Talent Retention Study

In the fall of 2021, there was a new peak in voluntary employee turnover. However, this trend has been building for the past 10 years, in part because millennials and Gen Zers care more about purpose than other generations do — and they are quick to move on when they don’t find it in their workplace. In fact, over half of Gen Zers say it’s very important for their work to have meaning, and 71% would take a pay cut to do more meaningful work. Even as trends like the Great Resignation move into the rear view, it’s clear that people still have different priorities when it comes to work, and purpose is high on that list.

Purpose is strongly linked to employee retention

There is a clear link between an employee’s participation in a corporate purpose program and how long they stay at a company — especially during their first 2.5 years.

For employees, corporate purpose programs have a strong relationship with their tenure. Even more so if they’ve been with the company for 2.5 years or less. Participating in these programs plays a role in shaping their early experiences with the company, as they assess whether the employer meets their promise around purpose, value and impact broadcast through brand messaging and recruitment — similar to how consumers evaluate the brands they purchase from.

As an employee integrates into the culture and has a broader set of experiences, purpose still seems to play an important role in their engagement — even six years out. That’s powerful when you consider the cost savings of engaging and retaining people who are longer tenured and have institutional knowledge and know-how. Purpose is not only formative for people in those early days with a company — it is a critical factor in engaging and retaining employees over time.

There’s also reason to believe these retention rates will change as Gen Z workers, whose sense of purpose is proven to be key to their engagement and retention, will make up a greater proportion of the workforce.

Reduction in turnover by employee cohort

This data reveals a significant opportunity for corporate social responsibility and human resources leaders. Engaging their people in their programs contributes to them having a positive impact at work and in the world. With 53% of Gen Zers saying it’s very important for their work to have meaning, and 80% of Gen Zers and 59% of millennials saying that better alignment with their values and interests is a priority for their place of employment, companies who don’t prioritize engaging their people in purpose could find themselves in the same cycle of high turnover again and again.

In 2020, we saw heightened activity on our platform in support of prevalent societal causes like racial justice and vaccine equity, reflecting a collective desire to create positive change. However, our analysis shows that in 2021, 65% of companies experienced a lower rate of employee participation in their corporate purpose programs than in the previous year, in part because these programs were feeling the effects of increased employee turnover.

With the influx of new people joining companies, rates of participation in giving and volunteering decreased, partially because it takes time for new employees to ramp up and fully engage with their companies’ corporate purpose programs. At the same time, reduced participation is correlated to increased turnover, which leads to more churn.

This all underlines how important it is to engage new employees early on.

The impact of purpose programs on retention is consistent across regions.

‍To further analyze the trend, we looked at how the impact of purpose programs on retention differs by region. We found very little difference, with the link between employee participation and the reduction in turnover being consistent, regardless of region. Perhaps this points to the universal human need to feel a sense of impact and purpose in our lives, of which work is a big part.

Reduction in turnover by region

However, when we look at the data by industry, the impact on retention varies widely.

The impact of purpose programs on retention varies by industry.

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Engaging employees in purpose early on positively impacts the bottom line.

‍It’s no secret that the cost of replacing talent can be high. Especially when looking for specific qualifications or skill sets. The impact a purpose program can have on improving a company’s bottom line, by reducing employee churn, cannot be underestimated.

The cost of replacing an entry-level employee is estimated to be around 30% to 50% of their annual salary. Go up a few levels, and you’re looking at 150% for mid-level employees and 400% for seasoned and specialized team members. And the value loss goes beyond the hard numbers. When people leave, team cohesion, morale and productivity are all impacted as teammates and adjacent workers try to fill the gaps.

New employees participate in corporate purpose programs at a third of the rate of their longer tenured peers.

Our analysis shows that employees who have been with a company for under one year are less likely to participate in a corporate purpose program than their longer tenured peers. On average, these employees have a participation rate of just 6%, compared to 20% for employees who have been with a company for more than two years.

With Benevity data showing that 40% of employees in our client community have been at their company for one year or less, or they’re newly enrolled in their corporate purpose program, it’s clear companies must shift their approach to these programs to deliver on what new employees are looking for. Simply having a program isn’t enough.

New employees will likely be more motivated to participate if they are aware of the programs, feel connected to the company and their peers, and are able to engage easily in ways that personally resonate with them.

Employee participation by tenure

The reasons why new employees participate less vary widely.

Here are four common reasons new employees are less inclined to take part in social impact programs:

1. They likely have fewer social connections at the company compared to their longer tenured peers, so they may not have heard about the program or could be less inclined to support employee-driven initiatives.
   
   
2. New employees typically have less awareness of various company programs and initiatives, perhaps due to poor or inconsistent program promotion and communications.
   
   
3. Many companies have transitioned to remote or hybrid work but have not adapted their programs and onboarding to account for this.
   
   
4. Remote work, fewer in-person bonding opportunities and limited volunteer events — paired with an influx of new employees who have never met in person — all contribute to weaker social ties.

The new engagement challenges thrown at companies over the past few years are not to be underestimated. The good news is that if you already have a purpose program, you are well on your way to meeting these challenges head-on.

With more and more people searching for meaning at work — especially younger generations, who will continue to make up a larger portion of the workforce — the importance of purpose will only grow in relevance. Engaging all your people in your corporate purpose program early, in ways that are meaningful to them, is a significant opportunity to keep retention high while strengthening your company culture for everyone, everywhere.