Job hopping might not be such a bad thing: U.K. study

Employers may want to embrace new realities of job loyalty
By Marcel Vander Wier
|Canadian HR Reporter|Last Updated: 03/30/2017

Millennial workers exuding loyalty to their employers – and not seeking alternative employment — may stunt their pay and career progression, according to new research by a think tank in London, U.K.

Which is why employers may want to rethink a “job hopping is bad” mentality, say experts.

A slowdown in job movement, combined with lesser rewards for long service and a shift towards low-pay work, have stalled pay progress for millennials, found Study, Work, Progress, Repeat?, released in February by the Resolution Foundation.

Just four per cent of those born in the mid-1980s moved jobs from year to year in their mid-20s — half the rate of those born a decade earlier, found the research which analyzed pay growth rates between cohorts based on individual characteristics and job-change frequency.

The longer an employee remains in a junior role, the slower her wage progression will be, said Paul Gregg, associate at the Resolution Foundation and co-author of the study.

“Young people progress in the labour market by gaining promotions, which follow from experience and knowledge gained in employment,” he said. “Such promotions can be inside a firm, but often involve moving firms, as firms may not have vacancies in more advanced roles at the right time.”

The findings run counter to the widespread perception that millennials are continuously on the move from job to job, said Laura Gardiner, senior policy analyst at Resolution Foundation and co-author of the study.

“One of the most striking shifts in the labour market has been young people prioritizing job security and opting to stick with their employer rather than move jobs,” she said.

“The stalled progress on pay for young people today is unprecedented and its causes run far deeper than the recession.

“With the typical pay raise for a job mover in their mid-20s at around 15 per cent, and evidence that employers have essentially stopped rewarding their long-serving staff with real annual pay increases, such job loyalty can be very costly.”

It may be time HR recruiters cut proverbial job hoppers some slack, said Debby Carreau, CEO of Inspired HR in Calgary.

“We need to be very careful not to judge,” she said. “A few years ago, absolutely, it was a huge red flag if we saw significant job hopping. But now, when you look at someone’s resumé, it gives you data to ask questions: So why are they job hopping? Is it because the company they’re in is not growing? Did they need new opportunities? Was it a result of the economic downturn?”

“I wouldn’t discount people because they have multiple jobs on their resumé. They may actually have different and better experience as a result of it.”

Why are people moving around?

It appears job hopping is no longer the deal-breaker it was said to be three years ago, said Mandy Gilbert, CEO of Creative Niche, a recruiting firm in Toronto.

Changing employers provides more benefits than a simple pay increase for workers, including the expansion of peer networks, increased communication skills and knowledge of new technologies, she said.

“Obviously, that’s going to accelerate your learning and your ability to grow,” said Gilbert. “The more that you go through that, the more value you’ll bring to the next company, especially if they’re a younger company. Therefore, (the job hopper’s) value becomes higher than just being a new grad.”

“Some people have more of a difficult time of starting new roles. It’s really high stress for them and they are more of a longer-term contributor, if you will. Then there’s individuals that thrive on change and risk and want to grow, grow, grow and be exposed to as many things as possible. I think it’s really down to the individual.”

A new job is not just about pay, but about the experience and knowledge it gives to help future advancement, said Gregg.

“Very short-term job hopping means this experience isn’t being gained, but also staying longer in a less senior role sees slow progression. There’s a balance.”

A slowdown in the availability of “stepping-stone jobs” is part of the equation in the U.K., he said.

“Firms faced with good people leaving often respond by raising pay and internal promotion — the competition effect. So, lack of the option to move into better-paid work reduces incentives of firms to advance people inside their firms.”

The 2008 recession hurt millennial workers in North America, too, as many entered the workforce at a time when wage amounts were being scaled back, said Carreau.

“If your metric of success is your income earned, there is no doubt by changing jobs, you can increase your pay more quickly,” she said. “In an existing job, often all you will get in terms of a pay increase is your annual cost of living — two to five per cent. When you jump jobs, usually you get a significant bump in your pay.”

“By staying with the same employer, unfortunately, unless you get a big promotion, you’re just getting that cost-of-living increase. It’s very hard to get ahead. The way to make leaps — wrongly or rightly — is to have another company really want you and move over to that company. It’s not the only metric of success, but if you’re purely looking at your compensation, it does help the employees to job hop a little bit.”

Changing employer attitudes

Today’s talent market is one that sees quality workers constantly being approached by headhunters, said Gilbert.

“Movement is good,” she said. “Both the employer and employee have to look at what each other can provide to one another.”

“And if you can’t keep a great millennial because you can’t provide the accelerated growth that they are craving and wanting, then it’s OK to let people move in and out of your company and just accept that maybe long-term retention isn’t realistic, nor does it make the most sense for your business.”

“We need to keep a really open mind in their first four years of employment and not hold too much judgment there,” she said.

“You need to hear their story and their rationale. Ultimately, if you’re asking the right questions in the interviewing process and creating a comfortable environment where they’re sharing their story with you, I think that’s what really matters to get a sense of what’s triggered or motivated these moves, and better understand the individual.”

Every millennial should be granted four years to hop from employer to employer before a commitment of at least two years should be expected, according to Gilbert.

At some point, an employee needs to make sure the decision is right for him and figure out what duration of time he can contribute to really make an impact or grow with the company — through change, transition, growth or contraction, she said.

“When times get tough, do you get going? Do you move because you feel like you’re going to be eliminated because of the value you’re contributing?” said Gilbert. 

“If you are throwing in the towel before two years on a regular basis, it could potentially catch up to you, because employers might flag your ‘stickability.’”

Purposefully employing workers for a shorter cycle could be an optimal scenario in certain sectors, such as retail, said Carreau.

“You’re not going to keep everyone for 10 years,” she said. “Often, it’s a transient job when people are going to school for a few years or supplementing a full-time job income, so sometimes you need to set up your onboarding and offboarding programs for a shorter length of time for employees.”

Some companies require retention of a stable core of intellectual brain trust, said Carreau. But many other positions can be filled with diverse candidates who bring a variety of experience to the table.

“More progressive employers are more open to people who have had different experiences in their career,” she said. “But I also think, as HR professionals and business owners, we’ve gotten wiser and we realize that all employee retention isn’t necessarily a good thing.”

“There’s an optimal period of time when an employee is productive with you and often times it is good for them to move on. I think we’ve realized you don’t want to retain all of your employees at all costs, forever. It’s not a reality and it’s not pragmatic anymore.”

Two years remains the ideal amount of time to remain in a position — or long enough to make a legitimate contribution, said Carreau.

“If you see someone jumping jobs every three or six months — or under a year — consistently, I would certainly ask the questions,” she said.

“But if someone’s changing positions every two years, I think you just ask the question and understand why. I don’t think that’s a red flag at all.” 

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