Many leaders in professional services are looking to increase employee retention among their junior talent populations.
While some employee turnover is part of running an organisation, when employee attrition gets too high it can be an expensive problem. In organisations with annual attrition over 20% and each leaver costing over £30,000 to replace, the impact on the bottom line can quickly make it a strategic matter.
With organisations increasingly seeing junior talent leaving earlier in their career than in previous years, we wanted to explore the reasons behind millennials leaving professional services.
Often there’s a mix of different factors behind a high attrition rate at play across all generations in an organisation. For professional services in particular, these are the main drivers:
Professional services firms jostle for the best recruits in a high-demand market. To make matters worse, they don’t just compete with other professional services anymore. There are highly attractive roles in start-ups and scale-ups like Deliveroo and Monzo to compete with. Often, these tech companies offer greater perks, impressive job titles and better work/life balance. Now, people are simply leaving good jobs – for great ones.
Additionally, firms have to compete with the rise of side gigs or people leaving the company outright to begin their own entrepreneurial careers.
Industries that are in-flux often experience a high attrition rate. The newspaper industry has undergone huge changes recently and has a high churn rate as a result.
Graduates now entering professional services careers don’t expect to remain in the same firm for life. In fact, 60% of Millennials are currently open to new job opportunities.
Automation, the rise of the gig economy and greater regulation have all contributed to graduates’ feelings over job security and satisfaction.
CEOs surveyed by PWC stating that their biggest talent challenge is attracting and keeping junior employees. The same survey found that a quarter of these CEOs had to delay or cancel a key strategic initiative because of a lack of qualified talent and skills.
Traditionally, professional services firms have had a hierarchical structure which is based on a ‘finders, minders and grinders’ model. Entry-level employees often have to do a lot of ‘grunt’ work which is repetitive and involves long hours. But this causes conflict with junior employees’ wishes for work/life balance. Younger generations are now leaving professional services for sectors with more flexible work styles. Notably, these working environments are often offered by tech companies.
Junior employees are particularly motivated by meaningful work that aligns with their values. 76% will leave a firm with values that no longer align with their own and 61% will actively seek out employers with similar social values to theirs. 77% of people who are involved in a good cause through work, feel that their overall job is more impactful.
Financial compensation alone won’t encourage a junior employee to remain. They often consider the wider ‘deal’ that they are getting. That includes their work/life balance, their sense of autonomy and empowerment, their leadership and career development opportunities and their stress levels.
Treading the old route of working hard until eventually reaching the top of the organisation isn’t enough to tempt younger generations. They still want to progress, but with greater flexibility and fulfilment in their work.
Becoming a leader whilst creating a better world and having time to travel the world is the ultimate dream for many of today’s junior employees. 72% of Millennials within professional services expect to complete an overseas assignment during their career.
Millennials rent far more than older generations and are having fewer (or no) children. This means the old drive of having a job – any job – to pay the mortgage or feed mouths doesn’t exist as acutely as before. They have greater flexibility in where they work and can more easily move locations (and therefore jobs) compared to before.
69% of younger recruits feel that rigid hierarchies and outdated management styles fail to make the most of juniors. This may be one of the reasons that smaller professional services with less hierarchy tend to see higher employee retention rates.
Younger generations report feeling less loyalty to organisations compared to older colleagues. Millennials will often change organisations or roles to progress up the career ladder.
Senior leaders in professional services have also noted that Millennials and Gen Z employees tend to have ‘unrealistic expectations’ of their career route and the time it takes to reach the top. Many want to progress as soon as possible, without necessarily completing the grind to get there.
This is compounded by the rapid career progression offered by many startups. A graduate who gets lucky in one startup could become the Chief Operating Officer within a few years – as opposed to decades in a traditional model. Professional services firms need to harness the energy and ambition of juniors, but also manage expectations.
28% of Millennials have reported feeling that companies aren’t using their skills to their full potential – a situation made worse by ‘hidden’ skills developed outside the firm, on side gigs or extracurricular activities. This can de-motivate juniors and eventually cause them to leave.
Millennials have stated that businesses aren’t doing enough, in their eyes, to help develop their skills. Especially when it comes to leadership skills. Failing to meet junior employees’ training expectations will cause them to leave. 71% of young professionals planning to leave a company in the next two years state that they are unhappy with how their skills are being developed.
Traditional drivers for employees don’t resonate in the same way with current graduates. The reasons behind work are moving from monetary and status-related goals, to more opportunity and lifestyle based.
Understanding the drivers behind employee attrition in professional services can provide some useful context behind the trends. However, each organisation will be different and therefore it’s important for leaders to take the time and effort to really understand the junior talent in your organisation.
Only then, is it possible to decide the right course of action to improve employee retention.
If you’d value talking with one of the GroHappy team about employee retention and career development in your organisation, please get in touch here.