This post originally appeared on startupnation.com/grow-your-business
The following is excerpted with permission from the publisher, Wiley, from “Upstanding: How Company Character Catalyzes Loyalty, Agility, and Hypergrowth” by Frank Calderoni. Copyright © 2021 by Anaplan, Inc. All rights reserved.
When I began my career at IBM, it was common for people to work 10, 20, even 30 years for the same company. Today, long-term employee loyalty is no longer the norm, particularly among younger workers. According to the most recent U.S. Bureau of Labor statistics, American workers have a median tenure of just 4.1 years with their current employer. However, older workers — from 55 to 64 years of age — have a median tenure of 9.9 years while younger workers — from 25 to 34 years of age — have a median tenure one-third that number, just 2.8 years.
If you zero in on individual companies in the tech sector, the stats are even more exaggerated. Amazon has a median employee tenure of exactly 1.0 year, and at Google it’s 1.1 years.
Why is this the case?
Today, people have more choices about where and how to work and under what terms they’ll accept employment. In competitive fields such as technology — especially for hard-to-fill positions such as security analysts, data research scientists and database administrators — talent is scarce. According to research conducted by iCIMS, from January to May 2019, only six tech positions were filled for every 10 that were open. That has implications, both for employers and employees.
The traditional employer/employee contract provided workers with a stable career for a lifetime in exchange for their good work and loyalty. When employees retired, they could count on a pension (a defined benefit plan) that would continue to pay them some portion of their salary for the rest of their lives, health care benefits and maybe even a glitzy retirement party and a gold Rolex watch as a parting gift (yes, the gold watch really was a thing).
Under this traditional contract, companies offered stability but not necessarily “meaningful” work. But as long as they upheld their part of the bargain — providing a job (and pension) for life and a steady paycheck — then all was good. When a company went out of its way to provide its employees with a culture and mindset that was more than a transactional relationship, as IBM did during my time there, it was such an anomaly that it was written up as a business school case study.
This classic employer/employee contract began to fall apart in the 1980s. By 1980, the number of American private-sector workers covered by a pension plan reached a peak of 46% (35.9 million people), but as of 2019, this number had plunged to just 12% of private-sector American workers. Many U.S. employees today have retirement plans that they must make their own financial contributions to, such as 401(k)s and the like. Employer-funded pensions are now extremely rare in the private sector.
Which brings us to today and contemporary thinking about the employer value proposition. To attract and retain the best talent, leaders must think not only about compensation and benefits but the experience people will have while working at their organizations. Leaders must define the mutual value both the employee and the company will get out of their association together. For professional workers, people change companies and even careers more frequently than ever. Sustaining productivity with that level of mobility means keeping the best people for as long as possible becomes an advantage.
Given the enormous competition for talent that many organizations face today, they must find unique ways to attract and retain great people. This most often takes the form of benefits and perks, rewards and recognition programs, corporate social responsibility efforts and a distinctive company culture — the things that make an organization a great place to work.
When Cisco was named the No. 1 company on Fortune’s 2019 World’s Best Workplaces list, it wasn’t just because of its pay scales or the fun benefits and perks it offered employees such as free food and drinks in the kitchens and Friday afternoon happy hours.
It was, according to the Great Place to Work Institute, because the company had these six elements of a great workplace culture:
- Community. Where there is a sense of winning together when times are good and sticking together when times are tough.
- Fairness. Where employees feel like everyone is getting a fair opportunity.
- Trustworthy management. Where management’s actions match its words.
- Innovation. Where managers create a safe environment to express ideas, make suggestions and take risks.
- Trust. Where companies show people that they consider them to be trustworthy and give them the opportunity to prove them right.
- Caring. Where companies don’t just say they value employees; they show it.
How would your organization score against these six elements? Are you making it a priority to create a great place to work — a thriving culture that attracts loyal and high-performing employees — or do you feel it’s “good enough” and doesn’t need specific attention or investment? As a CEO, I know from my own experience, with research to back me up, that a positive and intentionally crafted workplace culture contributes to long-term success.
While the COVID-19 pandemic clearly harmed many organizations, with some going out of business or suffering major setbacks, it has also done some good things for organizations globally. It’s opened up the doors to bringing in talent we would never have considered before now that working from home is so prevalent. Commutes are no longer an issue. Also, the strict lines between personal and professional lives have become increasingly blurred. For example, with working parents juggling so much at home, how you manage these people, how you empathize and how you offer support are key to retaining your top talent.
But the new employer value proposition is a two-way street — employees must also rise to the occasion, and ideally, bring a mindset that it’s more than just a paycheck. To sustain a thriving career, workers in all fields and at all levels will need to become adaptable, lifelong learners. Their best experience lies in engaging in the shared purpose of their work and partnering with their teams and managers to align with the organization’s culture, values and goals.
“Upstanding: How Company Character Catalyzes Loyalty, Agility, and Hypergrowth” is available now and can be purchased via StartupNation.com.
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