Article is behind a paywall - here is the Cached link with full article below. BofA cited. Moynihand quoted.
https://webcache.googleusercontent.com/search?q=cache:PNBDn7XcNqMJ:https://www.msn.com/en-us/money/careers/the-new-headache-for-bosses-employees-aren-t-quitting/ar-AA1jstP1&hl=en&gl=us
The New Headache for Bosses: Employees Aren’t Quitting
Chip Cutter
Posted: November 6, 2023 | Last updated: November 6, 2023
The white-collar labor market is softening to a point that companies are encountering an issue that would have been unthinkable in the era known as the Great Resignation.
These days, too few people are voluntarily leaving their jobs.
Turnover has declined so steeply at some large employers that companies now find themselves over budget on certain teams, requiring leaders to weigh whether to postpone projects or to cut additional staff as the end of year approaches. Other bosses worry about how to keep star employees engaged when there are far fewer vacant positions internally, making it harder to move people into new roles.
Companies such as Bank of America and dr-gmaker Ferring Pharmaceuticals say they have seen fewer employees leave their jobs this year. In some cases, executives say, turnover is returning to prepandemic levels following years of upheaval in the labor market.
“The attrition level is going down, that’s for sure,” said Denis Machuel, chief executive of global staffing firm Adecco Group, which works with large employers. “People feel it’s probably a bit cold outside with the macroeconomics not being so good. And with this last-in, first-out typical scheme, they’re more likely to stay in their current role.”
The decline in quitting would seem a welcome development for bosses who spent years bemoaning high levels of job-hopping and rapidly rising salaries. But some executives say they have been caught by surprise at how quickly the labor-market dynamics flipped, posing new challenges.
Hiring slowed sharply in October, with U.S. employers adding half as many jobs as they did in September, according to the Labor Department. The unemployment rate rose to 3.9% from 3.8%, but is still hovering near historic lows.
Morgan Stanley had layoffs in recent months in part because of low attrition within the 80,000-person Wall Street firm, CEO James Gorman said on a call with investors in mid-October.
“Really high performers are in demand across the Street, but we’ve actually had the opposite issue,” Gorman said. “We’ve had very low attrition, which is why we did some of the expense initiatives.”
Wells Fargo’s Chief Financial Officer Mike Santomassimo told investors this summer that attrition has been slower than expected at the company and that the bank planned to record higher severance expenses to reduce its head count. He reiterated the message in mid-October, telling investors that the company believed it still had more jobs to cut, as attrition has remained low, which will likely result in additional severance costs next year.
At Pitney Bowes, where the attrition rate is also down year to date, the shipping and mailing services company has had a few instances in which it hired an intern, expecting a vacancy to open in the company, only for the existing employee to remain in the position. The Stamford, Conn., company found other spots for the interns, and has generally managed the lower turnover rate, said Andrew Gold, chief human resources officer at the company, which had 11,000 employees at the end of 2022.
Employers try to accurately predict how many staffers will quit in a given year to help set budgets for teams and establish hiring plans. At the software provider ServiceNow, the company uses a machine-learning model to anticipate the number of employees it expects will step down each quarter. Voluntary turnover this year has fallen below levels forecast by those models, said Sarah Tilley, senior vice president of global talent. She didn’t cite specific figures, but attrition among top-performing employees in 2023 is less than half of what it was in 2022.
“Attrition, it took a nosedive,” Tilley said, adding that the roughly 22,000-employee Santa Clara, Calif., company’s culture also likely contributed to more workers wanting to stay. “We see it as a very positive thing.”
Nationally, the so-called quits rate—the number of resignations as a share of total employment—remained at 2.3% in September for the third month in a row, down from a 3% peak in April 2022, the Labor Department said Wednesday. The level of quitting hit a record during the pandemic, as Covid lockdowns eased and workers sought out better pay or working conditions, leading to a phenomenon that became widely known as the Great Resignation.
In surveys of workers, many show a newfound commitment to their current employers. This year, 73% of workers said they planned to stay at their jobs, up from 61% last year, according to a survey released in October by Adecco.
Some movement among employees at a company is healthy and necessary, said Purvi Tailor, U.S. vice president of human resources at Ferring Pharmaceuticals. Turnover creates promotion opportunities for high-performing employees, and allows employers to bring in new staffers with fresh perspectives or in-demand skills.
“When you don’t have enough attrition, that is when I think things start to feel stagnant, especially if people internally aren’t moving around,” she said.
Tailor declined to disclose Ferring’s current attrition rate but said it is below last year’s level, which was a five-year low within the company, which employs about 6,000 people. “Would I want the attrition rate that we currently have to go in half? Probably not—because then we’re in an unhealthy range,” she said.
If bosses want to get rid of employees, they can generally fire them, but layoffs can harm morale. In periods of low turnover, veteran HR leaders say they typically follow a different playbook before resorting to broader job cuts. When too few employees leave, companies will often get tougher in performance appraisals, pushing employees to quit. Cash can be another alternative. During periods of low attrition, companies tend to offer incentives, such as buyouts, to motivate employees to leave.
At Bank of America, the company told investors in January that it planned to cut its head count this year through slower hiring and attrition. But that task became more challenging, executives said, as fewer employees left the bank.
“Over the course of 2023, we’ve seen moving from 2022’s Great Resignation to a current level of a record low attrition in our company,” CEO Brian Moynihan told investors last month. “All that meant the team had to work harder to manage that head count down.”
Since January, Bank of America’s workforce has shrunk by about 6,000 full-time employees, to roughly 213,000 people.
Morgan Stanley’s Gorman told investors that he saw the lack of turnover as a reflection of the firm’s culture and its stability. “I guess we should feel flattered,” he said, before quickly adding: “The broader message is attrition has been remarkably low, and that’s something that we’ve just got to work through.”
After almost 14 years as chief executive, Gorman is doing his part to bump up attrition within the bank: He will step down from the top job in the coming months.
Write to Chip Cutter at chip.cutter@wsj.com