Reduce the Churn

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Four in 10 American workers are employed in low-wage, front-line jobs that are hard to fill, yet few have opportunities for advancement that would keep them at their jobs. Building From the Bottom Up, a report from Harvard Business School's Project on Managing the Future of Work, explores what businesses can do to weaken rates of employee turnover and strengthen their bottom lines by investing in frontline employees.

Four in 10 American workers are employed in low-wage, front-line jobs that are hard to fill, yet few have opportunities for advancement that would keep them at their jobs. Building From the Bottom Up, a report from Harvard Business School's Project on Managing the Future of Work, explores what businesses can do to weaken rates of employee turnover and strengthen their bottom lines by investing in frontline employees.

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For the study, HBS surveyed 1,025 US workers who earn low wages—roughly $20 per hour or less—and are age 21 or older with at least three years of continuous work experience. Some respondents had experienced upward mobility, and others had not. HBS also queried 1,150 business leaders at US companies across the managerial spectrum on how they perceived upward mobility, which HBS defined as "an improvement in skills that enhances an employee's productivity and results in an increase in the employee's pay or a promotion or both."

For the study, HBS surveyed 1,025 US workers who earn low wages—roughly $20 per hour or less—and are age 21 or older with at least three years of continuous work experience. Some respondents had experienced upward mobility, and others had not. HBS also queried 1,150 business leaders at US companies across the managerial spectrum on how they perceived upward mobility, which HBS defined as "an improvement in skills that enhances an employee's productivity and results in an increase in the employee's pay or a promotion or both."

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HBS found that more than half of surveyed employers had low-wage worker turnover rates exceeding 24 percent. "Employers have ignored the high price their organizations pay: unfilled positions that reduce output and increase overtime, direct and indirect costs caused by constant churn, and the 'soft' costs of eroding morale," write co-authors Joseph B. Fuller and Manjari Raman.

HBS found that more than half of surveyed employers had low-wage worker turnover rates exceeding 24 percent. "Employers have ignored the high price their organizations pay: unfilled positions that reduce output and increase overtime, direct and indirect costs caused by constant churn, and the 'soft' costs of eroding morale," write co-authors Joseph B. Fuller and Manjari Raman.

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When asked what would induce surveyed workers to stay at their company, 62 percent said the prospect of upward mobility. However, one-third said they do not have any career advancement opportunities. Not surprising, only 29 percent of surveyed employers estimated that one in 10 low-wage workers has advanced in their career during their previous year of employment.

When asked what would induce surveyed workers to stay at their company, 62 percent said the prospect of upward mobility. However, one-third said they do not have any career advancement opportunities. Not surprising, only 29 percent of surveyed employers estimated that one in 10 low-wage workers has advanced in their career during their previous year of employment.

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Half of surveyed workers reported their employers do not let them know which skills they should acquire to possibly advance, although 55 percent said they have had a supervisor or mentor who has helped them succeed.

Half of surveyed workers reported their employers do not let them know which skills they should acquire to possibly advance, although 55 percent said they have had a supervisor or mentor who has helped them succeed.

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Ultimately, the report reveals that individuals who earn low wages "are willing—often eager—to invest time and effort in upgrading their skills. But they receive little, if any, guidance as to what training or skills development is needed to be considered for advancement."

Ultimately, the report reveals that individuals who earn low wages "are willing—often eager—to invest time and effort in upgrading their skills. But they receive little, if any, guidance as to what training or skills development is needed to be considered for advancement."

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Based on the findings, Fuller and Raman advise employers to invest in those employees. "The skills, experience, and implicit knowledge of low-wage workers are intangible assets of real value to companies," the authors write. "By nurturing talent internally, they will deliver on their commitment to create a diverse organization—building better from the bottom up."

Based on the findings, Fuller and Raman advise employers to invest in those employees. "The skills, experience, and implicit knowledge of low-wage workers are intangible assets of real value to companies," the authors write. "By nurturing talent internally, they will deliver on their commitment to create a diverse organization—building better from the bottom up."