‘This year’s Staff Retention Report is a wake-up call for Australian organisations, particularly small businesses and not-for-profits’
Think performance reviews are integral to keeping staff motivated and loyal to your organisation? Think again.
Indeed, performance appraisals are contributing to adverse costs to businesses through an increase in resignation rates, according to The Institute of Managers and Leaders (IML) 2018 Staff Retention Report.
Indeed, companies with formal performance plans in place see a higher resignation rate (+0.5%) than those who don’t, with 28% ditching the performance plan all together.
Moreover, it found that organisations that focus on a learning culture rather than performance appraisals for development also experience lower voluntary staff turnover rates. Those who implement a formal training policy report an average 0.4% less in their resignation rates.
It also found that limited opportunities for career advancement and progression is the second most reported motive for staff resigning with 58.0% of organisations losing workers for this reason.
IML chief executive, David Pich, said the key to creating an effective and successful retention strategy is understanding your people “beyond the workplace”.
“After all, we all work harder so we can live better,” he said.
Pich added that the report has shown that flexible work arrangements, increased superannuation contributions and dropping the performance plan support a “healthy stress-reduced work-life balance” and a realistic employer attitude towards what really matters to staff.
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“Ultimately, if organisations show they care about their people, their people will show genuine commitment to their work and the business.”
Moreover, the report found a startling rise in the proportion of resignations in annual staff turnover, escalating 12% in the last year.
The report also found the national resignation rate has seen the sharpest rise (+5.3%) in five years.
Moreover, between 2017 and 2018, resignation rates have increased by 1.2% to 10.2% in businesses with turnovers between $5 to $10 million annually.
Publicly listed companies show the lowest resignation rates of all company types at only 9%, while the highest can be found in the non-profit (12.7%) and not-for-profit (12.1%) sectors.
This year has also seen a boom in the demand and popularity of flexible work environments. Of the 12 factors that drive resignation rates measured by the Staff Retention Report, only those related to flexible work increased while all other factors saw a decline.
The largest rise in the reason given by resigning staff in the past year was the lack of flexible start and finish times (+1.8%) as well as the lack of flexible working arrangements (+1.4%).
Factors that have been popular year on year such as insufficient financial reward surprisingly saw the steepest drop (-7.3%) followed by conflict with a manager or staff member (-6.5%).
The flexible work trend continues to be reflected in the strategies organisations are implementing to combat and reduce resignation rates.
Of the nine groups of strategies measured in the report, the reviewing and implementing of flexible work practices has seen the largest increase in popularity (+3.9%), with 43.0% of Australian organisations employing flexible work policies.
IML’s general manager of corporate services and research Sam Bell FIML said this year’s Staff Retention Report is a “wake-up call for Australian organisations, particularly small businesses and not-for-profits”.
“No organisation is too small or too young to invest in their people whether its professional development, flexible work policies or showing their staff members they care.”
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