Wharton@Work

August 2022 | Management

Talent Retention: New Research on the Manager’s Role

$4,700. That’s the average cost of hiring an employee, according to the Society for Human Resource Management’s (SHRM) new benchmarking data. The SHRM acknowledges, though, that many employers report costs that are astronomically higher: three to four times a position's salary.

But once you’ve made the investment, it’s time to reap the rewards, right? Wrong. A 2018 survey found that 33 percent of new hires quit their jobs within the first 90 days. Four years later, the Wall Street Journal reports that number is down to 30 days. But that’s not the end of the bad news: if that hire is from a historically underrepresented group, including women, there is growing evidence that the number is much higher.

New research from Wharton management professors Stephanie Creary and Nancy Rothbard (who is also deputy dean) and co-author Jared Scruggs explains that the effort to improve workplace diversity is no longer considered only “in terms of its positive relationship to innovation, better decision-making, and more favorable financial outcomes.” The authors note, “As reaching more diverse audiences continues to be of concern, leaders are starting to think more broadly about DEI as ‘a business imperative.’”

The study, “Improving Workplace Culture through Evidence-Based Diversity, Equity and Inclusion Practices,” finds that efforts to make your organization’s culture work for every employee improves overall recruitment and job satisfaction: “Studies show that more than 70 percent of job seekers are looking to work for a company with dedicated commitment to DEI.” That commitment, in turn, can lead to greater retention.

Three Practices for Reducing Turnover

Creary, Rothbard, and Scruggs note that many organizations are implementing a range of DEI practices, but few are “assessing the extent to which these practices were driving workplace outcomes.” The study examined the connection, developing a survey — “The Inclusion & Belonging Assessment” — to understand the relationship between DEI practices and workplace outcomes.

To protect the investment in talent by improving retention, the authors offer specific actions for managers and senior leaders:

1. Managerial Involvement. Managers should take steps to better understand the experiences of underrepresented employees and talk about DEI on the team. Those efforts should include listening to team members by collecting anonymous feedback on the team’s climate, including how roles and tasks are assigned and how often team members think about leaving. Managers may also use surveys conducted outside the organization that identify what drives employees to think about leaving. Those insights should then be shared with team members “in order to prioritize areas of opportunity. Both managers and team members can generate ideas for solutions to address any turnover issues. By becoming engaged in the process of devising solutions, employees can play an active and satisfying role in helping their teams reduce turnover.”
2. Mentoring and Sponsorship. When managers become mentors, they can “help team members navigate the challenges of the workplace and empower their mentees to feel like they can succeed.” Specifically, they can help identify and provide developmental opportunities by encouraging their mentees to become more aware of gaps in their development by seeking feedback from different people in the organization (making them more likely to seek similar feedback in the future). Manager/mentors can also advocate for their mentees by speaking up on their behalf and helping them to access opportunities.
3. Workplace Policies. Managers can communicate the importance of DEI policies to their teams instead of relying on HR or senior leaders. They can also “foster a culture that enables team members to build personal connections with one another in different settings.” Examples include suggesting that team members organize informal social events, while being mindful of situations that could exclude some members. “By building a culture where employees feel personally connected to others, managers can help to reduce turnover on their teams.”