Through detailed quantitative interviews with businesses — Seedco’s employer partners in New York, NY and Memphis, TN — the report’s findings estimate a single instance of turnover costs an employer approximately $3,300, with disproportionate impact on smaller businesses.
This research is a central element of Seedco’s participation in the CareerLift initiative, which builds on Seedco’s Youth Advancing in the Workplace program model. Seedco is deeply grateful for support from The Pinkerton Foundation and the Rockefeller Foundation through the Mayor’s Fund to Advance NYC/Center for Youth Employment for their support of this research.
Social Finance’s findings reveal that there is a market failure at work:
“Many employers— fairly enough—restrict the focus on their employee retention efforts to the job itself. They have come to accept that sky-high rates of turnover are inevitable, and that drivers of that turnover are beyond their control.
But our research suggests otherwise. Turnover among entry- level employees is often driven by challenges outside the workplace, such as transportation, child care, or housing. If employers could help to overcome those challenges, they could unlock value in their businesses by lowering turnover.
But this isn’t the role that most employers have traditionally played in the workplace; making the transition is
uncomfortable, and its rewards are uncertain.
We believe a Pay for Success model may be able to overcome this market failure. Such a model would allow employers to buy better retention outcomes, spending money only if those outcomes are achieved—paying for employee supportive services to the extent that those services are successful.
And based on the findings from our interviews, we believe that employers—when presented with models that allow them to pay only for results, rather than for services—are hungry for new, better ways to help their businesses.”
Read the full report here.
Read more from Social Finance here.