We live in an era when 30% of all new graduates hired by listed companies leave their jobs within three years of joining. In some major banks the situation is even worse, with the ratio rising to 35%. Some think it could even reach 40% this year. So why is it that young people who gain sought-after jobs with high-profile companies leave within such a short time?
We live in an era when 30% of all new graduates hired by listed companies leave their jobs within three years of joining. In some major banks the situation is even worse, with the ratio rising to 35%. Some think it could even reach 40% this year. So why is it that young people who gain sought-after jobs with high-profile companies leave within such a short time?
One reason is the recent trend of performance-based evaluation systems. This introduces young employees to a system in which pay increases can be hard to come by. At first glance, it would seem that performance-related pay is an opportunity for hard-working individuals to get ahead. In reality, the systems that many companies introduced after the economic bubble burst in 1991 were merely a substitute for the more painful measures of cutting salaries and restructuring; systems designed to keep the lid on pay increases for young employees, while maintaining the upward salary trajectories of the 'baby boomers' and their seniors. By and large, the strategy worked: companies were able to cap total labour costs, or even reduce them. Those who bore the cost were the younger generation – the so-called ‘Employment Ice Age’ generation – with a significant gap in lifelong wages opening up between themselves and their seniors.
Other factors have also played a part. In the late 90s, many companies greatly reduced their annual intake of new graduates and cut back on their investment in education and training. Junior employees found that if they stayed at the same company, they tended to remain junior employees. The way to escape was to move to a different company rather than wait for a promotion that seemed unlikely to come.
There is also growing career consciousness in Japan. Since the Asian financial crisis in 1998, new graduates have tended to start out their working lives with a greater sense of purpose. They are more career oriented than their seniors were, and more aware of the value of their current job to their future career. If their employer seems unwilling to invest in them to allow them to progress, they are much more likely to leave for a company that they feel will value them more.
According to an old Japanese proverb, if you sit on a rock for three years it will eventually get warm. In other words, stick at something for long enough and eventually you'll be rewarded. This used to have some meaning for people starting out on lifetime careers within the same company. But in an age where recruitment information is easier to get and opportunities for career advancement are available by moving to a new company, the saying holds less and less water.
Companies are finally beginning to acknowledge these trends too. For the first time in a decade, banks and manufacturing companies have raised their starting salaries in the hopes of attracting new talent. On its own, however, this is unlikely to reduce the numbers of young employees leaving after a few short years. Companies must introduce education and training programs that give the younger generation genuine opportunities to advance their career and better their salaries based on an honest assessment of the results of each individual.