Workers who get passed over for a promotion while a team member advances are more apt to quit than workers where no promotion occurs, according to The ADP Research Institute's 2019 State of the Workforce Report: Pay, Promotions and Retention.

The inaugural benchmarking report, for pay and promotion practices among employers with 50 or more workers, found that teams where a promotion occurs experience a turnover rate of 13.3 percent, while teams without a promotion have 12.3 percent turnover.

“Employers should consider the effect of promoting individual team members and the retention strategy for key team players,” the authors write.

Overall, firms promote 8.9 percent of employees, while new hires make up a much larger portion of positions being filled, at 30.2 percent. However, for management positions, firms promote more internally than they hire externally—17.2 percent of managers are promoted, while 15.6 percent are new hires. For the C-suite and other top positions, 21.5 percent are internally promoted and only 12.5 percent are new hires.

“Employers can compare their rate of internal promotion against national and industry benchmarks to determine the health of career development programs, learning and development, and the cost of losing high-potential front-line workers,” the authors write. “In addition, externally hired managers are more likely to increase total compensation costs.”

The report also found that employee turnover varies significantly with demographic factors. Not surprisingly, monthly turnover rates for older employees are lower compared with workers in younger age groups. The overall turnover rate for those 65 and older is 2.2 percent, while turnover successively increases across younger age groups to 8 percent for those age 25 or younger.

What may be surprising is that turnover rates are very similar across genders, with males leaving their jobs at a rate of 3 percent per month and females at 3.5 percent per month overall.

“Employers can compare employee turnover against national and industry benchmarks split out by age and gender to pinpoint organizational issues,” the authors write.

Another key finding: On average, it takes 6.6 years for women to be promoted to their first management promotion, while it takes 7.3 years for men, on average. However, as women move up the corporate ladder, there is a steep decline at the third level of management, with women hitting the proverbial “glass ceiling” at the fourth level.

“While less than half of one percent of all American workers reach the three highest management tiers, the under-representation of women is problematic because these elite positions have an outsized influence on corporate policy and culture,” the authors write.

“The average wages of job holders in these fourth-level management positions is also 40 to 50 percent higher,” they write. “Considering that these leadership positions typically require candidates with substantial job tenure and mentoring, short-term fixes will be challenging.”

From: BenefitsPro