How to retain young workers in 2016 and beyond
Technology, increased mobility and a growing workforce of so-called “millennials” means that the workplace of 2016 is very different to the office environment of yesteryear. Flexible working, flatter management structures and foosball tables are all the rage in today’s workplace, and companies not offering this are increasingly losing out when competing for young talent.
To see just how far we have evolved, Virgin held a ‘corporate day’ earlier this year where it asked employees to wear business attire, start at 9am and not use social media or take personal calls. The result? In the words of Virgin founder Richard Branson, “It was a horrible experience for everybody.”
But this new and, arguably, better type of workplace environment doesn’t mean that employees are willing to stay at companies providing it: in fact, young workers under 36 are more likely to job-hop, with 58% currently looking for their next job opportunity.
With this new generation of employees expected to make up 75% of the workforce by 2025, businesses who don’t tackle declining employee retention rates head on will see it worsen significantly, with average turnover rates predicted to jump from an average of 14.6% to 18% in the next 5 years.
The first step to finding a solution is identifying where the problem lies. A recent study by Deloitte found that 44% of millennials would leave their job now if they could due to a perceived lack of leadership-skill development, desire for flexibility and a conflict of values.
So what can companies do to ensure that they can retain the new generation of workers?
Map out progression opportunities
Young workers want to climb up the career path much faster and will look for opportunities elsewhere if they feel that they aren’t getting it in their current company. This is in stark contrast to previous generations, who favoured job stability.
This means that management can no longer look at hiring into a permanent position for 3-5 years. Instead, you need to consider that your employee will want to move into a new role or take up new responsibilities within 12-18 months. Work with them to map out progression opportunities and what is expected of them to achieve that (for example, training qualifications or a level of performance), and set regular 1-to-1 meetings to check in with them to see how you can support.
Encourage internal innovation
In order to ensure that young workers don’t eventually feel the need to start up on their own, you have to encourage entrepreneurial thinking and give them the freedom to apply it within your own company. Implement an Employee Suggestions Programme and reward employees for innovative ideas, even if it isn’t directly related to their job.
Don’t underestimate the value in ideas your employees bring to the table: Amazon’s free next-day shipping subscription, Prime, was actually suggested by a software engineer working for the company. It is thought that Prime customers increase their number of purchases by 150% after joining, which equates to a few billion dollars in extra revenue!
Place importance on personal development
Helping your employees lead fulfilling lives outside of work will make them happier, more productive and stay loyal. Maybe they want to train to be a yoga instructor? Or learn a new language? Consider allocating a separate budget on top of your usual professional training budget: companies like Basecamp allocate $1000 a year per employee for educational learning plus $100 per month for fitness.
Of course, not every company will be able to afford this, and there are other ways you could facilitate your employees’ out-of-work hobbies – for example, by letting them leave 30 minutes early on a certain day so they can make their boxing class. Your employee might even be making some extra money from their hobby (aka ‘side hustle’), so see how your company can support their success such as by promoting it in company newsletters, or having a coffee morning where team members can tell each other about their projects.
Monitor your employee referral rate
In order to retain young workers, you need to create a strong company culture which encourages progression in all aspects of their life. But when measuring success, looking at just your retention rate might mean you’re missing something major. This is because your current retention rate is not a predictive indicator of your future retention rate, because it’s based on people already having left.
Instead, monitor your employee referral rate closely: how many of your staff are referring people? Companies like Location Labs – who boast a 95% retention rate – have around 60% of all employees referring someone, with 40% of new hires being referrals. Employees will only recommend your company to others if they believe it is a great place to work, so if your referral rate is high this is a good leading indicator of retention.
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