We have come through a pretty wrought economic period; many have coined it the Great Recession. Most of the 1^st world fared far worse than Canada like the US, Ireland, UK, Iceland and Greece to name a few. The impact we faced here was significantly shorter and less deep. The Canadian job market has now recovered all the positions we lost during the recession. As with most economic slowdowns, the end is marked by a large wave employee turnover. Most companies are just starting to grow again, consequently many companies are caught flat-footed by this turn-over and they see many of their great people leave. This CIO letter is to outline what is happening with the labour force and how to manage through it.

Where does this turn-over come from?

Recessions create some interesting dynamics in the labour market. There are 4 main forces that influence people:

1. Employee layoffs – during a recession companies stop hiring and then slowly start their lay-offs, initially the C players are cut, then as the recession takes hold, under-utilized resources and over paid resources and finally entire departments and companies are released.
2. Staff Stasis – with lack of jobs and layoffs, people stop looking for work and with a fear of unemployment, they tolerate much more to keep their pay check. The result is employees do whatever it takes to keep working.
3. Contractor Convert to Full time – a slower economy produces less project work thus creates less work for contractors. These workers react in a predictable manner by taking full time positions at lower pay.
4. Under-employment expands – with higher unemployment; people take any work to pay bills. Often taking positions they are over-qualified for, outside their career path and most likely at much lower salaries than they earned at their previous position.

These main crosscurrents result in very little voluntary employee turn-over during a recession. While companies benefit with lower voluntary turnover during the slow down, the downside of this stability is a pent-up demand for a change in employment.  As soon as the layoffs stop and companies begin to hire again, people dust off their resume and start cruising the job boards.  This causes a problem for companies. If a company has 1,000 employees and they need to grow by 10%, but their turnover has increased from 5% to 15%, hiring over 200 additional people than you hired the year prior is required. That adds a substantial unexpected cost to an organization.

The latest survey from Right Management confirmed we have now entered this phase of the business cycle. They surveyed 1400 people and found 84 percent planned to look for jobs in 2011, up from 60 percent last year.

Why do people leave?

Interestingly, the reasons for leaving are very stable and have a similar pattern post recession as that prior to the recession.  In a survey from Salary.com here the top reasons:

Some of these issues are difficult to resolve, but fortunately you can do things to improve some areas. One way to determine underlying issues is to implement an employee satisfaction survey for your team. You may find some gold nuggets that you can use to increase job satisfaction. This improvement will lead to productivity improvements and reduced turnover. Other good advice is to just listen to your employees and observe changes in behaviours. These are very good for determining employee happiness.

Some of the reasons for turn-over can be traced back to the initial recruitment. For example, commute times impact 4% of a person’s decision to leave. Our advice to our clients when recruiting people is that 60% of their hiring decisions should be on personality fit.  Understanding a candidate’s career aspirations and motivations up front will reduce the possibly of their leaving because of career or boredom. Also, don’t over promise or over sell the job, you need to be realistic and honest about the duties and career growth.

Some minor improvements to understanding your team better and improving your hiring processes will help your organization manage through this turnover period.