: Businesses that pay fair wages retain the best people — no matter the industry. Competitive compensation is essential to cultivating longevity among portco workforces.
3. Bad Leadership
The saying ‘people don’t quit companies; they quit their bosses’ has been proven accurate as it comes in as the third highest reason for employees leaving their job. Micromanaging, lack of recognition, and overloading employees are just a few ways leaders can drive top talent away.
Most of what causes high turnover isn’t the work itself; it’s how people are being treated. Portfolio companies should build psychologically safe work environments by developing consultative, compassionate, and empathetic leaders who can successfully lead a team.
Proactively engaging employees through feedback solicitation, one-on-one meetings, and establishing a culture of transparency and communication can help foster stronger relationships. People distrust managers who refuse to share information and are skeptical of companies that obscure their decision-making processes. When implementing changes, leadership should explain how employees will be affected and where they fit into the master plan.
When building a strong employee relationship, portco employers should:
- Follow through with promises
- Thank them (seems simple but makes a difference)
- Create a productive environment where employees shouldn’t be afraid to ask questions
4. Lack of Purpose
Workers value organizations that offer three specific things:
- Meaningful work
- Opportunities to make an impact
- Environments that foster well-being
Workers are more likely to become disengaged and gravitate to new opportunities when work becomes under stimulating.
9 out of 10 employees are willing to trade a percentage of their lifetime earnings for greater meaning at work.
Leaders can create meaningful work by communicating the portfolio company’s mission and values. Employees want to feel that they are making a difference and part of something bigger than themselves. Connecting how an employee’s role or project contributes to the company’s overall success can be a great way to highlight their purpose. It is essential to keep a pulse on engagement and find ways to reignite their purpose in the job.
Need help with your recruitment and retention processes? Contact us today!