WHAT: 30-minute webinar recorded on April 30th, 2024
WHO: Melissa Jezior, President and CEO, Eagle Hill Consulting
Jonathan Gove, Senior Human Capital Director, Eagle Hill Consulting
Lindsay Henson, Federal Industry Lead, Eagle Hill Consulting
TRANSCRIPT
0:00:00 Start
Moderator: Good afternoon and thanks everyone so much for joining us on this afternoon for a webinar hosted by Eagle Hill Consulting. We’re going to be talking about Eagle Hill’s Employee Retention Index, the Q1 2024 results. In terms of logistics for today’s webinar, we’ve got everyone in listen only mode just to keep out that background noise. But we do encourage your questions throughout the presentation. If you have any questions, just type your questions into the question or chat function. And once we get through the presentation, we’ll read those out loud and respond to your questions.
Following this session, you’re going to receive an email with a link to a replay of the session if you need it for future reference. If you have any technical or audio issues during the webinar, just call GoToWebinar at 1.800.263.6317 and they should be able to provide support. Also, we just wanted to let you know if you haven’t already, you can view the Eagle Hill Employee Retention Index at employeeretentionindex.com.
In terms of our agenda, we’re going to do quick introductions, we’ll do a deep dive on the Retention Index, and its Q1 findings, we’ll provide some recommendations for employers and how they can use this really useful information, and then we’ll take your questions. In terms of our speakers, we have three today. Our first speaker is Melissa Jezior, she’s the president and CEO of Eagle Hill Consulting. Also with us today is Jonathan Gove, he’s a senior human capital director with Eagle Hill Consulting, located in our Boston office. And then, last but not least we have Lindsay Henson, she’s our federal industry lead for Eagle Hill Consulting. And with that, I will turn the session over to Melissa.
Melissa Jezior: Welcome everybody. As Kelly said, I’m Melissa Jezior and I look forward to talking with you today. Alright we can go to the next slide. So I am really excited today to talk about our Employee Retention Index. It’s something we’ve been working on for the last year. And that’s really something we’re excited to share with you all today.
I believe it’s really a great tool for you all to be able to use going forward because it’s our first shot at really trying to take a look at better forecasting, what sort of turnover we can all expect over the next six months.
So I think with all of the workforce changes that we’ve all seen over the last couple of years with the Great Resignation, and now things are a much steadier state, I think this is going to continue for years to come in terms of the volatility.
And so we’re hoping this gives you a way to kind of peek into the future and be able to figure out what you’re going to do with it, how to react to it, how to how to plan for it and then eventually what to do with all of the results that you’re going to see here in a couple of minutes.
So if you go to the next slide, what we’ve put together is, we have what we’re calling a composite index. And that index really is comprised of four sub-indices. And these sub-indices are really the different factors that an employee considers on whether or not they should stay or leave an organization.
So the four sub-indices, the first one is organizational confidence. So this one is, how do employees feel about their organization’s future and their organization’s leadership? The next one is culture. So how are employees feeling connected? Do they feel valued? Do they feel recognized? For any of you out there with teenage children like myself, this is where they would say, what’s the vibe of the organization or what’s it like to actually work for that organization? And how does it feel to work for that organization?
The next index is compensation. So this is really, how do employees view their overall compensation, their benefits and their ability to grow their compensation at their current organization? So these first three indices really are very highly correlated to what makes a person stay at an organization. This last one, job market opportunity, is one that’s inversely correlated, meaning that when people see more opportunity outside their organization, they’re more likely to leave. So this is where people kind of figure out where do they think the grass is greener? And as a result, would they consider moving in the near term?
So let’s talk quickly on how to read the index. So very simply when the graph goes up, when the line goes up, like you’ll see on the far right there with that green arrow, it means that we’re expecting retention to increase. And when you see the line going downward, like you’ll see at the left side of the chart with the down red arrow, that’s when we’re expecting retention to decrease. So very simple, line goes up, increase, line goes down, decrease. That’s how it works.
00:05:17
And then last but not least before we get into the results, just a quick nod if there are any data geeks in the audience. Let’s talk quickly about our methodology. So we use a monthly omnibus survey conducted by Ipsos where we look at a minimum of 1,200 adults in the US who are employed either full time or part time. And we also combine our index with Ipsos’ job index so together those are combined and make up our overall composite index. And if anyone has any more questions about methodology, of course, feel free to ask us at the end.
So with that said, I’m going to turn it over to Jonathan who will get into all of the results of this quarter’s index. All right over to you, Jonathan.
Jonathan Gove: Thanks Melissa and yeah, let’s jump into it on the next slide. As people can see here throughout 2023 the index declined. In Q1 of this year, however, the index made its first gain. It’s reading at 96.8 which is up about 2.3 points from Q4 of last year. So the upward shift reflects a reversal in employee sentiment signaling that employees will be less inclined to leave their jobs over the course of the next six months.
Broadly, this may suggest that retention initiatives over the last year are having the desired effect and we’re going to dive into each of those components of the index that Melissa introduced in just a moment. We’ve started talking with clients about the implications of a period of higher retention, opportunities to leverage what might be a slow down in turnover, as well as how to navigate challenges this may introduce into the market. And we’ll talk about some recommendations on both side of that coin after presenting the rest of the index results.
So if we go to the next slide here, you’ll see the overall retention index as the purple dotted line and superimposed on that we’ve got each of the four indicators that make it up and the upward shift in Q1 in the index was driven by gains in all three of the internal factors, those factors Melissa mentioned. Organizational confidence, culture and compensation.
So now we can take a look at each of those in turn, go to the next page. So starting with organizational confidence, this indicator demonstrated the largest gain amongst the four sub indicators in Q1. It rebounded after a very sharp decline that you can see there from Q3 to Q4, rising back up about three points to 96.
So employee confidence in their organizations is strengthening, but its relative position has moved from a strength to a weakness over the last couple of quarters. You can see that in Q2 and Q3 of last year, it was at the top, so a strong contributor to likely retention. Now it’s the weakest and it’s dragged the overall index down for the last couple of quarters. So just about half of US employees have confidence in their organization’s future. And about the same number report confidence in their organization’s leadership. So building on that area of employee perception could be an opportunity for employers to further solidify opportunities to retain their priority talent.
Go to the next slide, we’ll see the culture indicator also strengthened this quarter up nearly two points to 97.2. And this is encouraging because it marks the first instance of strengthening employee sentiment on workplace culture. It was on a downward trend throughout 2023.
Next slide, so here we’ve got the compensation indicator which rose slightly to 98.6. And the largest factor to that indicator’s rise was an 8% jump in the number of employees who believe they have a path to increase their compensation while staying at their current organization. So for organizations that have annual performance cycles focused around calendar year end, it suggests that these sort of communications and year end processes were received well by employees in many cases.
Next slide, finally, the job market opportunity indicator which remains steady. It stands at 98.8. Employees’ views of the external market have been very stable over the last five quarters. You see this line is relatively flat compared to the others. So there’s lower variability than the employee perceptions of organizational confidence, organizational culture or compensation.
00:10:12
And I think this relative comparison reinforces the idea that if your organization can actively and intentionally address those factors within your control, those internal factors, you do have the ability to strongly influence retention. Next slide, what you’ll see here is we’ve broken down the retention index by each generation of the workforce. Gen Z, Millennials, Gen X and Boomers.
So if we start with the two lines in the middle, you’ll see that Millennials at the brown line and Gen X, the blue line workforce are more stable than Gen Z, which is the youngest segment of the workforce really along the bottom for most of last year. And Baby Boomers, the eldest, which sort of peaks at the top.
The Q1 findings show that Millennials and Gen X are more likely to stay at their jobs than their counterparts. Melissa will elaborate in a minute on this. But recognizing that these two large segments of the workforce are less likely to leave can provide an opportune time for employers to invest in development, in skill growth as the employees will likely stick around for organizations to realize a return on such investments.
Gen Z and Baby Boomers on the other hand, pose the largest risk for attrition for organizations based on this quarter’s results. Gen Z is the lowest scores which indicate the highest likelihood to leave for four straight quarters. Baby Boomers on the other hand, have been a little all over the map. For three quarters of last year they were the most likely to stay in their roles, but they’re becoming increasingly likely to leave with sharp drops for two consecutive quarters. And they were the only generation of workers to show a quarter over quarter decline in retention sentiment in the last quarter.
This segmented view can also help organizations that are able to map generations against their critical roles and their workforce more broadly. So, for example, if you have Boomers that hold vital institutional knowledge that can’t be easily replaced, you may need to continue with the retention initiatives focused on that group. Or if this segment’s been a bottleneck for promotion or advancement of rising stars in other generations, their higher likelihood to leave may provide an opportunity.
So given the way the Boomers line is moving all around wanted to deep dive on that. So if we flip to the next slide, you’ll see that we’re diving in on the Boomers here with the overall index as well as the components and the weakening of the retention index for Baby Boomers in Q1 was driven by particularly the weakening of the organizational confidence and organizational culture indicators for that group.
Within those categories we saw large declines in sentiment on their feelings that the work they do is meaningful and that they feel connected to leadership, team leads, and firm culture. So Boomer’s compensation perceptions had been trending down but shifted upward in Q1. And you can see here, the job market indicator for this segment held relatively stable as I mentioned before as it has for the index overall.
It’s possible that some of these responses are signaling retirement or other upcoming transitions for some of this generation. In which case, employers may want to focus on succession planning and knowledge transfer in the coming months.
One more slide please. And for our last segmentation, we’ll look at gender. As you can see here, workers that identify as male remain more likely to stay at their jobs than their counterparts who identify as female. Interestingly, Q1 marked the first time that the index’s trajectory was going in the same direction for both which is up and we’re also seeing the gap between these segments, which peaked a fairly wide gap in Q2 of last year, is closing.
So, I hope you found that the deeper dive on these index results interesting. In the coming months, we’re going to continue to share the index overall as well as try to explore data for different segments and highlight insights for discussion depending on what those segment results show. And I’ll turn it back over to Melissa to discuss in more detail some recommendations for your organization.
00:15:05
Melissa: If you flip to the next slide, so our first recommendation is around using this time to undertake strategic initiatives. I think one thing I’m excited about over the next six months, especially after spending the last two years in the Great Resignation period is I’m excited to have a moment of quiet. I think for all of us to take a collective breath and be able to figure out how to more strategically address our workforce, so I’m excited about that.
I have three kind of sub bullets under this recommendation that I wanted to talk through with you today. So the first one is around finding, there’s everyone, at least I know I do, I’m guessing a lot of you do as well have some initiatives that you maybe have been thinking about. That you know are going to be great for your organization, they’re going to help move the ball forward, but you also know may meet some employee resistance. We all know people don’t like to change.
So this could be anything from return to office to implementing a new process to doing a reorg. But I think it’s now the time to kind of look at some of these ports to look at these some of the initiatives and think about whether or not now could be a time to take advantage of this quiet to implement them.
And the reason we think that is because oftentimes these type of initiatives will not only create employee resistance but often come with additional turnover. So given that we’re expecting less turnover, your organization might be able to withstand some additional turnover from these type of initiatives that you can rest assured are not going to, it’s enough turnover that it’s not going to interfere with meeting your organization’s mission or your ability to achieve results.
So, I think this is kind of our first thing that we’re encouraging our clients to think about. The second one is looking at your low performers and I know this could be something for our federal folks on the line who might find it a little bit more challenging. But I think for our private sector counterparts where we’ve seen this with a lot of our clients right now is really trying to take a holistic look at your workforce and say, where are my low performers and how do I need to address them? And perhaps thinking about doing some more managed attrition with these individuals.
Now, I’m not saying a reduction in force, I’m not saying reduced head count. It’s not about that. It’s really more about looking strategically at workforce and figure out where are your productivity holes and then figuring out how to address those. And then the third thing is around brain drain. And Jonathan already started talking about this a little bit. We see during times of high turnover, as you guys know, right, institutional knowledge just leaves the organization.
So we’re saying, take this opportunity to shore up your institutional knowledge transfer processes and technologies so that when we do come across that next period of high turnover, again, you guys are in a much better position for maintaining institutional knowledge at your organization, which we all know is so important for operating. So with that, I’d love to invite Jonathan and Lindsay to share any of their insights that they’re seeing around this particular recommendation with their clients.
Lindsay Henson: Thanks Melissa, I’ll jump in. You already mentioned the one that immediately came to mind for me in terms of potential resistance, which for the Federal government is around the recent mandate for the increase to return to the in-office presence and increasing the in-office presence.
So over the last quarter, we’ve been seeing lots of agencies ramp up their efforts, setting timelines and targets and really working to clarify kind of the why, what’s the value proposition for employees, leaders, the entire workforce to get back into the office? That’s the one that comes to mind for me from federal. Jonathan?
Jonathan: Yeah, likewise, I mean, we’re seeing really stepped up efforts in return to office and I think that’s a combination of a real business imperative that people believe in together, perhaps with the idea that if the workforce is going to be more stable, it’s an opportunity to do that. Melissa already alluded to other things that we’re seeing probably more on the commercial side than federal. Restructuring, implementing new processes, productivity improvements.
So these are the kinds of initiatives that might have been delayed previously due to concerns about employee push back. But now it could be an opportune time to push those forward.
Melissa: Excellent, great, thanks Lindsay and Jonathan. So our second recommendation is around adjusting to a market in which talent and skills are less readily available. So people are not moving around, so we’re trying to set folks expectations that we are anticipating that if you need to fill an open position, it most likely will be slower to do so and probably take longer as well. So with that, we have kind of two thoughts on perhaps how to think about hiring over the next couple of months.
And the first is perhaps considering new recruiting sources as one possible remedy. The second one is taking a look and really focusing and honing in on the really top priority roles that you need to hire for. That will enable you to really consolidate all your recruiting horsepower over a fewer number of roles and hopefully create a bigger impact. So that’s our first thought.
00:20:38
The second thought is that given that the hiring market is much, we’re expecting it to be much slower over the next six months, it could be the opportune time to really then invest in building skills of your current people. So this is something Jonathan talked about as well in his earlier part.
So it could be a time to take a look at because you have people staying in their seats, the money you do spend on training and development will most likely be a great investment because people aren’t getting trained and developed and then walking out the door, they’re staying and applying those skills at your organization. So you could be thinking about skills like some easy ones to think about that I think are in a lot of people’s minds these days are AI and technology skills. Those could be ones to continue to invest in or it could be around building future leaders of your organization. That could be another great way to kind of focus on training and development over the next couple of months.
Lastly, we talked about Boomers leaving the organization. Oftentimes, Boomers are in more senior roles. So really spending time thinking about how do you plan for succession? How about the succession plan for those individuals? Or even perhaps thinking about creating more internal mobility as those folks leave the organization. The more internal mobility you create, you also will see an uptick in innovation because you’re sharing ideas across teams in your organization and an uptick in morale because people are excited about new opportunities that they see. So that’s my second recommendation or our second recommendation.
So Lindsay and Jonathan, would love to hear any thoughts that you guys have from what you’re seeing your clients focus on in this area.
Lindsay: Yeah, so I’m excited to talk about this and we’re seeing a lot in this space from a federal perspective. We are really seeing an emphasis on the workforce that is in place. Melissa, you talked about the development and really putting that investment into that workforce. And so a couple of kind of ways one is around identifying and addressing what are the barriers that exist to advancement and development in the organizations? Really understanding how that system works and how it supporting or constraining the development of employees.
So we’re seeing a lot specifically around that and then they’re using that information to kind of kind of help them, you talked about the skill development. That’s exactly what we’re seeing, skill development around leadership, technical skills, technology skills. So all of that kind of the gamut around that forward looking, what are the skills that not only do we need now, but kind of that forecasting, what it’s going to be.
Then related, we’re seeing a lot around the reassessing, what are the competencies that are needed to be successful in the roles that are adapting to industry changes that our government regulates? And so really trying to keep pace with one of those skills. And so really looking at what are the competency skills, et cetera in order to keep pace with the regulatory authority or responsibilities. Jonathan?
Jonathan: Same thing in the commercial sector. There’s so much emphasis and momentum around the heavy influence of technology on how work is performed. How do we use AI, what is our policy on ChatGPT? It’s changing every day and you can’t open up the business press without seeing some stories about this.
So with all of that happening, as a backdrop, I think employers can take advantage of what might be this coming period of stability in the workforce to drive forward the requirement or the ability or the offering to build technology skills. Maybe it’s implementing new tools or technologies that are going to be necessary capabilities and tools in the medium term, even the short term.
Despite some friction this might cause with training and you know, Melissa said people don’t like to change but getting out ahead of this heavy influence of the way technology is impacting work, I think is something else people should be thinking about if they’re going to have some stability in the workforce in the coming six months.
Melissa: So our final recommendation is around being mindful of employee engagement and not getting too complacent. So when Jonathan went through the different sub-indices, you may remember that there were two that even though people are staying or we’re anticipating people are staying, there are two that are still lower than we’d like to see and those are around culture and confidence.
00:25:04
So we think that now is the time to take a look at these particular two aspects in your own organization to figure out how you shore them up. So that when – hopefully we don’t move back to a Great Resignation – but if we do move back to obviously a time where we’re expecting more turnover, you’re kind of shored up in those two areas.
So one quick thing that I know we do a lot at Eagle Hill and we also recommend to our clients that where you can get a kind of a quick pulse on things that you need to improve in these two areas is doing stay interviews. Stay interviews are one-on-one conversations between an employee and a manager around, at a micro level, what’s working for them with their role, with how they’re being managed, with the work that they’re doing and really focusing on what currently keeps them at the organization that they’re working on.
So if you take a look at that and then you analyze it at a macro level, you can really get some good insights into some things that you could focus on fixing over the next six months. So Lindsay, Jonathan, anything to contribute here?
Jonathan: Yeah, building on that, Melissa, we’re seeing employers double down in general on analyzing engagement survey results and addressing those concerns. And I think during a period of lower turnover, you really have the time and the space to take action and to be recognized for it. So, I think that’s a trend we’re seeing on the commercial side.
Lindsay: And on the federal side, what I’ve heard a couple different times and almost verbatim is they’re in this kind of cultural no man’s land, right? So the culture that existed pre-pandemic kind of has evolved in unintended ways based on the pandemic. And now they’re lifting their heads up and this culture is not serving us. They have a lot of new people that have come into the organization and so there’s no kind of common core around, what are the operating behaviors that we all kind of need to work against? What are the norms, what are the expectations of how we work together? All of that kind of thing, and it’s really causing this disruption in terms of sentiment from employees that were here in the before time versus the folks who are newer to the organization.
I think what we’re hearing a lot is around needing to do a kind of a cultural reset. What’s the culture that we need now for our organizations? Recognizing it’s not everybody in the office and it’s not everybody remote. Finding some kind of middle ground and really being intentional about redefining that.
One of the things that now would be a really great time for is agencies and agency leaders to engage their organization, talk to their employees, get their input around, their staff perspectives on defining out and really detailing out what are those values, norms, behaviors, expectations that really combine and create that culture that they need in this new operating environment. So that’s the thing that jumps to mind what we’re hearing a ton of right now.
Melissa: Well, those are our recommendations. We’d love to open up the floor for any questions that you might have of the three of us.
Moderator: And just as a reminder to everyone, if you have questions, there’s a question box on your control panel. Just enter your question in there and I’ll read it aloud. And then we can get our speakers to respond to those. So the first question we have is when will the next index data be available? And how do you typically release that data?
Jonathan: I can take that one. So the Q2 results are going to be available in early July. We’ll collect and analyze data for April, May, and June. You can find that data at employeeretentionindex.com. And you can also, there’s a mailing list that you can subscribe to if you want to get updates about the index when things are coming out.
Moderator: Great, thank you so much. And then the next question we have is, is the index data available by other demographics, by industry, or geography? Is that information available also?
Jonathan: So, right now, we’re focused on looking at the US workforce at large and then starting by diving deeper into the generation and gender splits that we shared today. So we’ll look at that over the course of the year. Periodically we’ll plan to over sample in certain industries and sectors to help deepen the number of segmentations we can share. We’re not doing geography at the moment, although we can think about maybe doing that in the future.
Moderator: Thanks so much. The next question we have, I know the jobs reports come out on a regular basis, perhaps monthly. Are you finding that your index data is tracking at all with those job indexes and job data?
00:30:12
Jonathan: So the retention index is unique in that it’s forward looking. And of course, the other job numbers that come out reflect backward looking. So we would hope there’s correlation but there’ll be a little bit of a shift. So for example, the latest JOLTS data that the Bureau of Labor statistics puts out, the quit rate held steady. I think it was just over 2% for its last four months that were reported. So if we then look back to the six months prior to that in our results, our index was also holding steady with about half a point of change.
So I think we were signaling or suggesting that it would stay steady and it did show steady in the latest data. So as we get longer and longer sample sizes, we’ll be able to look and continue to see how they track against each other.
Moderator: Thanks so much. I know that, Eagle Hill, I’ve seen a lot of your research on employee burnout. Do you have any thoughts on how much of a factor burnout is in employees deciding to leave their employer?
Melissa: I believe – correct me if I’m wrong Tyler, I think you’re on the line – but I’m pretty sure that we’ve seen a significant downward trend in our burnout data over the last couple of months. We’ve seen it really level off since the pandemic a couple of years ago. So while still a factor, burnout I think is always a factor and something you really need to be paying attention to, I don’t necessarily think that we’re seeing that contribute to these numbers. Well, actually, now as I say that perhaps, perhaps because burnout is down, you are seeing people stay in their jobs more. They’re not looking for as much as the grass is always greener because they’re not as burnt out.
Jonathan: Yeah, I would say the same thing. So that downward trend that you mentioned would to me suggest that it’s consistent with the idea that people are going to be sticking around.
Moderator: That looks like that’s all our questions. So I can turn the program back over to Melissa just to close this out.
Melissa: Wonderful. Well, thank you all so much for joining us today. I hope you’re as excited as we are about something that will hopefully help all of us have a little bit more of insight into what we expect in the future and then how to use that to your advantage over the next six months. So thank you all for joining.
00:32:52 End
