The Staggering Cost of Millennial Turnover

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Imagine if there was something lurking in your business that was costing you hundreds of thousands to millions of dollars every year, was detrimental to your company culture, and negatively impacting every facet of your business. You would probably spring to action to fix it right?

Well, Millennial turnover is that “something”.

Yet, when I talk to CEOs, business leaders, and partners at law firms, they often seem unaware of the extent to which Millennial turnover impacts their business. When we talk about Millennial turnover, we are talking about historically low retention rates of young talent across industries that cost mid to large sized companies and firms millions of dollars a year and billions of dollars to the US economy. Millennial turnover is not something for CEOs or industry leaders to grumble about and sweep under the rug. It negatively affects company culture, staff morale, innovation,  productivity, and every other aspect of a business. The total impact on your business may astound you.

Direct Costs of Millennial Turnover

Millennial turnover costs the US economy $30.5 billion dollars every year. Yes, each and every year.

For individual businesses, the news is just as bad.  Currently, millennials make up one-third of the workforce, and 36% of them say they expect to  leave their current employer in the next 12 months. And in the US, each of those employees that is currently scrolling through job boards at their desk generates on average of $150,000 of revenue per year for their company.

And once those Millennials leave, they need to be replaced. That replacement process includes advertising costs, interview costs, training costs, and a host of other onboarding related costs. Depending on the industry, these direct costs of replacing millennial staff can add up to anywhere from $15,000 at the low end to 50% to 200% of an employee’s annual salary at the higher end.

Can you say “OUCH”?

Those are staggering numbers. And with Millennials continuing to enter the workforce over the next few years and Gen Z on the workforce horizon, the direct costs associated with employee turnover may increase.

Those are only the direct costs.

Indirect Costs of Millennial Turnover

What happens when an employee leaves?

For starters, their work still needs to get done, and it is usually passed on to other staff. This is often a source of stress for their ex-colleagues who are responsible for picking up the slack.  In the paper The Impact of Staff Turnover on Workplace Demands and Coworker Relationships, the authors outline the problem for ex-colleagues clearly:

“…Turnover causes financial strain on organizations while they recruit and train new employees… disrupts organizational efficiency…can threaten the implementation and sustainability of new initiatives… likelihood of turnover among remaining staff increases when stress is high and coworker support is low…”

Let’s appreciate what the authors are saying for a second. Millennial turnover causes increased financial strain, decreased efficiency, disruption of new initiatives, and increases in turnover of the staff who are still working there.

Basically, Millennial turnover negatively impacts every imaginable aspect of a business or company.

And don’t forget, even once the Millennial moves on, you are not out of the woods yet.

The people who replace the Millennials who leave your company need time to get onboarded, trained, and brought up to speed before they can start contributing at max efficiency. This process can take between three and seven weeks according to a Millennial Branding survey, causing months of suboptimal performance.

Once CEOs and business leaders realize the extent of the Millennial turnover issue, it is as if they just realized their gas tank has had a giant hole in it for the last 20 miles. They jump to action, asking us at Launchbox365 to help them to reshape retention and engagement..

And through the new training and development needed:  coaching and mentorship from the inside-out, our team is able to to help them connect with their Millennial staff and provide the professional development and work environment and experience Millennials crave, reducing their Millennial turnover.

But the first step to getting help is admitting you have a problem. Business leaders must first appreciate Millennial turnover for what it is: a million dollar issue that negatively impacts every aspect of their business.

What about you? Got this issue?

Solving the Professional Service Industry’s Millennial Challenge.

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Houston, we, the professional service industry, have a Millennial problem. Millennials can expect their initial years in the industry to involve “paying their dues” through unengaging grunt work and brutal work hours with few opportunities for professional growth or training. The reward for surviving those monotonous early years is greater earning potential later in their careers.

Or, said another way, the professional service industry offers the exact opposite of what we know Millennials want from their careers.

And it is costing the industry millions of dollars every year.

On average, Millennials leave their employers after only two years on the job. This is wildly expensive for companies and leaves them with no talent in the pipeline to groom for future success in the industry. Though professional service companies must own some of the blame for their lack of appeal to Millennials, the issue is complex and it isn’t all the fault of the professional service industry itself.  So what is really going on with professional Millennials and what can be done about it?

To Invest or Not to Invest in Training for Millennial Talent

Millennial turnover is no small problem. For mid to large professional service companies, a high rate of turnover costs millions of dollars in direct and indirect costs.  

Employers are understandably frustrated. They feel that Millennials are graduating college without the necessary skills to succeed as professionals. Employers could close that gap by investing in training and professional development. But out of fear their young talent will leave anyway, they hesitate to invest in proper training and professional development opportunities.

This has created an endless negative cycle. Millennials don’t receive the training opportunities they value forcing them to look elsewhere for opportunities where they can learn and grow. This gives them a reputation for job-hopping, making employers even more hesitant to invest the time and money to train their young staff.

This is already playing out in law firms, which some think will be forced to break apart over the next decade due to a lack of up and coming talent to hand established firms over to after longstanding Boomer partners retire.

For companies, Millennials are an expensive and seemingly unfixable problem. But they are not alone: Millennials think the situation is hopeless as well.

Why Are Millennials Leaving?

We know that Millennials value work that is meaningful, provides opportunities to learn and allows them to make an impact in areas that they are passionate about. Yet, professional service companies continue their tradition of giving young talent long hours, dull work, a lack of opportunities to make a significant impact, and limited opportunities to work in areas of interest.

Millennials also rank salary below training and schedule flexibility when it comes to workplace perks. Yet, most companies continue to pay high salaries, are unbudging when it comes to flexible work hours, skimp on providing valuable professional development opportunities, and then throw up their hands in exasperation when their Millennials walk out on them.  

It really should not come as a surprise that Millennials are quick to leave the professional service industry given that companies have shown little willingness to cater to the needs and wants of Millennial talent. Senior Boomer staff who have spent their lives working their way up the industry hierarchy will exclaim that this is how it has always been! These Millennials need to toughen up!

This is a losing mentality for individual companies and the industry as a whole.

The professional service industry simply cannot afford to pass up on entire generations of talent because of an unwillingness to adapt to the needs of up and coming talent. Just like in any other industry, companies can (and must) make small adjustments to how they operate and invest in young, up-and-coming talent.  

How The Professional Service Industry Can Retain Millennial Talent

If current trends continue, many companies in the next decade are going to be forced to deal with a shallow talent pool as the most talented Millennials become frustrated and move on to other more Millennial-focused industries. Thankfully, there are practical strategies that companies can use to satisfy Millennial’s professional development needs, keep them engaged in their work and increase the likelihood that they stick around long enough for companies to see a return on their investment in young talent.

Pay Less and Train More

This bears repeating: professional development opportunities are the number one workplace perk among Millennials across all industries. It is possible for companies to invest more in training and decrease their risk of losing that investment simultaneously. To do this, some companies are lowering starting salaries and offering an increased emphasis on training opportunities as a perk to attract young talent.

At the end of the day, indulging Millennials in their desire for professional development is hugely beneficial for companies. Providing training helps close the skills gap, increases Millennial retention rates, lowers turnovers costs, and helps attract top talent that companies can groom for success in the industry.       

Alternative Career Paths

Not everyone needs to pop champagne on a private jet to feel fulfilled by their career. Companies need to provide alternative career paths for Millennials who may not be striving to summit the peak of the industry in terms of money and status, but who are more than capable of bringing value and passion to an organization.  

Creating alternative career paths often involves offering more diverse positions than were previously available. These new roles provide more opportunities for Millennials to focus on areas of the industry that interest them most and where they feel they can make the biggest impact. This is a draw to Millennials, even if that means they will be working for a lower salary. These alternative career paths may not offer the glitz and glamour of “making partner”, but they allow companies to appeal to a more diverse group of young talent and benefit from the value and passion they bring.

Adopt More Progressive Work Policies

No one is suggesting axing professional dress codes or adding ping pong tables and craft peer as office perks. But the service industry needs to begin to admit that if it is going to succeed, it needs to come out of the 1960s. That includes making greater efforts of inclusion, supporting greater work hour flexibility, and continued integration of digital and online tools that improve the experience of both the young staff and the company’s clients. The industry doesn’t need to be turned on its head, but it does need to work towards reflecting the world that its associates and clients live in.

The next decade is going to be critical for the  professional service industry. Gen Z, the generation after Millennials, has the job market in its sights, and the talent in Gen Z is going have similar expectations about the workplace as their slightly older Millennial colleagues. The professional service industry needs the best and brightest to succeed, but if it does not begin to evolve to appeal to young talent, it is going to be left fighting over the leftovers of the talent pool.

And for industry built around professionals, that is a scary thought.

launchbox recognized as top Millennial blog

launchbox365 was recognized as one of the Top 100 Millennial Blogs and Websites for Millennials.
See the complete list here.

launchbox recognized as top Millennail blog

 

quote – delinda forsythe
“Dan has a fresh message and a direct and highly effective style.” quote_end
– DELINDA FORSYTHE
CEO and Founder at Innovative Commercial Environments (ICE)

The “M” Word (Millennial): Reverse Ageism at its worst…

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We know that making sweeping generalizations about any group of people being “lazy,” “unprofessional,” “unreliable,” or “narcissistic” is repugnant. Unless we are talking about the dreaded “M” word,  Millennials. Then, apparently, it’s okay.    

After years of having their generation smeared by Baby Boomers, Gen X, and the media, Millennials are perceived negatively as professionals at first glance.

Millennials often enter a workplace climate in which it is okay to make negative assumptions about the quality of work they can produce, the professionalism they will display, and their dedication to their job.

It is called Reverse Ageism and it presents a serious hurdle to young talent in your office no matter how capable they actually are.

And the problem is not cost-free. The impact of these negative stereotypes contributes to high turnover rates of Millennials, costing the US economy billions of dollars every year and negatively impact the productivity and culture of individual organizations.  For an organization with 50,000 employees, 40% of which are Millennials, this can be a billion dollar problem annually – billion with a B.

With generational tensions already high, it is important to understand the extent of the negative stereotyping of Millennial professionals and how you can help rid your workplace of Reverse Ageism.

The Problem of Reverse Ageism

Regular stereotyping of Millennial workers in pop culture and offices alike has led to socially acceptable age-discrimination against younger staff. According to a report titled  Discriminating Against Millennials in the Workplace Analysis on Age Discrimination Against Young Adults, Millennials face a perception in the workplace from older staff of being “entitled, hard to train, and uncommitted to their position of employment.”

And this perception has real ramifications for the young talent in your office.

In their paper Too Old or Too Young? The Impact of Perceived Age Discrimination, authors Ed Snape and Tom Redman cite a study which found that “being seen as untrustworthy and being given less responsibility were common” among undergraduate business students. And that is if they are hired at all; experts now cite a hesitancy in employers over hiring younger staff.

Even worse, this is happening at the beginning of Millennial’s careers, right when they need opportunities to learn, develop, and hone their professional skills the most. But too often they are never given those opportunities, forcing them to leave their employer —re-confirming the ‘job-hunting’ stereotype— and continuing the negative cycle at their next job.  

Reverse Ageism Is a Million Dollar Problem for Companies

Ageism isn’t just a bummer deal for Millennials. If you are a mid to large sized company, reverse ageism could potentially be costing you millions of dollars, your most productive employees, and ruining your company culture.

On average, Millennials stay in a role for 1.3 years, which Gallup estimates costs the U.S. economy $30.5 billion annually. That’s a ton of coin.

And money isn’t the only loss for companies. Recruitment costs, onboarding costs, loss of productivity from watching colleagues leave, and lower productivity of new hires all negatively affect a company, its culture and its bottom line. Not to mention these young staff that are leaving are often more productive than senior staff and almost universally less expensive to hire, hurting your bottom line even further.

These are real costs to your company, but they are fixable. They require thought, time, investment and a commitment to emphasizing the strengths of your Millennial staff and helping the five generations working together today to bridge the gaps between them and leverage their unique strengths.

Millennials Have Unique Gifts and Gaps

Unlike the other four generations in the workplace, Millennials have a unique set of talents and disadvantages: what they may lack in interpersonal skills they make up for in fast research through collaboration, for example.  They have real strengths as employees. It is certainly true that they may not have the industry knowledge of a 30-year veteran, but that doesn’t mean they can’t bring powerful value to your organization.

For one, while it may be true Millennials lack some essential professional skills, they are happier than any other generation to develop and hone their skills given the chance. Gallup found that 87% of Millennials believe “development is important in a job” and development opportunities regularly score higher than pay when Millennials rank the benefits of a job.

Millennials are also fantastic when it comes to problem solving using technology, are very strong collaborators, and are professionally curious. The point being, while they may not be walking into your office on the first day of work as perfectly polished professionals, they have the eagerness and desire to learn that should allow you to sculpt them into the exact type professional you think will thrive in your organization.

The catch is that they know when they are liked, wanted, respected and valued.

Investment really is the key. Employers who want to put a stop to both the generational tensions in their office and the high turnover rate of Millennials need to take the time to train the enterprise to bridge generational gaps. That process starts with providing Millennials with the training opportunities that develop their professional skills and make them feel that they are valued in the workplace and gives them a sense of progressing as professionals.

We suspect you might even be surprised by what they can do.  

What’s Your Story? 3 Books That Will Help You Find Your Brand’s Heartbeat

This is a guest post by Shannon Fox, from the website MinuteMarketing. You can find the original post here.

Whether you’re developing your personal brand or selling a product or experience, you need to get in touch with your story. With so many options out there, people don’t just buy because of what you’re selling, they buy from you because of YOU.

Think of all the companies that have recently been embroiled in controversy, not because of their products, but because of a stance they took that didn’t resonate with their consumer base. Chik-fil-A and CEO Dan T. Cathy’s opposition to same-sex marriage. The #DeleteUber campaign that happened with Uber appeared to send drivers to JFK airport during a taxi driver strike against President Trump’s Travel Ban. Chik-fil-A’s fried chicken sandwiches may be delicious, but they’re not the only game in town. Uber may be convenient, but they’re far from the only ride-share company available. While neither company suffered insurmountable losses on the business scale, the resulting PR nightmares were the direct result of the new marketplace where consumers care more about your story and image than they do about your product.

But how do you become a company like Apple or Disney, whose story is something consumers believe in so much, they practically buy every product and experience the company puts out without question? How do you achieve a level of consumer loyalty that borders on fanaticism?

You get really clear on your story and your why.

What makes you you? Why should consumers choose your brand over a competitor? Why should they work with you? Why should they buy your products? Why should they choose the experiences you’re offering?

If you’re struggling with any of the above questions or aren’t sure how to deliver a compelling narrative about your company, I’ve compiled a list of three excellent books that will help you on your way to discovering the heartbeat of your story!

Book - The Storyteller's Secret

1) The Storyteller’s Secret: How the World’s Most Inspiring Leaders Turn Their Passion Into Performance by Carmine Gallo

From the publisher: In The Storyteller’s Secret, Gallo explains why the brain is hardwired to love stories – especially rags-to-riches stories – and how the latest science can help you craft a persuasive narrative that wins hearts and minds. “The art of storytelling can be used to drive change,” says billionaire entrepreneur Richard Branson. And since the next decade will see the most change our civilization has ever known, your story will radically transform your business, your life, and the lives of those you touch. Ideas that catch on are wrapped in story. Your story can change the world. Isn’t it time you shared yours?

Quick Take: I love that this book has tons of concrete examples of people whose stories you can research for yourself. It also has lots of great tidbits to help you in crafting your story and inspiring you to think differently. (Full Book Review Forthcoming)

Start with why

2) Start With Why: How Great Leaders Inspire Everyone to Take Action by Simon Sinek

From the publisher: Sinek starts with a fundamental question: Why are some people and organizations more innovative, more influential, and more profitable than others? Why do some command greater loyalty from customers and employees alike? Even among the successful, why are so few able to repeat their success over and over?

People like Martin Luther King Jr., Steve Jobs, and the Wright Brothers had little in common, but they all started with WHY. They realized that people won’t truly buy into a product, service, movement, or idea until they understand the WHY behind it.

START WITH WHY shows that the leaders who’ve had the greatest influence in the world all think, act, and communicate the same way — and it’s the opposite of what everyone else does. Sinek calls this powerful idea The Golden Circle, and it provides a framework upon which organizations can be built, movements can be led, and people can be inspired. And it all starts with WHY.

Quick Take: Sinek takes a slightly different take than Gallo on the topic of story, focusing instead on how great leaders used their why as a way to inspire others to take action. Sinek’s TED Talk is one of the most popular TED Talks ever – you can watch it here. (Full Book Review Forthcoming)

Chasing Relevance by Dan Negroni

3) Chasing Relevance: 6 Steps to Understand, Engage, and Maximize next-Generation Leaders in the Workplace by Dan Negroni

From the Publisher: There are more than 83 million millennials in the United States, representing 36% of our workforce. By 2025, that number will grow to 75%. If millennials are not your employees yet, they will be soon-as well as your biggest customers. Our ability to attract, train, manage and retain this next generation of leaders is critical to the future success of our businesses. But a huge and damaging connection, communication, and understanding gap exists between non-millennials and millennials in our workplaces. Why? Because millennials are not a problem that needs to be fixed, they are an opportunity that needs to be embraced. We must all find relevance in bridging the gap to create next-generation leaders in all of us by: – creating powerful, authentic relationships – promoting behavior that creates a culture of openness, delivering value and shared purpose – teaching real-deal skills and increasing individual accountability to drive sustained results

That’s what Chasing Relevance is about: being better leaders by guiding those millennials and letting them guide us, having everyone be their best self by caring enough to connect. The choice is clear: we need to care more about millennials by pushing ourselves to be better leaders, coaches, and mentors. Because we love them, we need them and we want them to succeed. It’s time to stop chasing relevance and make it happen.

Quick Take: On the face of it, this book might not seem like it belongs on this list. But Part 1 is a gold mine for anyone looking to get in touch with and deliver their story in a powerful way. The questions that are clearly laid out for you to ask yourself will really help you discover your story and what sets you apart. Plus, part 2 is all about bridging the gap between generations…something almost all businesses struggle with. (Full Book Review Forthcoming)

So what’s your story? What makes your company or your brand unique?