Job Hopping: The Favorite Pastime of Today's Work Force?

Companies grappling to retain employees in good economic times

By LARA ZUEHLKE

With a rich economy and low unemployment rate, many companies are wondering who installed the rotating front door. Job hopping among today's workforce has become all too familiar for many companies, forcing them to fight tooth and nail to retain employees.

Job turnover is not a new concept, but the fast pace at which employees are now switching jobs — and sometimes careers — has become burdensome for many companies. To keep quality employees in today's cutthroat marketplace, companies of all sizes are being forced to re-evaluate how they stack up against other firms. Do they offer training programs and room for advancement? Do their compensation packages include competitive salaries, stock options, signing bonuses and flexible benefits?

There's no question that the corporate landscape now demands competitive offerings, yet the prevalence of job turnover often can be pinned to one essential ingredient — loyalty. And, company loyalty in today's work place is waning. A recent USA Today article, for example, noted that in a survey, conducted by Chicago-based consulting firm Aon, "one in three employees said they would leave their current job for slightly higher pay."

One factor that could account for this shift in job loyalty is the rocky economy during the 1980s, which left many long-time employees out of jobs, said Michael Wesson, assistant professor of management. "It makes a big difference when you have worked at a company for 30 years and then are laid off," he said. "When you see people go through that your sense of loyalty at any company will be very different."

Because the notion of accepting a job and staying in it until retirement is practically extinct, companies are witnessing job abandonment across the board. One group in particular stands out, however: recent college graduates.

Leaving too Soon?

Riding the high times of today's economy, recent college graduates have had few problems finding jobs or demanding high compensation, especially now when the labor market for talented, versatile employees is tight. Unlike their parents from previous generations, many graduates come out of college with several job offers. And, if they wind up in a job they don't enjoy, they can simply quit and find another — a practice that has become quite acceptable even from the employer's standpoint.

"Twenty years ago, if people had two different jobs in three years, they would have a hard time getting another job," said Wesson. "It's almost become a self-fulfilling prophecy because students are told in college classrooms that they shouldn't be surprised if they change jobs and companies numerous times."

In fact, according to a May 2000 study by the National Association of Colleges and Employers, almost two-thirds, or 62 percent, of new college graduates said they plan to stay with their first employer for three years or less. Of the 659 respondents, nearly 30 percent indicated they would most likely spend two years in their first job.

The million-dollar question then is: Why is this group of employees leaving so quickly? The reasons are countless, ranging from job satisfaction and compensation to job responsibility and a host of personal reasons. The accessibility of information plays into the equation as well.  Internet job sites, such as monster.com, have changed the way people find out about jobs, salaries and benefits, unlike 15 or 20 years ago when people relied on newspapers and word of mouth. 

"Job satisfaction and organizational commitment are two big reasons people leave," Wesson said. "But, if I had to put my finger on one thing that's leading to turnover, I'd say that the increased amount of information is a large factor. There are turnover models that indicate many people aren't really thinking about leaving their jobs, but now there is readily available information about how much money they should be making and what other jobs are out there."

The rate of job jumping among recent college graduates also depends largely on their industry or field. Associate management professor Michael Abelson contends this is because an organization's work culture often determines how long a person stays in a job. "In the accounting industry, for example, you are either up or out," said Abelson, whose research interests include employee loyalty. "In other words, you either become a partner or you leave."

Accounting firms, especially the Big 5, invest heavily in their new hires not only in dealing out highly competitive compensation packages and signing bonuses, but also in training. "It's fairly expensive for the firms to train people and have them leave quickly," said Austin Daily, director of the college's Professional Program in Accounting, Financial Management, and Information Systems, a five-year combined BBA and master's program. "I think for the most part firms are pretty serious about really trying to reduce turnover because each 1 percent they can reduce turnover, it falls to the bottom line."

Many business students who graduate from the Professional Program land jobs in Big 5 accounting firms, Daily noted. "We're finding that a fair number of students leave after two years," he said. "The structure within accounting firms is that the top people make partner, and less than 5 percent of the people who start at the firm will make partner. It seems to me the optimum time to leave would really be somewhere between five and 10 years because employees have gotten the management skills and knowledge of working with people. A lot of people just don't hang around to do that though."

Like with other companies, accounting firms are finding the reasons employees leave to be diverse — taking the CPA exam, accepting better job offers and changing career specialties. Regardless of the company or industry, a resounding theme runs across the board — the need for employees to strike a balance between their personal lives and their careers. According to Wesson, many in the younger generations "enjoy leisure time and having the work/life balance is much more important to them."

What's a Company to Do?

When addressing the issue of employee retention, companies are up against an ominous task, and one that is increasingly requiring them to give employees personal attention right from the start. For many companies, recruiting and keeping high caliber employees often means providing more perks. And, in today's labor market, employees know they can take their résumé down the street to a company that will offer better compensation packages.

That's why many organizations are offering employees flexible work hours and more work/life-related benefits, such as gym memberships and on-site childcare. "Once a company offers its employees something, it's like a snowball affect in that everyone has to start offering interesting work/life benefits," added Wesson.

Offering these extras can be costly for companies, yet they often give employees a sense that the company is interested in their personal well-being. And, from the company's perspective, offering benefits like stock options and signing bonuses can be a short-term way to reduce turnover. "Many of the benefits companies are offering, such as signing bonuses, come with stipulations," said Wesson. "Some companies require employees to pay the money back if they leave within a certain amount of time. In some ways, it provides an incentive to the employees to stay with the company longer."

Regardless of how large the salary or how many days of vacation they hand out, companies looking to reduce turnover must adhere to the basics of business — valuing their employees. "Very few organizations go back to the principle that is tried and true and works all the time — giving employees personal respect," said Abelson. "Companies have to respect their employees and involve them and do the things that aren't just bottom-line oriented." @