The Great Resignation and turnover contagion: How skills-based hiring can help you hang on to your teams

The Great Resignation is slowing down but quit rates remain high. According to McKinsey, two out of five employees are thinking about leaving their jobs in the next three to six months.[1]

Workers around the world are considering their options: whether to switch industries or companies, move on to nontraditional work – like part-time jobs or temporary gigs – or leave the workforce altogether. Meanwhile, employers are struggling to understand why. 

The truth is, attitudes are changing and many workers have started looking at their jobs as a means to an end – not the end itself. If they’re not fulfilled and satisfied at work, they’ll have no problem leaving it to look for better opportunities. 

The problem is turnover can be contagious. One person’s decision to leave can trigger a wave of resignations, negatively impacting both employee morale and business performance. 

In this piece, we'll delve deeper into the causes of turnover contagion. We’ll also look at some best practices to avoid worker turnover, such as using skills-based hiring to make sure you’re picking the right people for the job, and using reskilling and upskilling to develop your employees’ full potential.

Is quitting cool?

In April 2023, 3.8 million workers quit their jobs, and for many, it’s become a bold act of self-empowerment. What was once a personal and private decision has transformed into a public declaration, reverberating across social media platforms and inspiring others to follow suit.

In fact, leaving behind a toxic work culture, bad managers, or a lack of growth opportunity has become so common that it’s birthed a new phenomenon: ‘live quitting.’ Since late 2020, this trend has been going strong and now has its own dedicated subgenre on TikTok called #Quittok. 

This began when one TikTok creator, Marisa Jo Mayes, posted live footage of herself the moments before, during, and after she quit her job. Shortly after posting, the video went viral and at the time of writing, has 2.9 million views and almost 3,000, largely positive, comments. 

Marisa’s experience encouraged other TikTok users to open up and share their stories as well. For example, one commenter wrote: “I quit my job two weeks ago without [anything] lined up.” Another said: “This is where we all learn that life isn’t about how much money you make. It’s about being happy. If you’re not happy, money isn’t gonna fix it.”

Has quitting become cool? Perhaps the more important question is: How does seeing others quit affect your employees?

The domino effect of turnover contagion 

Turnover contagion is the phenomenon in which one person’s decision to quit influences and triggers the likelihood of others leaving as well. The concept suggests that turnover can spread like a virus and "contaminate" the work environment, and it’s not that far from the truth.

One study found that employees in teams with high rates of attrition in the last 180 days are more likely to leave the company. Individuals who work closely in smaller teams are even more at risk of being affected by turnover contagion.[2] 

With the rise of 'cool quitting' and 'live quitting' trends on social media, the people quitting don’t even have to be their colleagues. Watching strangers on the internet quit might be enough to influence some workers.

As one commenter on another Quittok video put it, “This just gave me so much inspo. It’s the fourth ‘I quit my job’ video I’ve seen today. Is this a sign?” 

Turnover contagion typically occurs when employees observe their colleagues leaving and perceive their departures as an indicator of dissatisfaction, low morale, or problems within the organization. This perception can create a sense of uncertainty and unrest among your remaining people, leading them to wonder if the grass is greener on the other side.

This can hurt your organization as it leads to the loss of talented employees, decreased productivity, increased recruitment and training costs, and overall instability within the workforce. But it doesn’t have to be that way.

Let’s take a look at how you can get ahead of the wave and take proactive measures to retain your best employees.

5 ways a skills-based approach can help you hang on to your talent

Traditional retention methods like the promise of future promotions, a loftier office, and standard benefits just aren’t cutting it anymore. Companies need more than empty gestures to keep their people happy and motivated. Of course, adequate pay and career development are still important, but many individuals are prioritizing factors like flexibility, inspiring leadership, and support for health and wellbeing.[1]

By investing in your people’s skills and potential, and taking a multipronged approach to retention, you can foster a culture of loyalty and commitment – one that attracts new talent and brings out the best in your existing teams, boosting satisfaction and retention rates. 

Heather R. Younger, chief executive officer and founder of Employee Fanatix, recommends prioritizing people-centric retention strategies to reduce employee turnover and contagion. This means asking for feedback and collaborating with your people to find solutions that help them feel genuinely cared for and valued. 

“Don’t try to do a cookie-cutter approach,” she says. “The whole point is that you have to get to the truth. You can’t make assumptions. Find out what people all across the organization really want and need from you, not what you think they want and need. That’s the only way to move forward with a better strategy for engagement and retention."

Here are some ways that a skills-based approach can build a culture of belonging in your organization and make your people want to stick around:

1. You get the best match for a role

In our 2022 State of Skills-Based Hiring report, we surveyed 2,736 employers and 2,666 candidates from around the world. We found that 92.7% of companies that used skills-based hiring reduced their number of mis-hires, which can happen when candidates have impressive qualifications but lack the practical competencies needed to thrive in their positions. 

Mis-hires hurt morale and can cost your organization between five and 27 times the amount of an employee’s salary. They also waste precious time and can, on average, cause an additional 300 hours worked for managers, peers, and HR teams. 

By testing for skills and efficiently screening out unsuitable candidates, you can make sure the right people with the right skills are hired in the first place. You’ll also have more time to engage with your top candidates and empower them to make informed decisions about the best role for them. 

As a result, when these candidates do choose to join your company, the likelihood of unexpected mismatches between their skills and the job requirements is significantly reduced. That’s partially why voluntary attrition is 50% lower for people hired through competency-based recruitment. Only 3.2% of employees hired through this method are planning to leave their roles in the next 12 months.

2. Candidates hired from skills-based hiring are happier

When employees are placed in jobs that match their skills and abilities, they’re happier and stay longer in their roles.

Approximately 72% of people who were recruited via skills-based hiring reported being happy or very happy in their current roles. As a result, 91.2% of companies that use this recruitment method increased their employee retention rates. 

This is because by aligning job requirements with an individual’s capabilities, as opposed to their education, gender, or background, you can foster a sense of purpose and growth within your workforce. When people feel their skills are valued and their potential is nurtured, they’re more likely to commit to your company for the long term.

Finally, more than half of the candidates we surveyed (54.3%) for our 2022 State of Skills-Based Hiring report prefer this hiring process to a resume-based one. They value speed, communication, and transparency, factors that are improved considerably by competency-based hiring. 

3. You create a skills-based culture

A skills-based culture places a strong emphasis on recognizing, valuing, and leveraging the specific skills and competencies of individuals. In such a culture, skills take precedence over factors like job titles, formal qualifications, or years of experience. 

This makes it easier to remain agile and innovative because you and your people recognize that skills can be acquired, enhanced, and applied across different roles and contexts. 

Because of this, managers can promote their employees or help them transition into new roles based on objective factors like skills, and not how well they network. For example, if an employee wants to move into a leadership role but isn’t sure if they’re ready, you can test them on their leadership and people management skills to find out. 

This can help you retain your people better. According to a McKinsey report, 63% of workers are so unhappy with their progress at their current company that they’d rather look for jobs elsewhere than chase a promotion. By rolling out development plans and building career transparency, you can show employees they have a future at your company and that you’ll help them get there. 

4. You can offer upskilling and reskilling opportunities

Seventy-six percent of employees are less likely to leave their current company if they’re offered continuous training.[3] Learning and development (L&D) opportunities also make your company more attractive to younger professionals. For 29% of both millennials and Gen Z, L&D is the second biggest reason they chose their current job.[4]

Providing upskilling and reskilling opportunities tells your people that you value them and are willing to invest in their development. Training your employees also helps you remain competitive and is more cost-effective than hiring. In fact, reskilling creates cost savings of around $60,000 per person.[5]

By using a skills-based approach, along with ongoing skills testing, you can identify skills gaps and develop personalized learning pathways.

5. It’s easier to recognize and reward employees based on skills growth

Being valued and recognized by their employers is one of the most important factors to your employees and is the difference between attrition and attraction.[6]

A skills-based approach makes it easier to identify and appreciate your people’s progress and development. It gives you a comprehensive framework to measure their growth and recognize, reward, and retain your workforce based on personalized metrics. 

Let's say you want to measure your software engineering team's growth. You can implement a skills assessment program that evaluates various technical competencies, such as their knowledge of algorithmic approaches, familiarity with programming languages like CSS, or problem-solving abilities.

Whether through public acknowledgment, career advancement opportunities, or tailored professional development programs, you can align recognition and rewards to the unique skills that employees bring to the table.

Finally, a skills-based approach fosters a culture of continuous learning and improvement. Individuals are inspired to invest in their own skills development, knowing that it directly impacts their professional growth and prospects within the organization. 

“I remember a team member who was at one company for 20 years. But she said she felt like she’d been at five companies because she’d had five different roles. So it kept things interesting for her and that's why she decided to stay. Because she could always be learning and growing.”

– Heather R. Younger, chief executive office and founder of Employee Fanatix 

Skills-based hiring: the glue that holds your teams together

While fewer people are leaving their jobs in 2023 compared to previous years, the Great Resignation changed how people view their careers and what they expect from their employers.[7] If work doesn’t give people flexibility or help them grow and feel fulfilled, they’ll simply leave and find a better opportunity elsewhere – even if it means taking a pay cut. 

As one Reddit user said: “I left my role as engineer manager for the past decade five months ago… So far, this has been the best decision I’ve made in my professional career. We don’t even feel the pay cut. My kids love having me around physically and mentally.”

However, quite often, one person’s decision to leave doesn’t just impact them, it can also encourage other team members to quit. This turnover contagion can negatively impact your business through loss of productivity, reduced morale, and increased costs. 

The good news is that by taking a holistic and personalized approach to retention, you can keep your people engaged and committed to your company for longer. In this piece, we reviewed five ways a skills-based strategy can help you hang on to your teams. These include creating a happier work environment and making it easier to train, reward, and promote your employees. 

As Heather says: “When you can create a place that’s magnetic enough, where people have reason to stay, more than just money, then your company becomes a ‘sticky’ place to be. And that’s where we’re all trying to get to.”

Turnover contagion hurts both your people and your business. If you're ready to on mis-hires with skills-based hiring strategies. 

Recommended reading: Skills-based hiring is the solution to the Great Reshuffle

Sources 

1. “The Great Attrition is making hiring harder. Are you searching the right talent pools?” (2022). McKinsey. Accessed June 16, 2023. https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/the-great-attrition-is-making-hiring-harder-are-you-searching-the-right-talent-pools

2. “Attrition: How to identify your high-risk employees.” (2021). Bob. Accessed July 7th,  2023. Attrition risk indicator: Identify your high-risk employees | HiBob

3. “The State of L&D in 2022.” (2022). TalentLMS. Accessed June 16, 2023. https://www.talentlms.com/employee-learning-and-development-stats

4. “The Deloitte Global 2022 Gen Z and Millennial Survey.” (2022). Deloitte. Accessed June 16, 2023. Deloitte Gen Z and Millennial Survey 2022 

5. “Reskilling: A business case for financial services organizations.” (2022). Financial Services Skills Commission. Accessed June 16, 2023. https://wp.financialservicesskills.org/wp-content/uploads/2022/01/Reskilling-A-business-case-FINAL-EMBARGOED.pdf

6. “Great Attrition’ or ‘Great Attraction’? The choice is yours.” (2021). McKinsey. Accessed June 16, 2023. https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/great-attrition-or-great-attraction-the-choice-is-yours 

7. “The Great Attrition is making hiring harder. Are you searching the right talent pools?” (2022) McKinsey. Accessed July 3, 2023. https://www.mckinsey.com/capabilities/people-and-organizational-performance/our-insights/the-great-attrition-is-making-hiring-harder-are-you-searching-the-right-talent-pools