Tired of the talent drain? Time for a mindset shift on turnover. A Gen Z analysis.
A Mexico and United States contrast.
For years, management strategies have focused on fostering company loyalty, job tenure, and a sense of family within the company. This was assumed to generate benefits such as increased productivity, better use of training, trust in work teams, and a strong employee commitment to their work and the company.
However, the arrival of Generation Z in the post-pandemic labor market has challenged these traditional ideas. This generation, born between 1995 and 2000, has a completely different way of speaking, dressing, behaving, and seeing the future than previous generations.
What if I told you that we should stop fighting employee turnover and start accepting it? Instead of seeing turnover as a problem, we can see it as an opportunity to develop more flexible and adaptable work plans to the new needs of the labor market.
In this article, we will explore the reasons why employee turnover is no longer an enemy to be fought, and how we can leverage it to create a more dynamic and attractive work environment for new generations.
Here are some key points that will be covered in the article:
According to data from the IMSS, in December 2023 the resignation rate was 2.42% and the dismissal rate was 1.68%, the highest and the lowest respectively since before the pandemic. This resulted in almost 60% of job losses being due to resignations and 40% due to dismissals that month.
During my university years, a recurring topic was the issue of employee retention and turnover. Now, in my professional life, the topic continues to be relevant in all areas.
In government, turnover is a problem because leadership changes with each administration, and the training invested is lost in very short periods. Those who remain in their positions are often reluctant to innovate processes. Young people have a more complicated path to public service and it is no longer attractive to them.
A similar issue occurs in companies. Costs increase, the organizational environment does not develop strong ties, and employee development is hindered by their separation.
But, this will remain? What is really happening in the industry?
We see now a shift on generational growth, the youth are not a huge mayority as they once were. Gen Z is a large population but not as big as other young generations, they are more prepared (3.6% in 1970 vs 23.4% in 2023 of people who went to the university in Mexico. INEGI.), they are living with new adaptation techniques (while living COVID Pandemic, Tech developments, scarcity of independence options) and are more open to new ideas (96% in 1970 vs 78% in 2023 of people identify as catholic in Mexico, and in young people only 67%).
Cultural change in generations needs to be analyzed to understand how employee turnover will affect organizations, allowing us to work with it in a different way.
The graph below shows how the population pyramid has been changing, making the difference in population volume between ages smaller.
Let's ask ourselves the following question: How will young people deal with increased competition, fewer growth opportunities, salaries that do not keep pace with the cost of housing, and job openings that increasingly require higher qualifications for entry-level positions?
A report by McKinsey & Company reveals that employees who switch jobs approximately every two years earn 50% more than those who remain at the same company. This trend, known as "job hopping," is becoming increasingly prevalent among young workers.
According to McKinsey's analysis, young workers prioritize factors outside of work due to the constant state of crisis in many parts of the world. When everything feels like a crisis, nothing does, and young workers are focusing on what remains constant: family, love, and themselves.
This shift in priorities has led to a decline in employee retention rates, which are expected to continue to fall globally. Employers must adapt to this new reality by understanding the motivations of job hoppers and implementing strategies to attract and accept job hopping.
Benefits of accepting turnover and creating a more dynamic work environment.
While it may seem counterintuitive to organizational theory, employee turnover has shown some benefits for both parties involved.
One significant advantage is the dynamic office environment it fosters, bringing in fresh ideas and new talents who become increasingly skilled each day. The only challenge lies in project continuity, but this can be easily addressed with structures that maintain hierarchy in decision-making to prevent employees from becoming irresponsible and hindering long-term management.
If we apply the concept of a liquid organization as an analogy, with employee rotation as a key factor, we can envision a vessel with a defined shape where the liquid is constantly changed—the form remains intact. However, if we pour the liquid into a vessel with a changing shape, the structure will never hold, and it will eventually collapse.
How to develop work plans for Generation Z.
We are observing that Generation Z has different preferences when it comes to searching for and accepting employment, although in Mexico, the majority still accept what is offered due to economic conditions.
Nevertheless, we can recognize that they understand the inefficiencies of the labor system, such as the issue of seeking a reduced work schedule.
The process for integrating this new trend of rotation and the inclusion of new generations into the workforce appropriately follows this procedure:
Definition:
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Construction:
Adaptation:
Integration:
Startup:
Control:
Characteristics and expectations of Generation Z in the labor market.
The response to improving retention does not lie in office perks like freebies, snack tables, colorful spaces, and fun chairs, although employees do appreciate these amenities.
Generation Z no longer gives away their time and work; they only perform the tasks for which they were hired. They have better things to do outside the office, and attempting to change this would be like swimming against the current.
Some strategies to retain talent may include:
And that's it. Seriously, giving gifts to employees, having themed Fridays, playing games in the company's green areas, and cultural days are actions that no longer work. While employees appreciate these gestures, they are not sufficient for retention.
What truly works is the dynamism in their work, the ability to feel they are doing new things. It is about their quality of life. In reality, Gen Z employees, especially in Mexico, seek nothing more than not having their leisure time and pay infringed upon. Emotional salary is now perceived as a modest strategy that serves as a palliative to avoid addressing what the employee truly wants: better working conditions and pay.
Increasing salaries may seem challenging; however, considering all the costs that can be cut from ineffective activities and the increase in efficiency that motivated employees can bring, the issue of salaries can be addressed with a well-crafted personnel management and benefits plan.
In summary, do not fight against turnover.
Employees will be proud to resign from your company and may even make a TikTok about it.
References:
Project QA
6 个月Interesting perspective, but if an employer wants loyalty it has to give it, and visa-versa, however in the UK at least a key loyalty enabler was a good company pension. These have been erroded under various pretexts or 'flexibilty' over time, now a company just gives a % of salary (buying themselves out of any future commitment). Any employee who thinks this is loyalty' might think the % is just factored in to the monthly employee cost, its no future comitment, so unsurprising GenZ and others may have considered this as lessening of loyalty. Just like training, used to done by an organisation for its own growth, but these days an employee has had to get their own as expediantly as possible (self directed 'learning', never workplace experience) just to get your job, further undermining 2 way loyalty. CBT an excuse for real people interaction skilling, no Let me test my understanding' just tick box parrot fashion. For all the evolution of employer-employee, just because you can doesn't = you should (or should have), modern employee-employer ballance is perhaps not so ballanced anymore, reaping the (lack of) loyalty sown, the cost cutting/divesting with employees? Has the evolution really been benificial for either party?
Breakthrough Business Mentor | Transformational Leadership Mentor and Advisor | Fractional COO
9 个月Excited to dive into your insights on attracting and retaining Gen Z talent! ??