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Why Employee Turnover Spikes after the Holidays and What to Do about It

By Elle Mason

The holidays are approaching rapidly. Before you know it, the turkey decorations will be replaced with holiday music, and then bam: it’s January. For many companies, November and December can be a much more relaxed time of year – end of year goal-setting, a slower and more leisurely pace, uplifted spirits in the office, and holiday parties. But come January, the environment can be drastically disrupted by New Year turnover. 

Why is Turnover Important?

Turnover is an important piece of data for companies to pay attention to: according to a massive study on evidence-based practices in retention and turnover, reducing turnover rates is linked to sales growth and improved employee morale. But because of globalization and demographic shifts, it’s becoming more challenging, and therefore increasingly important, to retain key employees.

And turnover isn’t just a morale-killer – it’s expensive. On top of the direct costs required to recruit and onboard a new employee, there are indirect costs like loss of diversity, diminished quality of work while the gap is open, and risk additional turnover.

Why Does Turnover Spike in the New Year?

There are plenty of reasons why turnover tends to increase in January: it’s when most organizations ramp up hiring, some people wait for their year-end bonuses before leaving, and many want to enjoy the holidays before starting their new job search.

Additionally, employees may use the new year to reinvent themselves with a new role or, depending on the type of business, seasonal workers may be moving on as expected. Employees often think about new opportunities at the end of the calendar year, but when it comes to transitioning jobs, movement can be slow until Q1.

Many decision-makers are out of office during this time of year, and it’s a busy time for HR because of year-end payroll tasks, compliance regulations, and benefits administration duties. Although some turnover isn’t within anyone’s control (e.g. an employee leaving because their spouse accepted a job in a new location), employers will fare better if they can anticipate major turnover challenges ahead of time.

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How to Prepare for Seasonal Turnover

Employers can take a two-pronged approach by focusing on 1.) retaining their existing employees and 2.) growing their teams. January and February are two of the best months of the year to recruit new employees. Many job applicants are actively looking for a fresh start in the new year.

Employers should take advantage of this by highlighting any positive changes or new policies that they may be implementing. What are you working on right now that can showcase your culture, values and atmosphere?

If you’re planning a holiday celebration, revising your HR practices to be (even more) family-friendly, or hosting a recognition event, you should share those changes in a way that bolsters your employer brand. It’s not only critical to keep your current staff happy - it can also serve as valuable collateral for recruitment.

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Retain Your Employees

The power to improve retention doesn’t just lie in the hands of managers and companies – in fact, there are a variety of evidence-based practices that both employers and employees can do to improve turnover. Here are a few examples:

Encourage growth and development:

January is the perfect time to set new learning goals and establish a benchmark for the year. Employers can kick-off the mindset shift with a New Year conference or training on the topic. Create opportunities for employees to enhance key functional skills or learn new ones, expand their understanding of an area and improve some of their soft skills.

This can come in many forms: employers can sponsor the use of e-trainings on online courses, facilitate workshops, send employees to industry conferences, or role play exercises. Even something as simple as encouraging employees to share learnings with their colleagues can encourage development.

Likewise, offer opportunities for change or advancement to encourage high performers to stay within an organization, even if they want to switch roles. 

Give recognition:

In addition to looking forward, employees are looking back. The new year is a time of reflection.

Managers should purposefully look for opportunities to give praise and acknowledgement for good work – whether it’s a kudos in an email or a more formal recognition system. Giving specific, timely, and genuine praise is not only a good way to encourage good work but can also boost morale.

Consider delivering end-of-year recognition in a card, email, or other medium. Better yet, implement a year-round recognition and/or bonus platform to show employees they’re valued.

Optimize for autonomy:

By encouraging employees to be independent, managers can increase their employee’s sense of ownership over their work and organizational commitment – both critical factors for preventing turnover. There's no one size fits all solution. Empower your employees to find out what engages them.

Reconnect with meaning & purpose:

You may have heard of job crafting, a tactic that anyone can use to redesign or reframe their work in a way that creates stronger engagement, meaning, and fulfillment while aligning work with passion.

In one study, a researcher found that hospital custodians who were the most excellent, productive, and happiest didn’t just see themselves as custodians but as critical team members who ensured that the hospital maintained sterile conditions so that patients could heal quickly.

It turns out that anyone can connect with a deeper meaning in their work, and how it’s in service to others – like these West Elm associates, who aren’t simply “salespeople” but warm and welcoming ambassadors for new people moving into an area. The start of a new year is a great time to reflect: Who do you serve and how can you better support them? What would you like to do more? How can you integrate that into your daily or weekly routines? 

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Grow Your Team

Start Recruitment:

Industry trends indicate that January is an ideal time of year to ramp up recruiting. Take a look at internal turnover data to see if that’s the case for your organization, as well. Below are a few reasons why:

  • Hiring is often delayed in winter, so there will be a backlog of interested employees looking to make a change, giving your company a large pool of available talent.
  • At the beginning of the year, teams are more likely to have an accurate assessment of their needs, so you’ll be able to take action and secure top performers without as many delays.
  • Many employees who were interested in leaving their current positions are ready to officially begin the transition since they likely received their end-of-year bonuses.
  • HR will have finished the end of year obligations and can focus on onboarding activities.

Looking for more recruiting advice? Read 15 Simple Recruiting Tips You'll Be Happy You Learned.

Build a Pipeline

By building a pipeline, you can stay ahead of companies who aren’t as prepared for the January shift. Identifying potential candidates early on, gauging their interest in transitioning, and even conducting interview can prepare your team for seasonal changes.

Start Today

There are many more ways to reduce turnover and improve recruiting. At the end of the day, understand that seasonal turnover isn’t completely out of your control. It’s one piece of an organizational puzzle, and with careful recruitment, onboarding, and engagement strategies - especially in the winter months - it could be one less worry for your organization and one more competitive advantage over organizations that didn’t start sooner.

How much could your company save on employee turnover each year?

Written by Elle Mason

Elle Mason

Elle is a professional management consultant and Founder of Better Living with Design. She has studied at the University of North Carolina, Johns Hopkins University and Harvard University and has consulted in the Human Capital space for almost a decade.

Originally published on November 14, 2018 → Last updated November 14, 2018