2014 Looks to be Very Interesting for Employers

Global talent exodus on the horizon as economic growth returns

Worldwide employee turnover levels forecast to reach new highs, rising sharply in 2014

Turnover in emerging markets set to spike first

European workers will be the slowest to spread their wings

Unique new study identifies the five key factors driving employee loyalty

Global firms face a rising talent exodus as economic and labor market conditions improve, according to a new study from global management consultancy Hay Group, conducted in association with the Centre for Economics and Business Research (Cebr).

Many economies are seeing initial signs of growth. Further, we are seeing an increased focus on generating growth in mature markets, for example in the case of ‘Abenomics’ and the ECB’s recent interest rate cut.

As growth builds and employment opportunities increase, worldwide employee turnover is set to accelerate in 2014, after broadly flat levels in recent years. The number of workers taking flight is expected to reach 161.7 million in 2014 ­– a 12.9 per cent increase compared to 2012.

This trend is set to continue. Average employee turnover rates over the next five years are predicted to rise from 20.6 to 23.4 per cent, and the number of global departures in 2018 will stand at 192 million.

Emerging markets are set to feel the brunt of the turnover spike first, beginning this year, while developed economies will start to see departures with a peak in 2014, when conditions improve.

Mark Royal, senior principal at Hay Group, comments: “The turbulent labor market associated with the economic downturn has held down turnover rates in many firms. But as the economy recovers and global employment becomes less volatile, dissatisfied workers are a significant flight risk for organizations across the world.

“To keep high value employees from leaving in search of more favorable work arrangements, firms must address engagement and enablement challenges.”

The study, Preparing for Take-Off, is based on a unique Hay Group macroeconomic model that analyses the main factors affecting employee turnover. The study covers 700 million employees in 19 countries worldwide.

Mass migration

With average turnover rates forecast to be higher in those countries where market prospects are better, Hay Group’s study reveals a two-speed trend.1 For workers in emerging markets new employment opportunities will continue to be plentiful. Employees in the region will be among the first to take flight, while employees within crisis-hit European countries will be slower to make the move.

Asia-Pacific will experience its largest spike in employee turnover levels this year, as employment growth and wealth creation continue energizing an aspirational and mobile workforce. Organizations in the region will also experience the highest increase in turnover rates worldwide, rising from 21.5 to 25.5 per cent over the period 2012-2018 – growth of nearly a fifth.

Latin America faces a double spike in employee turnover levels, in both 2013 and 2016, as infrastructure spending rises alongside investment for the Olympics and World Cup, boosting growth in the region. Their North American neighbors will see turnover spike in 2014, with departures in the region expected to reach 36.7 million in 2018.

European employees will be the slowest to spread their wings, with turnover set to peak at 18.7 per cent in 2016. Southern European markets lag even further behind – with a turnover spike not expected in countries such as Italy before 2018.

Building a supportive work environment

To identify the key factors affecting employee retention Hay Group conducted a detailed analysis of their employee opinion database, which includes information from over 5.5 million employees across the world.

The research reveals that confidence in leadership, opportunity for career development, autonomy, supportive work environment and appropriate compensation are among the most consistent predictors of employee engagement and commitment.2

Employees who are planning to stay in their company for more than two years score their employers over 20 percentage points more favorably on these five factors than those employees who are aiming to leave in the same period.

Mark Royal comments: “With retention a growing concern for organizations – not just for key high performing employees, but also core employees – understanding the factors that drive commitment and loyalty is essential for managing increasing turnover risks in the months and years ahead. Now is the time for organizations to understand where they stand on and tackle these influences, to keep employees from taking flight

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