A new report has raised the alarm on Australian worker resignation rates. The 2018 Staff Retention Report, released by the Institute of Managers and Leaders, has found the national resignation rate has seen the sharpest rise (+5.3 per cent) in five years. Meanwhile, however, the total staff turnover rate has seen the sharpest drop (-10.7 per cent) in five years. These figures indicate an alarming rise in turnover numbers attributed to resignations, jumping from 63 per cent in 2017 to 75 per cent in 2018.
Most alarmingly amongst the report’s findings are the jumps in resignation rates for small businesses. Between 2017 and 2018, resignation rates have increased by 1.2 per cent to 10.2 per cent in businesses with turnovers between $5 to $10 million annually.
This statistic comes in view of the government’s recent fast-tracking of the $29.8 billion tax cut for Australian small business. However, with the cost to replace a single staff member adding up to an average of $22,135 for small businesses, the new lowered tax rate benefit will pale in comparison to the costs to replace increasing numbers of resigned staff.
Meanwhile, big business’s resignation rates show incredibly positive outcomes with the largest decrease of 1.3 per cent to 10 per cent for organisations turning over $100 to $200 million annually. Publicly listed companies show the lowest resignation rates of all company types at only 9 per cent, while the highest can be found in the non-profit (12.7 per cent) and not-for-profit (12.1 per cent) sectors.
Flexible work trend
2018 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 per cent) as well as the lack of flexible working arrangements (+1.4 per cent). Meanwhile, factors that have been popular year on year such as insufficient financial reward surprisingly saw the steepest drop (-7.3 per cent) followed by conflict with a manager or staff member (-6.5 per cent).
Time to ditch the performance review
Performance appraisals – the employer’s long-upheld scripture on measuring job performance – is seeing adverse costs to businesses through amplified resignation rates, suggesting it might be time for some businesses to ditch the practice all together. Companies with formal performance plans in place see a higher resignation rate (+0.5 per cent) than those who don’t, with 28 per cent ditching the performance plan all together.
Organisations that focus on a learning culture rather than performance appraisals for development also experience lower voluntary staff turnover rates, with those who implement a formal training policy reporting an average 0.4 per cent less in their resignation rates. This figure is also a reflection of factors driving resignation rates; limited opportunities for career advancement and progression is the second most reported motive for staff resigning with 58.0 per cent of organisations losing workers for this reason.
Commenting on the recently released findings, 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.”
“The key to creating an effective and successful retention strategy is understanding your people beyond the workplace,” said IML Chief Executive, David Pich FIML. “After all, we all work harder so we can live better.”