Toxic Culture, Not Wages, Is Driving the Great Resignation.

• Four Steps to Boost Retention in the Short Term

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.

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“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.

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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.

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