Is there a company or nonprofit that is not bemoaning the current or anticipated turnover of their Millennial employees? No, and for three good reasons: turnover is costly; it affects a business’s performance, and it may "snowball." A recent Deloitte survey says that two-thirds of Millennials intend to leave their current jobs by 2020.
According to the Bureau of Labor Statistics, that might be very true since this is 2016 and the median turnover rate for employees 25 to 34 years old is 3.0 years. Two-thirds of your Millennial employees could leave in four years! One of the biggest reasons Millennials leave is to be developed for a future role—and they often take their work friends with them.
In most organizations, the Millennial generation includes “emerging leaders.” Bersin by Deloitte says that “emerging leader” is “an individual contributor who is a strong performer and is preparing to assume a first-time manager role.” These star performers know your products, services, customers, and culture. Your organization has invested heavily in them: between the cost of the recruiting process itself, orientation, OTJ training, additional training, the development of customer relationships (many Millennials have customer-facing positions) and the negative effect on employee and supervisor engagement and performance when someone leaves, turnover is costly. Replacement costs are documented at 0.5 times annual income for an hourly employee, and 1.5 times annual income for a salaried employee.
Instead of spending on replacement costs, why not target those dollars for longer-term emerging leader development that increases the odds of retaining these valuable future leaders?
How does development of emerging leaders work as a retention tool? There are three ways:
When Millennials stop learning, they leave. Millennials want to be marketable inside and outside of their organization. They know their parents stayed too long in companies that did not develop them and then were replaced by new hires with specific needed skills. Millennials will not wait for obsolescence to happen to them. They leave if they think there is no more development in their future.
Development of emerging leaders results in a “talent pool” from which the organization can hire when a supervisor or front line leader position is added or becomes available. Whenever the organization has to hire from outside to fill these first-time management positions, two negative things happen: the cost of recruiting rises because external hiring is time consuming and more expensive than hiring from within; and there is a strong implied message sent to existing employees that says, "You will never move up."
Emerging leader development is a "promissory note" that speaks to the value that the organization places on their potential future role. Millennials understand that every organization decides where to invest its profits. The choices include technology, office equipment, R&D, and performance-enhancing training. Development builds employee skills – and patience. Readiness for internal interviews, actual opportunities to interview, etc., send the message, "We think you can lead in the future!"
Inc.’s Amanda Slavin, in "4 Ways to Increase Retention Among Millennial Employees,” says that employers need to:
Know what matters to Millennials. Organizations focused on attracting emerging leaders often use individual development plans and strategies as "carrots" to stay. Once hired, retention of emerging leaders is an individual success or failure, especially for the most individualized generation of all time: Millennials. Managers need to have one-on-one conversations to uncover what matters to each employee.
Involve and evolve. According to a 2015 Fast Company article, Millennials are willing to take a 15 percent pay cut to obtain a position where they can make an impact. Involve them in hiring decisions or in the selection of a nonprofit to assist, and evolve their skills with training! They can make an impact at your organization if they acquire the skills to move up! Provide opportunities for growth: training, mentoring, stretch assignments, job shadowing, leading a Lunch & Learn, etc.
Provide perks with purpose. Coconut water, free food and foosball are great as far as they go, but training is a perk with a purpose! Millennials are all about developing themselves, positioning for upward career movement, and being part of the growth of the organization.
Be flexible. Millennials find experiences outside the normal work day to be energizing and engaging. External experiences might include working from a café, attending events or conferences, and offsite training. When the experiences align with the organization’s goals and their goals, all the better!
Turnover cost avoidance, while very valuable, is not the only bottom line benefit of developing your emerging leaders. The most successful management hires at any level are developed and come from within. They know the products, services, customers and culture. They have seen the organization survive and thrive many times, over time. Developing emerging leaders enables an organization to increase its odds of a successful future by increasing the number of long term employees ready to take leadership positions.
Nancy S. Ahlrichs is a business development consultant for FlashPoint,