Rethinking Retention for the Next-gen Workforce

By Steve Allinson  

In today’s competitive job market, retaining young employees poses a significant challenge for many organisations. A recent survey by the Institute of Student Employers revealed that 51% of graduates and apprentices are leaving their roles in pursuit of better pay, marking a significant rise compared to 2023 and 2022. This trend highlights the growing financial pressures young professionals face, as inflation and the rising cost of living drive them to seek higher salaries. However, not all employers have the flexibility to offer substantial pay increases. To address this issue, companies must explore innovative strategies to enhance employee loyalty and engagement without solely relying on financial incentives. 

The changing landscape of workforce retention 

The winds of change are sweeping through the graduate recruitment landscape, leaving employers scrambling to retain their new hires. According to the ISE’s Student Recruitment Survey, employers retained 83% of their graduate hires after three years in 2016. However, this figure dropped significantly to 70% by the 2023-24 period. This decline in retention rates indicates a growing challenge for employers in maintaining a stable workforce. A notable trend is the increased number of applications for higher-paying sectors such as finance, while traditionally lower-paid public sector jobs are seeing fewer applicants. This shift suggests that financial incentives are becoming a more critical factor for graduates when choosing their career paths.  

While many graduates once prioritised climbing the career ladder, the rising cost of living has led to some younger workers placing greater emphasis on securing higher-paying jobs to maintain financial stability. 

Needs and expectations of young workers 

Many of today’s young people are entering the workforce after spending a significant portion of their recent education in online learning environments. This experience has made hybrid workplaces particularly appealing to them, and so often Gen Z workers will value the flexibility that allows them to balance professional responsibilities with personal priorities. The hybrid model offers a mix of in-person interaction, which fosters office relationships, and remote work, which can support a more balanced lifestyle. This preference for flexibility is a key expectation that employers need to address to attract and retain young talent. 

Additionally, entry-level employees today tend to value professional development highly. They expect access to comprehensive learning and development programs, such as career coaching. These resources are seen as essential for skill development and career progression. As a result, organisations that invest in robust development programs and create supportive environments for their young employees are more likely to meet their expectations and succeed in retaining them.  

Creating an engaging and inclusive culture 

Creating an engaging and inclusive culture is essential for retaining young workers and fostering a sense of belonging. A culture of autonomy, where individual responsibility is emphasised and encouraged, can significantly motivate staff and nurture their personal growth. When employees are trusted to manage their own tasks and make decisions, they often feel more valued, empowered, and invested in the company’s success. This positive culture of trust encourages a sense of ownership, accountability, and personal agency, leading to higher job satisfaction, motivation, and productivity. Encouraging autonomy also enables employees to innovate, think creatively, and contribute more effectively, knowing that their unique perspectives and contributions are recognised and appreciated. Such an environment that promotes self-determination can be particularly appealing to young workers who seek meaningful, impactful roles and opportunities for personal and professional development. 

Another way to create an engaging culture is the implementation of comprehensive career coaching and workplace development programs. By offering career coaching, employers can help young workers identify their strengths, set professional goals, and create personalised development plans. This not only enhances their skills and productivity but also creates a sense of loyalty and commitment as employees see a clear path for growth within the company. Regular feedback, mentoring, and opportunities for upskilling can further support their career progression, making them feel valued, motivated, and invested in their roles within the organisation. 

Additionally, demonstrating a commitment to sustainability can greatly influence retention among young workers. Research shows that 20% of Gen Zs and millennials have already changed jobs or industries to better align their work with their environmental values. As such, by implementing eco-friendly practices and supporting green initiatives, companies can create a workplace culture that resonates with the values of younger generations. This alignment with personal values fosters a deeper connection to the organisation, encouraging long-term commitment. 

As the workforce continues to evolve, it is evident that retaining young talent requires a multi-faceted approach that extends beyond mere financial incentives. While competitive salaries remain a crucial factor, organisations must also prioritise creating engaging work environments, fostering professional growth opportunities, and aligning with the values and preferences of the younger generation. Employers who prioritise innovative strategies that cater to their diverse needs and values will not only attract top talent but also cultivate a dynamic, committed, and sustainable workforce for years to come.

About the Author 

Steve Allinson is the Chief People Officer / Vice President for People & Culture at CoachHub. With over 15 years of experience of working in HR, Steve is passionate about people. He believes that for any business, people are its biggest investment, biggest variable and biggest potential success factor.