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The brave new (business) world

Our Great Attrition research found that 31 percent of employees who left their job in the past six months did so to start a new business. What can organizations do to engage and retain these employees?
Bonnie Dowling

Partners with clients to achieve and sustain their strategic priorities through a focus on their people and building the skills, capabilities, and culture needed today and in the future

Marino Mugayar-Baldocchi

Partners with organizations to provide research-backed expertise on leadership, talent management, learning and development, and future of work topics

Bill Schaninger

Designs and manages large-scale organizational transformations, strengthening business performance through enhanced culture, values, leadership, and talent systems

Joachim Talloen

Develops standardized, scalable solutions and advises clients on talent, operating model, and broader organizational strategies, with expertise in behavioral economics and data science

People don’t leave jobs, they leave bosses—or so the old saying goes. Fed up with your manager? Have a business idea? Why not try your own thing?

At least, that seemed the prevailing logic for the record 4.4 million U.S. small business applicants in 2020. Not only was that up by nearly a million applications from 2019, but the trend appears to have continued in 2021. Our research into the Great Attrition found that 31 percent of employees who left their job in the past six months did so to start a new business. Additionally, parents and minority women were comparatively more likely to leave to start a new business or to join the gig economy.

What can organizations do to engage and retain these employees? We propose three focus areas based on our research:

  1. Value workers and ensure they feel a sense of belonging. Our research showed that the top three reasons employees left their organization in the past six months were not feeling valued by the organization (54 percent) or their manager (52 percent) and not having a sense of belonging (51 percent). This disproportionally affects populations that are leaving in greater numbers for non-traditional work: 60 percent of parents reported not feeling a sense of belonging at work—relatively speaking, 30 percent more than colleagues without children.

    In related research, we found that in organizations that improved their individual and team performance during the pandemic, 60 percent of leaders increased the amount of time they spent recognizing their employees.

    Valuing employees will ultimately improve performance and reduce attrition, but it must be genuine and meaningful. For example, a large consumer packaged goods company encouraged managers to have regular 1:1 check-ins with direct reports. The more frequent the check-ins, the more employee engagement scores went up.

  2. Empower employees. Autonomy at work is highly valued by employees looking for non-traditional work opportunities, particularly women of color. Our research shows organizations where leaders successfully empower others through coaching are nearly four times more likely to make good and fast decisions and outperform their industry peers.

    For example, one large retailer gives each of its sales associates the ability to offer a discount on any store item for whatever reason the employee deems valid. They trust their people’s expertise and their desire to provide the best customer experience. In return, their staff feels trusted and that their work matters to the company.

  3. Encourage setting work-life boundaries. Establishing work-life boundaries has been particularly hard during the pandemic. As many employees continue to work from home, they struggle to create and maintain work-life boundaries because of their responsibilities, both at home and as an employee. This can lead employees with caretaking responsibilities to work extra-long hours and be unable to devote valued time to their family. This is especially true among women of color and parents. Fifty-nine percent of women of color report wanting to care for family as a key factor when considering leaving their job.

    Ultimately, 50 percent of employees cited that they left their job in the past six months because they did not have good work-life balance. Encouraging boundaries to improve work-life balance can help reduce attrition, especially among crucial employees at risk for leaving to start a new business or join the gig economy. A large banking organization mobilized to help its employees set work-life boundaries by implementing company-wide meeting-free Fridays, discouraging working on weekends, and enforcing a strict policy against weekend emails.

Frustration with management shouldn’t be the motivating factor in an employee’s departure to chase entrepreneurial aspirations. Managers need to shift focus to the human aspect of their organization; employees want to be appreciated and recognized for their expertise while also having a life outside of work. If organizations continue to disregard these foundational elements, more talent will leave to become the master of their own happiness—or unhappiness.

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This blog post is part of a series on the Great Attrition, exploring the immediate actions leaders can take to retain and attract talent at a time when employees are leaving their jobs in droves. Topics include how to keep top-performing talent, the nuances emerging in different industries, adaptability as an antidote to burnout, the implications for the labor shortage and what to do about it, how to build a sense of community in the new employee landscape, the complex relationship between DE&I and attrition, the importance of employee experience, socioemotional support as the organization’s social glue, the need to reimagine and personalize flexibility at work, competition from the gig economy and entrepreneurism, and how to prevent premature retirement.

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