In order to understand how employers can improve engagement and retention of employees, FSG - together with Hart Research Associates - surveyed over 1,200 entry-level, hourly workers between the ages of 17 and 24 years of age. Dozens of companies were also interviewed to find out how they have improved staff retention.
The young people that were surveyed worked in a wide range of jobs, which included health care, manufacturing, retail, and hospitality. More than half of these 1,200 young people working in entry-level jobs said that was their intention to leave in less than a year. Less than a quarter stated that they were highly satisfied with their job.
As turnover can cost up to 200% of an employee's annual salary, depending on what their role is, it can therefore cost businesses billions of dollars each year.
Employers wanting to improve retention were advised of key ways this could be achieved - by improving manager training; diversity and inclusion and scheduling – although it was found that some employers are already improving in these areas.
Job satisfaction amongst the young people surveyed was found, in a large part, to be determined by how they perceived the way their manager treated them, with being treated fairly and with respect often more important than income. Nearly 50% of the women and 40% of the men surveyed said that they had struggled at work because they felt they were treated unfairly by their manager and 32% said they had previously lost a job due to unfair or disrespectful treatment.
HMSHost - the largest provider of food and beverage services for travelers in North America - used its Engagement Training Program to help frontline managers provide authentic recognition to its employees, to listen and solve problems and deliver specific, actionable feedback to their teams. Where it tested this training, it received enthusiastic feedback from managers and associates and saw early improvements in associate engagement and retention.
Research showed that young people are more than twice as likely to stay in their employment for more than a year if they see the job as a career - or a stepping stone to a career. However, only 35% of young people surveyed described their current employment in those terms. It was suggested that employers could offer meaningful opportunities for professional growth within the company.
In addition, employers can support educational achievement for young people, as 45% of those surveyed wanted to go to college and the responses indicated that those who enrolled in school whilst working are much more likely to stay in their current jobs.
Starbucks recently expanded its College Achievement Plan - offering free tuition for online classes and removing cost, knowledge and schedule barriers for employees. Early results show that the changes are paying off, as employees enrolled in the plan are being retained twice as long and promoted four times as often as employees not participating in the program.
Employers could also create a more diverse and inclusive work environment as there is clear evidence that doing so is good for business. For example, Gap Inc. is a leader in this area, creating a program called This Way Ahead for teens and young adults facing barriers to employment. Sixty five percent of its participants are women, 98% people of color and all are from low-income backgrounds. After training and a 10-week paid internship, 75% of This Way Ahead graduates received offers of employment at Gap, Old Navy and Banana Republic stores. Gap Inc found it to be an effective talent strategy and the retention rate for these employees is double that of their peers. Their performance ratings are on par with their peers and graduates have higher-than-average engagement scores.
Of the youths surveyed, 83% said they would be more likely to stay in their current job if they had more control over their work schedules. Predictability and flexibility were most important - they want to know, in advance, the days and times they are going to work and they also want their managers to be flexible when unexpected events such as sickness or transportation challenges, arise outside of work.
Young people value good benefits and wages, however research showed that whilst they value benefits like overtime pay, a 401k retirement-savings plan and paid time off, the most important benefit by far is health insurance. That is why companies like UPS, Lowes, REI, and Starbucks are in high demand - they all offer some form of health insurance for part-time, hourly employees.
More than 50% of the youths surveyed wanted to more work hours and research suggested that offering existing workers additional hours, rather than hiring new workers, may be one way to save on costs and improve employee satisfaction.
There is also a business case for raising wages. In 2014, IKEA decided to raise its minimum wage, which led to a 5% improvement in retention in less than six months. It was so successful from a business perspective that IKEA raised wages again in 2015. Other low-cost retailers, from Costco to Trader Joe's, have also shown that raising wages can create a competitive advantage.
Research finds that there is a clear business case for putting these ideas into practise and employers who are leading the field in these areas are surpassing industry averages when it comes to retention and employee engagement. This not only makes them better places for young people to work but it also makes them stronger businesses.