Toxic culture, not wages, is driving the Great Resignation.
Four steps to boost retention in the short term
CAMBRIDGE, Mass., Jan. 11, 2022 /PRNewswire/ -- According to new research released today in MIT Sloan Management Review, toxic corporate culture is the top predictor for employee attrition in the Great Resignation. This holds true across industries both blue-collar and white-collar for the period between April and September 2021.
To better understand the causes of the Great Resignation and help leaders respond effectively, the authors analyzed data from Revelio Labs, looking at 34 million online employee profiles to identify U.S. workers who left their employer. They then analyzed the employer's culture using data from the MIT SMR / Glassdoor Culture 500 dataset of hundreds of the largest employers in the United States.
"Much of the media coverage surrounding the Great Resignation focuses on high turnover among burned-out knowledge workers who are dissatisfied with their stagnant wages," said lead author Donald Sull, senior lecturer at the MIT Sloan School of Management and cofounder of CultureX, a company that uses AI to measure and improve corporate culture.
However, said Sull, "A toxic corporate culture is by far the strongest predictor of industry-adjusted attrition and is 10 times more important than compensation in predicting turnover."
The research also identified four steps — offering lateral career opportunities, remote work, social events, and more predictable schedules — that can boost retention in the short term across both blue-collar and white-collar industries.
These steps offer effective, inexpensive ways to increase retention. The authors' research suggests that offering company-sponsored social events has a 1.3 times as powerful effect on boosting retention as a rise in compensation. Lateral career opportunities was 2.5 times as powerful as an increase in compensation.
"Leaders who are serious about winning the war for talent during the Great Resignation and beyond must do more. They should understand and address the elements of their culture that are causing employees to disengage and leave. And above all else, they must address anything that makes their culture toxic," said Charles Sull, coauthor of the article and cofounder of CultureX.
The MIT Sloan Management Review (MIT SMR) article, "Toxic Culture Is Driving the Great Resignation," publishes 8 a.m. EST on January 11.
Methodology
The authors analyzed 34 million online employee profiles to identify U.S. workers who left their employer for any reason (including quitting, retiring, or being laid off) between April and September 2021. The data from Revelio Labs allowed CultureX to estimate company-level attrition rates for the Culture 500, a sample of large, mainly for-profit companies that together employ nearly one-quarter of the U.S. private sector workforce.
To dig deeper into the drivers of intra-industry turnover, the authors looked at how each Culture 500 company's attrition rate compared to the average of its industry as a whole. The research team further analyzed the free text of more than 1.4 million Glassdoor reviews using natural language processing. For each Culture 500 company, the authors measured how frequently employees mentioned 172 distinct culture topics and how positively they talked about each topic to determine which topics best predicted a company's industry-adjusted attrition rate.
About the Authors
Donald Sull (@culturexinsight) is a senior lecturer at the MIT Sloan School of Management, where he directs the Strategic Agility Project and the Culture 500. He is also the cofounder of CultureX, which leverages proprietary AI to measure and improve corporate culture. The Economist named him "a rising star in a new generation of management gurus," and Fortune listed him among the 10 new management gurus.
Charles Sull is a cofounder of CultureX. He leads successful consulting engagements for top teams from around the world around a variety of strategic and cultural issues. He published several articles about related research in leading journals, including MIT Sloan Management Review.
Ben Zweig is CEO of Revelio Labs and an adjunct professor of economics at New York University's Stern School of Business.
About MIT Sloan Management Review
MIT Sloan Management Review (MIT SMR) is an independent, research-based magazine and digital platform for business leaders, published at the MIT Sloan School of Management. MIT SMR explores how leadership and management are transforming in a disruptive world. We help thoughtful leaders capture the exciting opportunities — and face down the challenges — created as technological, societal, and environmental forces reshape how organizations operate, compete, and create value.
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