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FINAL PPT Version.pdf
1. Increased Turnover
Human Resources Management
Professors
Filipa Rocha Rodrigues
Inês Caetano
Students
Fábio Simão 57870
Rita Bento 46778
Ana Garcia 57793
Conrad Ottosen 58490
Manuel Allende 57496
Group 6 TC
2. 1 Why is increased turnover a challenge ? 5 The Amazon approach
4 What employees value
2 Why are people leaving their jobs ?
3 The Great Resignation
6
7 The EY approach
8 The Spotify approach
Table of
contents
Costco’s approach
3. Why is increased turnover a challenge ?
Companies with high turnover rates suffer reputational damage, as potential
candidates fear that they may face the same problem as those who are leaving
Companies allocate a significant part of their budget to recruit and train
employees, so with increased turnover , this implies that companies will
incur in extra costs
Increased organizational costs
Hindering reputation
Productivity losses
If companies experience high turnover levels, this may result in losses in
productivity as new employees need to go through the onboarding
process and are still getting used to the pace and rhythm of working of the
organization
4. Why is increased turnover a challenge ?
With employee turnover, companies also lose talents which are incredibly important
“assets” to progress
Loss of talent
Stability
Stability also plays an important role in any organization. Employees that are longer
associated with a company tend to better portray the values and culture of the company.
On the other hand, companies that suffer constant changes in their employee structure
are less likely to portray the above mentioned in an effective way and, at the same time,
hinder the company´s mission and vision and, thus, its stability
5. Lack of growth and progression
Employees who do not have an opportunity to step
up in their careers are more likely to become anxious
and tired of their current positions and thus, more
likely, to start looking for jobs elsewhere
Inadequate compensation
According to a Forbes article most employees expect
a 3% annual increase in their paycheck as opposed to
a 10 to 20% prospectus of a pay boost if they switch
jobs to more appealing companies
Poor management / Uninspiring leaders
"Employees do not leave companies, they leave
managers". Poor management is one common source
of demotivation at work
Intense workload
A study conducted by Deloitte pointed out that 77% of
respondents have experienced burnout due to intense workload,
from which 72% have resigned from their positions for that exact
reason
Why are people leaving their jobs ?
6. The Great Resignation
2021, other than the Pandemic was also a year that registered unprecedently high levels of turnover .
Rather than focusing on developing effective retention policies, companies were more focused on "band aid "
policies, such as "thank you bonuses " without focusing on strengthening relational ties in such difficult times.
According to this study , 40% of employees stated they were somewhat likely to leave their current job ( in the next
3-6 months), particularly in Leisure and Hospitality, Healthcare and social assistance and Goods producing
industries.
7. The Great Resignation
As for employers, around 53%
were experiencing greater
turnover in comparison to prior
years and 64% expected that this
numbers would continue to grow
11. From the Great Resignation to the Great Retention
According to the US career institute, around 76% of employers are concerned with the
employee turnover rate.
Hence, the challenge in 2023 is to transition from :
Great Resignation Great Retention
13. Amazon's High Turnover
Rates: The Revealed 150%
Annual Rate
Endgadget leaked confidential documents in October 2022, revealing that
Amazon had a whopping 150% annual turnover rate.
14. A Looming Worker's Shortage
by 2024?
Studies suggest that if Amazon fails to address the high turnover issue, it
could face a worker shortage in the US by 2024, potentially impacting its
operations and growth.
15. Amazon's High Turnover Rate
Senator Bernie Sanders - "one
of the most dangerous
companies in America."
The Strategic Organisation
Centre (SOC)
Toxic company culture
Huge amount of workload and
disregard for employee's
private lives.
Lack of incentives
No additional compensation
for working extra hours.
Lack of Satefy Practises
16. Amazon: Building an
Attractive Company
Culture
Amazon has been tackling its company culture and high turnover rate by
implementing strategies that improve employee compensation and
benefits. But how is this affecting their image in 2023?
17. Increased Compensation: Addressing
Turnover
New Hourly Wage
Amazon is addressing its high turnover rate
with the introduction of a new hourly wage,
increasing the compensation of its
transportation employees to more than $19
per hour, which is more than double the
federal minimum wage.
Improving Employee Benefits
Amazon gives all of their employees benefits,
which include: Healthcare, retirement plans
and parental leave (offering up to 20 weeks
of fully paid leave)
18. Upskilling
1 Education and Tuition
Reimbursement
• Career Choice Program
• Pre-Paid Fees
2 Career
Advancement
• Surget2IT
• Upskilling 2025
3 Data-Driven Insights
Following the backlash
caused by the
Endgadget leak, Amazon
began using and
recording concrete data
to aid in its efforts to
address the issue of its
high turnover rate.
Upskilling is Amazon's biggest bet in addressing the high
turnover challenge that businesses face today.
19. The Value of Upskilling in
Today's Workforce
Upskilling is essential for career growth, providing workers with
opportunities to advance, earn higher pay, and find more fulfilling jobs.
20. Primary Motivation for
Upskilling
1 Career Advancement
59% of workers consider
career progression as the
key motivation for
upskilling.
2 Higher Pay
17% are motivated by the
desire to find a new job
with a higher pay.
3 Fulfilling Job
11% seek more fulfilling
roles that require
additional skills to match
their aspirations.
4 New Opportunities
10% plan to look for a job
with more room for
advancement.
22. Costco's Low Turnover Rate
Costco’s business model,
allows the company to make
most of its profit
from memberships.
Higher entry-level wages
Company's commitment to
providing employees with a fair
and competitive compensation
package from day one.
Incentives / Health Benefits
According to Glassdoor, Costco employees rated the company a 4 out of 5, putting it well ahead of competitors like Target (TGT)s.
Memberships
Costco's employee benefits
provides its staff with access to
comprehensive healthcare,
retirement plans, and other
perks.
23. The Numbers Behind Costco's
Success
Costco’s practices are clearly more expensive, but they have an offsetting
cost-containment effect: Turnover is unusually low, at 17% overall and
just 6% after one year’s employment. In contrast, turnover at Wal-Mart is
44% a year, close to the industry average.
24. The Long Run Win
• For a Costco employee, if they quit, the cost of replacing them is
$21,216. This means that their annual salary is equal to:
- Annual Salary (Costco) = Cost of Replacing Employee / 0.60 =
$21,216 / 0.60 = $35,360
• Similarly, for a Sam's Club employee, if they leave, the cost of replacing
them is $12,617. The annual salary for a Sam's Club employee is
calculated as:
- Annual Salary (Sam's Club) = Cost of Replacing Employee / 0.60 =
$12,617 / 0.60 = $21,028.33 (approximately)
• Total Annual Cost due to Turnover = Number of Departing Employees
x Cost of Replacing Employee
- For Costco, the total annual cost due to employee turnover
(17%) is $244 million - $3,628 per employee.
- For Sam's Club, the total annual cost due to employee turnover
(44%) is $612 million - $5,274 per employee.
The calculation is based on the assumption that the total cost of replacing an hourly employee is 60% of their annual salary.
26. • There has been an increase in employee turnover in several companies,
the consulting area is one of the areas where this problem is being seen
the most by the new generations.
• More than one in three staff members, or 2700 workers, resigned from
consulting giant EY in the year to March 2022.
• EY’s total staff numbers fell between the 2021 and 2022 reporting
periods,.
• 20% of the employees who used to work in the consultancy have fallen.
EY Turnover
27.
28. • EY employees indicate that there is an overload of work. His work hours have been up to 84
hours a week. This is equivalent to 12 hours of work every day.(El Pais)
• They denounce that since the staff "is extremely short" and the rotation is "exaggerated", they
have had to dedicate themselves to training the new additions, a task for which they do not feel
prepared, and even assume the functions of team leaders.
• The combination of endless work days, short deadlines, and obligations above their position in
the organizational chart, have led to transforming a work ecosystem that is already hard in itself
into an unsustainable ecosystem in the long term, which threatens to cause new departures
and raise turnover even further.
Why did turnover increase at EY?
29. • EY wants to reduce the turnover of its employees and aims to
improve the mental health of staff and the safety support
structures within the company.
• It also has a plan to divide the company into separate auditing
and consulting businesses in the future. Therefore, work tasks
will be divided and there will be more vacancies.
• The firm has almost 400 open roles. Improving learning
opportunities.
What does EY think about reducing employee turnover?
30. The following survey gave this results:
• 24% of employers want employees to return to the office five days a week.
• 88% of the workforce wants to work remotely at least two days a week.
• 31% of respondents say salary increases are key to addressing employee
turnover, but only 14% of employers agree with this perspective.
EY has been a participant in conducting surveys in companies to
review what employees are looking for.
González, C. (2022, August 11).
32. Spotify's beliefs
Outcome-Centric Work
Shift from Office-Centric to
Outcome-Centric Work Culture:
Work should be focused on
productivity, not physical
presence in the office.
Flexible Effectiveness
Empower Flexibility for Enhanced
Effectiveness: Effectiveness
should be based on outcomes, not
office hours; providing freedom in
work location enhances
productivity.
Balance andTalent
Enhance Work-Life Balance and
Tap into Talent: Offering flexibility
supports work-life balance and
opens doors to new talent, while
retaining current team members.
33. Spotify's "Work From Anywhere" model
"My Work Mode"
Employees have the option to work remotely, on-site, or in a hybrid arrangement, with the specific balance of
remote and on-site work determined jointly by the employee and their manager.
Location choices
Spotify is expanding location flexibility, allowing employees to choose the country and city they work from. All
Spotify employees enjoy the same "My Work Mode" flexibility. If an employee selects a location that lacks a nearby
Spotify office, we provide support through co-working space memberships for those who prefer office work.
34. Spotify's "Work From Anywhere" results
• Reduced Turnover and Increased Diversity: Spotify reported a 15% lower attrition rate in the second quarter of
2022 compared to the same quarter in 2019. Notably, the company witnessed an increase in diversity, with Black
and Hispanic representation rising from 12.7% to 18% from 2019 to 2021. Additionally, the percentage of women
in leadership roles globally increased from 25% to 42%.
• Geographical Expansion: Spotify expanded its reach, registering in 42 U.S. states beyond its traditional New York
and California locations. In Europe, the company extended its presence to countries such as Germany, Spain, and
the Netherlands.
• Enhanced Talent Pool: The initiative attracted talent from diverse backgrounds and locations. Approximately 6%
of employees relocated after the policy's introduction, and around 150 employees (representing 2% of the
workforce) moved to different countries. Almost double that number chose to relocate within the United States.
• Streamlined Hiring: Spotify's time to hire decreased from 48 days to 42 days since the implementation of the
"Work From Anywhere" policy, providing a substantial advantage in a competitive labor market.
• Emphasis on Well-being: Spotify emphasized the importance of trust, flexibility, and energy in fostering
employee well-being. Moments of spontaneous collaboration and idea sharing were highlighted as contributors
to mental health and well-being among employees, regardless of their physical work location.
35. Final remarks
• Employee turnover is a significant challenge faced by companies today, with consequences ranging from
increased costs to damage to organizational reputation, decreased productivity, and loss of talent.
• The root causes of high turnover include lack of growth opportunities, inadequate compensation, poor
management, and intense workloads.
• EY faced high turnover rates, partly attributed to excessive workloads, and responded by aiming to improve
employee mental health and safety support structures while considering splitting into separate auditing and
consulting businesses.
• Costco's success in retention is attributed to its positive work environment, work-life balance, higher entry-
level wages, health benefit plans, educational assistance, and unique perks.
• Spotify addressed turnover by introducing a flexible "Work from anywhere" policy and creating a Community
Experience to foster a sense of belonging among employees.
• Transparency and Communication + Regularly Evaluate and Adapt Maintain open and transparent
communication channels with employees. Conduct exit interviews to understand the reasons behind turnover
and use this feedback for improvement.
36. References
• Sainato, M. (2022). Amazon could run out of workers in two years, a study suggests. The Guardian
• De Smet, A.(2021) Great "attrition" or "Great "attraction" ? The choice is yours. Mckinsey
• Segal, E. (2022). Amazon Responds to Release of leaked documents Showing 150% Annual Employee Turnover. Forbes
• Del Rey, J. (2022). Leaked Amazon memo warns the company is running out of people to hire. Vox.
• Paulise, L. (2022). Amazon’s High Attrition Could Cost $8 Billion Annually. Forbes.
• Bernie Sanders announces Amazon safety investigation. BBC
• Strategic Organizing Center. (2021). PRIMED FOR PAIN: Amazon’s Epidemic of Workplace Injuries.
• Berman, B. (2018). Costco's Business Model is a Lesson in Employee Branding. Harvard Business Review
• Tadros, E. (2023, April 4). EY disputes data showing more than one in three staff quit in a year. Australian Financial Review. https://www.afr.com/companies/professional-
services/ey-disputes-data-showing-more-than-one-in-three-staff-quit-in-a-year-20230331-
p5cx41#:~:text=More%20than%20one%20in%20three%20staff%20members%2C%20or%202700%20workers,exited%20during%20the%20same%20period.
• Sánchez, Á. (2021, April 27). Auditores de ey en España denuncian ante Sus Jefes Semanas de Trabajo de 84 horas: “es insostenible.” El País. https://elpais.com/economia/2021-
04-27/auditores-de-ey-en-espana-denuncian-ante-sus-superiores-semanas-de-trabajo-de-84-horas-es-insostenible.html
• Vélez, A. M. (2023, February 1). Despedido de Una “big four” por intentar Cumplir Su Horario: ‘es esto o te echamos.’ elDiario.es.
https://www.eldiario.es/economia/despedido-big-four-cumplir-horario-echamos_1_9898831.html
• González, C. (2022, August 11). Tendencias del Mercado Laboral en Latinoamérica según ey. EY US - Home. https://www.ey.com/es_do/workforce/tendencias-mercado-
laboral-latinoamerica-ey
• Kidwai, A. (2022, August 2). Spotify allowed its 6,500 employees to work from anywhere in the world. Its turnover rate dropped. Fortune.
https://fortune.com/2022/08/02/spotify-allowed-6500-employees-work-from-anywhere-in-world-turnover-rate-dropped-remote-work/
• Industries with the Highest (and Lowest) Turnover Rates. (n.d.). https://www.linkedin.com/business/talent/blog/talent-strategy/industries-with-the-highest-turnover-rates
37. References
• Sánchez, Á. (2021, April 27). Auditores de ey en España denuncian ante Sus Jefes Semanas de Trabajo de 84 horas: “es insostenible.” El País. https://elpais.com/economia/2021-04-27/auditores-de-ey-
en-espana-denuncian-ante-sus-superiores-semanas-de-trabajo-de-84-horas-es-insostenible.html
• Tadros, E. (2023, April 4). EY disputes data showing more than one in three staff quit in a year. Australian Financial Review. https://www.afr.com/companies/professional-services/ey-disputes-data-
showing-more-than-one-in-three-staff-quit-in-a-year-20230331-
p5cx41#:~:text=More%20than%20one%20in%20three%20staff%20members%2C%20or%202700%20workers,exited%20during%20the%20same%20period.
• Vélez, A. M. (2023, February 1). Despedido de Una “big four” por intentar Cumplir Su Horario: ‘es esto o te echamos.’ elDiario.es. https://www.eldiario.es/economia/despedido-big-four-
cumplir-horario-echamos_1_9898831.html
•González, C. (2022, August 11). Tendencias del Mercado Laboral en Latinoamérica según ey. EY US - Home. https://www.ey.com/es_do/workforce/tendencias-mercado-laboral-latinoamerica-ey
