Understanding the Rise of the Short Tenured Employee

As we prepare for Q4 of 2022, businesses across multiple sectors continue dealing with workforce management issues. But whether it’s labor shortages or shifts in the market, one matter seems to stay true: workplace culture has changed, specifically regarding tenure. 

With ongoing worries surrounding the economy, housing, and overall health, employees are less hesitant to tread along in a position they no longer feel provides them with adequate satisfaction, whether it be compensation, benefits, culture, or career progression. The move comes from a perceived sense of candidate power in a tight labor market and leveraging that power to create improved work-life balance and general satisfaction in their careers. 

Hiring a new employee is costly, and that remains true throughout this shifting landscape. Still, employees who have successfully left one job for another report benefits such as increased pay and earlier career advances. As we move forward, the question will remain: how sustainable is short-tenure culture? 

What The Data Shows

According to the U.S. Bureau of Labor Statistics, total payroll employment rose by 528,000 in July, with the unemployment rate edging down to 3.5 percent—signaling a return to pre-pandemic levels. 

However, data shows that 4.2 million employees quit their jobs during the same reporting period. Considering the rise in gas and grocery prices that Americans have faced throughout much of 2022, this figure is a surprise.  

According to Jennifer Dannals, professor of organizational behavior at Yale University, the recent group of short-tenured employees (or job hoppers) is slightly different from previous years. 

Traditionally, people switch roles when they become unhappy with their current position. Today, however, “we’re seeing people change jobs specifically for more pay,” says Dannals. Based on a report by ADP derived from payroll data of 18 million workers, job hoppers experienced a 5.8 percent wage growth year over year in June of 2021, with job-holders only seeing a 3 percent gain. 

Out of all job hoppers, the younger generations have primarily been responsible for driving the movement forward. 

Data from the Bureau of Labor Statistics shows that employees under 34 change roles most often, with those aged from 20 to 34 having a median tenure of 2.05 years in 2020 (the latest year with data available). In contrast, those aged 35 to 65 had a median tenure of 8.15 years in 2020. 

After factoring in the Great Resignation and the hiring crisis of the previous two years, job-hopping seems to have increased. In a recent global survey conducted earlier this year by McKinsey & Company, 40 percent of respondents said that they have seriously considered leaving their jobs “in the next three to six months.” Of those preparing to leave, 48 percent plan on switching industries. 

Frequent Job Hopping Fuels Turnover — Is it Sustainable? 

Regardless of one’s reason for leaving a position, constantly quitting and starting over isn’t sustainable at any level. If you always have to start at the beginning, reaching your end goals will only become more difficult. Furthermore, there is a great stigma attached to job hopping—one held by the older generation of hiring managers and executives. 

For the hiring manager with years of tenure at one company, job hopping is often considered a red flag. 

In our current job market, a job hopper may still have ample opportunities to find a company where their job history is slightly overlooked. However, once the job market tightens, applicants with resumes showing frequent movement may have a harder time landing a new job. 

As the data shows, employees below the age of 34 have the lowest median years of tenure. For the young professional, a few early job switches can place them on track to their ideal career progression. 

However, if a pattern forms and the employee continues to leave shortly after onboarding, it’s only a matter of time before that employee risks affecting their career. When employees switch roles too frequently, they limit the number of new skills they may gain, making it difficult to show future employers any previous career achievements. 

Meeting Expectations

Preventing short tenure begins with understanding the reason why employees choose to leave for another position in the first place. Currently, pay and career advancement are the two leading factors driving the job swapping movement. This means that to prevent their talent from going elsewhere, business executives must compare their business’s pay model and overall opportunities to their competitors.  

Rather than sticking it out in the hopes of a pay raise at the end of next year, young employees are choosing to take their advancement into their own hands. To combat this, it’s in a business’s best interest to have an open discussion with their applicants on where the job they are applying for can go in terms of pay and growth. 

Developing these early fundamentals with an applicant may not prevent them from ultimately leaving, but it will establish a middle ground that both parties agree upon before entering employment, which promotes open discussion. Loyalty is a two-way street, and with the rise of the gig economy, remote work, and nontraditional careers, employees today have increased leverage with employers. 

Moving Forward

To understand the rise of the job-hopping employee, executives must analyze their business’s internal practices, pay structures and retention strategies. 

As we’ve seen, today’s younger generations have little issue with switching from company to company as it can often result in greater pay or benefits early on in one’s career. However, for the experienced employee, multiple job changes in a few short years seem to remain the red flag that they’ve routinely been. 

Fixing core issues within an organization begins with its leadership. At Executives Unlimited, we have years of experience helping companies find and recruit lasting talent at the executive level. With a growing roster of clients across the country, Executives Unlimited will continue to monitor this evolving landscape.