New McKinsey Data Sounds Alarm on Industry Turnover

New Data Spotlights Industry Turnover

Some media companies hire professionals just to write eye-catching headlines. I promise “alarming” is right for what I’m about to report. McKinsey just announced that more than half of the job quitters during “The Great Resignation” did not return to their same industries.[i] We’ve all heard stories of how the pandemic period caused workers to rethink their jobs and their lives, and now we have very hard data that proves it. Here’s a direct quote:

What we are seeing is a fundamental mismatch between companies’ demand for talent and the number of workers willing to supply it.

Data Shows Dramatic Shift in Industry-specific Turnover is Now Common

Across the board, McKinsey tells us that just 35% of quitters have returned to their same industry, a full 48% returned to work in a different industry, and the remaining 17% have so far stayed out of the workforce altogether. McKinsey also reports on the percentage of workers who quit and returned to their same industries by specific industries. Here’s what they found, rank-ordered by the highest percentage of quitters who abandoned their original industry:

• Consumer/retail… 76% of leavers have stayed gone from their industry and just 24% returned.
• Public and social sector/not for profit…72% of leavers went elsewhere or stayed home, just 28% returned.
• Finance and insurance…65% of leavers have gone elsewhere or stayed home, just 35% returned.
• Industrials…64% gone, 36% came back.
• Travel, transport, and logistics…55% gone, 45% returned.
• Technology, media, and telecommunications…55% gone, 45% returned.
• Healthcare and pharmaceuticals…54% gone, 46% returned.
• Education…54% gone, 46% returned.

Let’s take the example of healthcare and pharmaceuticals. The data tells us that of all the job-quitters in those combined industries, just 54% have re-upped for a job in healthcare and pharmaceuticals. The remaining 46% have either moved on to another completely new industry or remain unemployed by choice….and it’s likely most of that group is working in another industry. Or for another example, seeing that just 24% have returned to consumer/retail tells us why we have to wait for a table at the corner restaurant.

What Industries Are Seeing the Highest Turnover and Why

Looking more deeply at the data shines light on other stunning findings. Nearly fifty percent of all teachers have quit with less than half of them returning. Might you be hearing about local teacher shortages? And assuming “Industrials” represents manufacturing, almost two-thirds of that workforce left and just a hair more than a third came back. This is why some economists have said workforce shortages are the true cause of inflation and supply chain snafus.

McKinsey then differentiates between “traditionalists” who have stuck with their industries versus “non-traditionalists” who have gone elsewhere. Their findings say these are the top reasons we should apply to re-attract non-traditionalists to their original industries, in this order:

1. Workplace flexibility
2. Adequate total compensation
3. Meaningful work
4. Support for health and well-being
5. Reliable and supportive people at work

Their list looks realistic but it doesn’t feel new. And it’s hard to create job flexibility for teachers, nurses, and on-the-floor manufacturers.

A missing chunk to the data is how many workers who have left your industry would come back under any conditions, considering any reasonable workplace changes you made. We know an untold number of healthcare workers are finished for this lifetime, burned out by COVID-19 on top of their usual pre-pandemic workday stressors. Same with teachers. And same with restaurant servers who scrambled to find alternative income sources during the pandemic which taught them they don’t necessarily have to work on holidays and weekends ever again.

Good News: Turnover from Different Industries Can be Great New Hires for Other Industries

I reported months ago in this column how many corporations were recruiting teachers into project manager roles…providing them a springboard to advance to other positions. Doing so changes our usual job posting approach on Linked-In, Indeed, and the rest because those previous job qualifications that we used mainly to screen out unqualified candidates now have to be re-written to screen in the applicants we want. One approach is to consider workers from other industries who might thrive in your industry and go get them…however you can recruit to find them.

But hospitals can’t find nurses outside of healthcare. And those companies seeking technologists still must recruit technologists, even if they are willing to teach them a new industry for their applications. And based on the data above, more than half of all healthcare and technology workers who have quit have chosen to stay gone from their industries by either joining a different industry or staying home.

Overall the Data Concludes Retention Wins Over Recruiting

So much data from this report and others all points to the same conclusion: Retention is essential and recruiting is a risk. And given the overall worker shortage, even a recession won’t make this much better.

You Can Improve Employee Retention, Even During The Great Resignation
Schedule a conversation with me at DFinnegan@C-SuiteAnalytics.com to discuss your employee retention roadblocks and I’ll share ideas for how you can move forward and what is working for other companies to cut turnover by 20% and more, even during The Great Resignation that may benefit you.

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[i] https://www.mckinsey.com/business-functions/people-and-organizational-performance/our-insights/the-great-attrition-is-making-hiring-harder-are-you-searching-the-right-talent-pools?utm_source=search&utm_medium=SEM&utm_campaign=GAGA+2.0&gclid=Cj0KCQjw3eeXBhD7ARIsAHjssr8aS4TxqZ_0k4qWXc20NBGEJ_OnjOyMk12RIfW0pn8fOKAg8mWrQ7UaAhA7EALw_wcB