And just like that – poof – another employee is gone. What happened to courtesy? There used to be a time when it was customary for an exiting employee to provide a two-week notice before terminating employment. Not so much anymore. Aside from contracts or union clauses that mandate otherwise, the concept of a two-week notice has largely become an option rather than the norm. In fact, statistics indicate the whole concept is fading fast and is costing companies a lot of money.
Fading Out
There are a lot of reasons why the two-week notice is falling out of favor. First, research suggests that two weeks is an arbitrary length of time for replacing an employee in the first place.
Federal Reserve Economic Data (FRED) shows that it typically takes more than 30 working days on average to replace an employee. Deloitte puts the figure much higher, at 70 days for skilled workers and up to 94 days for employees like engineers, researchers, and scientists. Go Government reports that public sector jobs can take as long as 6 to 8 weeks to fill. Such high durations make a two-week notice seem unnecessary to many workers.
Secondly, many people want to avoid a confrontation or uncomfortable conversation. This has led to a dramatic increase in “ghosting,” which is when an employee leaves and never comes back without any kind of notice. Why have an awkward chat or possible conflict when you simply don’t have to?
Over the past several years, multiple sources including Robert Half, USA Today, and the Chicago Federal Reserve have documented a persistent increase in the number of employees that ghost their employers. Going back to about 2016, several report an increase of 10 to 20 percent more ghosting activity with each passing year.
This was thought to be perpetuated by the historically low unemployment rates of the years preceding 2020, but it has continued despite the economic strife caused by the pandemic. Even though there is higher unemployment than before, skilled people can still find a new job.
As an example, late last year the National Federation of Independent Business (NFIB) said, “The labor market is tight, and owners cannot find qualified workers to fill open positions. Small businesses reported a historically high level of job openings. Twenty-nine percent of owners have openings for skilled labor and thirteen percent have openings for unskilled labor.”
What Does This Cost?
Many of the costs that employers incur after an employee leaves without notice come from being blindsided. Simply put, it’s often a logistical pain that produces expensive workarounds. In the absence of any advance planning, an employer is given no time to cross train other employees or make alternative arrangements to cover responsibilities. For most companies, this will have measurable direct and indirect costs.
The bigger problem though, is the employer never got a chance to make a counteroffer. In other words, never got the chance to attempt to prevent turnover. In many situations, a raise or an additional employee benefit is much cheaper than having to hire someone new.
Finding a new employee can be incredibly expensive. The Society of Human Resources (SHRM) and the Work Institute say that, “Each employee departure costs about one-third of that worker's annual earnings, including expenses such as recruiter fees, temporary replacement workers, and lost productivity.”
Without a two-week notice, an employer can’t take steps to encourage the departing employee to stay and will lose more money than their retention incentives would have cost.
Should We Try to Bring it Back?
Employers generally can’t make giving notice a requirement, unless contracts stipulate otherwise, but they absolutely can request it from employees. They can also make it a positive part of the company culture, encouraging workers to give notice if they intend to leave or even incentivizing them to do so. And while it might sound crazy to incentivize someone to leave your company in a certain way, it’s largely preferable – and cheaper – than the alternative.
In many executive and company V.I.P. circles, it’s common to see bonuses or various compensatory packages made available to high-value employees that provide four to six weeks of notice before leaving. Sometimes even longer. As SHRM explains, some employers also choose to base rehire eligibility on the amount of notice that a person gave.
Strategies like these could be applied to every level of a company. When combined with a positive corporate culture that fosters high level of retention, the amount of turnover will be reduced in terms of both frequency and also severity of impact. All of which can help companies save a lot on their bottom lines.
Gone, But Not Forgotten
The two-week notice may be fading out as the most-used resignation practice on the national level, but it’s still a very favorable thing for companies. Abrupt departures are an expensive problem, but with the right combination of things in place an employer can ensure they happen much less often. With a little creativity, we can bring the two-week notice back and save lots of money as a result.
