Regrettable attrition—a lovely phrase that covers many sins.
Using regrettable attrition as a catch-all for people who leave the job is like calling a problem an opportunity. The name switch doesn’t make the problem go away, it just makes the problem sound a little less, well, problematic.
So it goes with regrettable attrition. It’s happening more and more. Work has reset. Two-thirds of the workforce—you and me—are rethinking what work means for us. The great resignation is a multi-year trend. Even if that multi-year trend slows down, regrettable attrition will still put a dent in your plans.
People are leaving in droves.
McKinsey puts the number of people ‘at risk’ of regrettable attrition at 40%. Microsoft puts the number at 41%. Bonnie Dowling, Associate Partner at Mckinsey, points out, “this isn’t just a passing trend or a pandemic-related change to the labor market. There’s been a fundamental shift in workers’ mentality, and their willingness to prioritize other things in their life beyond whatever job they hold.”
Steve Cadigan, LinkedIn’s first Chief HR Officer and author of Workquake, says, “we have never seen as many people pivot to new industries as we are seeing today, and there is no end in sight - it's the new ‘never’ normal.”
Before a person makes that pivot, there’s a decision.
Your next car purchase; triggered by the end of a lease or an accident. Putting extra dessert in your shopping cart; triggered by a pang of hunger.
The decision to quit a job has a trigger. Something puts you in search mode, ready to begin the labor of switching from one job to another.
It’s the proverbial straw on a tetchy camel’s back.
“You get to a point where the littlest things irritate you, and you know it’s time to start looking for your next move,” says Michelle Hancic, Head of People Science, APAC, at LinkedIn.
Data tells us that toxic work cultures drive the great resignation.¹
Look at the list of reasons that people leave, from a lack of career development to a lack of meaningful work, or support—all have a single root: Leadership. That leadership gap festers into a toxic culture.
A toxic culture promotes poor leaders.
Leaders shape the culture around them. Every choice a leader makes, from big policy decisions to little personal interactions, and every sentence a leader utters; makes the work, and workplace, either more rewarding or less satisfying.
Leadership is the next challenge.
Not re-christening the great resignation, but de-toxifying corporate culture, rethinking the work of distributed teams and equipping leaders to lead.
Each employee “subscribes” to an employer.
It’s an economic relationship. In exchange for a paycheck and other intangibles, employees show up and trade their time and effort. They subscribe until they are triggered to move.
This is similar to your relationship with Netflix.
In your love-hate (or love-love, or hate-hate) relationship with Netflix, you pay them. In return, you can stream a huge catalog of shows for your entertainment.
In the streamer-subscriber transaction, Netflix’s trouble is at the margins.
Netflix likes viewers that regularly binge-watch shows. They stick. They are happy. They wouldn’t even consider leaving. They are Loyalists. Defectors got upset with Netflix, left, and won’t look back. Then you have the Switchers. These are people who like streaming, and will binge-watch TV, but will switch. One month they are working through Westworld on HBO Max; next, they are onto Severance on Apple TV+, then they are back to Netflix. All these people make conscious choices.
It’s the Hostages we have to worry about.
The Hostages feel as if they have no free will. They would defect, but they don’t know how. Perhaps they have forgotten they subscribe. Or they don’t know how to unsubscribe. Or the hassle and effort—the switching cost—is too high.
You have the same mix in your employee base.
Defectors are Alumni. They’re a group that you can ignore, or tap into. And some companies—P&G, HSBC, and Citi— do it very well.
Switchers are the people that move every 18 months to three years. It doesn’t matter what you do, they will hop. Recruiters and HR should help screen them out in the selection process.
Paul Hudson, the CEO of Sanofi, sees this attitude in younger top-tier talent; they are saying, “I’ll bring from day one my experiences, and I’ll help you be a better company. But I will leave at some point, and you should not be concerned by that. I will leave it better than I found it, but I will also leave better than I arrived.”
It’s the Loyalists and Hostages you have to worry about—because you don’t know which is which. The hostage is the person you thought would never leave but did.
The switching costs for their next job are the same switching costs you would incur in your next car purchase. They fall into three buckets — “procedural” costs, “financial” costs, and “relationship” costs.
In the “procedural” bucket, economic risks, search costs, learning, and set-up costs, all chew up time.
Economic risk is the uncertainty of switching.
Effort is put in to get a new job, only to find halfway through the process that the compensation isn’t as good.
Search costs are the time and effort it takes me to look for a new job.
Learning and set-up costs are the mental effort, and time it takes to switch to that new job; new colleagues, new passwords, new software, and a new culture.
The “financial” switching costs are as real.
Loss of benefits, like switching from one healthcare or retirement plan to another. Perks that were associated with one job that are not present in another.
Monetary loss costs are the one-time financial outlay in switching—that may be paying for a job coach, someone to help with a resume or a new suit for an interview.
Finally, the “relationship” switching costs are emotional.
Personal relationship loss — they liked their colleagues at work—some were even considered friends, and will be missed.
There may even be Brand relationship loss. Put yourself in their shoes. Your mom has heard of Mastercard, Google, Verizon, or Citi. She can and does brag about you. She’s never heard of where you work now.
The barrier is there, in the corner of your eye, and it takes mental effort to look squarely at it, never mind climb it, yet, as the great resignation proves, more and more people are. Pay transparency laws will lower the economic risks of switching. Glassdoor, Comparably, and Fishbowl give prospective candidates clues into the culture and leadership of companies they are exploring.
There is more work to do for leaders.
Not in making the switching costs higher—that’s HR’s job, by making the benefits better, or the employer brand better. A leader's job is to stop the trigger.
To shape a culture where work has purpose and people are valued.
To build people up, not break them down.
To teach, and to learn.
Sull, Donald, Charles Sull, and Ben Zweig. "Toxic culture is driving the great resignation." MIT Sloan Management Review 63.2 (2022): 1-9.