Gary Burnison is CEO of Korn Ferry.
It’s a cost no one sees, yet it’s often as much as one percentage point of margin and possibly more.
If this cost were buried in the budget for marketing or another corporate function, or if it represented inefficiency in the supply chain, people would be scurrying to root out those 100 basis points.
The problem, though, is that these costs are hidden on the P&L, and few leaders even think to look for them.
These costs are linked directly to career nomads—employees traveling every few years from one opportunity to the next. As this high-potential talent seeks greener pastures, they contribute to an overall shrinking of job tenure, currently about 4 years on average and as little as 1-2 years for younger professionals.
Career nomads tend to be intellectually curious and thrive in ambiguity. Sounds like the kind of talent any company would want, right? But the irony is that the very people companies want to keep are the people who want to leave. And when they do, there’s a significant cost associated with frequent turnover—not only in recruiting and hiring replacements, but also for lost productivity.
In a recent Korn Ferry study we examined the career nomad impact on the P&L. Consider one example out of many data points from our study: a company in the middle of the Fortune 500. Using our Career Nomad Calculator, we determined this company’s career nomad costs equated to more than one percent of its annual revenues. But these dollars can be captured and brought to the bottom line, largely by implementing talent management best practices.
Learn More, Stay Longer
The number one thing career nomads want is to learn more. So, if they’re not learning in their current job, they’ll go to the next opportunity where they will.
Learning also determines earnings for life. Career nomads know this intuitively—and the research backs it up.
At Korn Ferry, we know what makes people tick. Our IP includes over 69 million assessments taken and more than 4 billion data points collected. Based on our work assessing best-in-class CEOs (our version of the Wonderlic Test for quarterbacks), we know the No. 1 predictor of success is learning agility: the ability and willingness to apply lessons learned to new and first-time situations and challenges. Or, as I like to say, it’s knowing what to do when you don’t know what to do.
Learning is so important it supersedes money as a motivator. Compensation, while important, never makes the list of the top reasons why people stay or leave. In fact, employers often find that offering more money will not retain a new hire who wants to leave.
The Boss Factor
The No. 1 influence on how much an employee learns and develops (or doesn’t) is the boss. People don’t really leave jobs—they leave bosses. It only stands to reason that better bosses would go a long way toward extending the job tenure of the career nomads. Unfortunately, it doesn’t usually work that way. I am shocked by how many line managers think that development of their teams is not their responsibility. Their first reaction is flip it to (or blame) HR. Instead, line managers need to own the people agenda.
Bosses need to be “all in” for developing people and giving them assignments to grow and stretch. That’s a key component of career development, which—no surprise here—ranks No. 1 on our top five talent management best practices for attracting and keeping career nomads.
Companies today need to become magnets to attract and develop career nomads—and to keep those nomads currently in their workforces. As more career nomads find a home with an employer, with plenty of room to learn and earn, job tenure can expand from two years to four, and from four years to six or more.
Then that hidden cost on the P&L will shrink—or even disappear.