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ADP examines impact of promotions on employee motivation a…


The ADP Research Institute released a report Wednesday on how worker promotions can affect businesses and employee retention and debuted a new index for tracking employee motivation and commitment.

In the September issue of its quarterly Today at Work series, "The Hidden Truth About Promotions," the ADP Research Institute described how promotions, under some conditions, can impact businesses and prompt employees to leave soon afterward. The report also introduced the Employee Motivation and Commitment Index, a real-time way to measure the state of worker allegiance. The EMC Index keeps tabs on how employees think and feel about their jobs, their place on the organizational chart, and their employers. The index draws upon ADP's data set of over 25 million U.S. workers and leverages nearly a decade of surveys of more than 490,000 workers across 29 countries.

While the research is not specific to the accounting profession, it can help accountants advise their clients on retaining employees during a tight labor market as well as help accounting firms and departments with their own employee retention efforts. 

An ADP sign at the TechFair LA job fair in Los Angeles.

Patrick T. Fallon/Bloomberg

"The shortages that the accounting profession is seeing are particularly resonant when you look at all the hiring trends," ADP chief economist Nela Richardson told Accounting Today. "This study isn't specifically about accounting, but it does speak to a lot of trends that might be familiar to your audience. What it's about is all that we don't know in the official statistics between the hiring and then when somebody leaves, all these different milestones that a worker's journey leads to, whether it's skills and training or promotion or changes in their team. All of that we wanted to just start sharing on a quarterly basis through Today at Work."

The new Employee Motivation and Commitment Index aims to measure employee sentiment. "If we know that feelings are important in terms of actions, how do we measure that? In this issue, we are introducing a new index on sentiment as well," said Richardson. "The first starting place in the first part of the report is on promotions. We found that when we looked at over 50 million workers from over 90,000 companies over a five-year period, the actual rate of promotion was super low. It was under 5%."

She was surprised at how low the promotion rate was for people within two years of their hire date, especially given how hot the talent market was, and expected the promotion rate would be much higher. "Hiring was rapid, but promotions were rare," said Richardson. "Getting people in the door was the most important thing."

When she and Ben Hannowell, director of people analytics research at the ADP Research Institute, took a closer look at the data, they found that many employees were actually leaving their jobs not long after they were promoted. "We found that for people promoted in this four-year time span, 29% left their job within one month of their promotion," said Richardson. "That compares to 18%, which is our estimate of people who would have left. It raises the risk of leaving by two-thirds in a six-month period overall. After nine months, when you extend the timeline, the people who got promoted and the people who didn't look very similar in terms of their probability of leaving, but right after that promotion, it's clear that people who got promoted are more likely to leave."

Other variables can also factor into the impact of a promotion, ADP found. Employees in jobs with fewer entry requirements are more likely to quit after being newly promoted, for example. In roles that demand extensive preparation such as graduate school or an advanced technical degree, a promotion increased a manager's risk of leaving more than it did for non-managerial workers.

"People who are in low-skilled jobs are greater flight risks," said Richardson. "They're more likely to leave than people with extensive preparation. That's a big surprise too. But when you look at those types of jobs, they're generally tied to high-turnover industries and low-skilled workers like a dishwasher in a restaurant tied to hospitality. When you look at just low-skilled jobs, we estimate that those job losses from promotion are actually equivalent to three months of workdays. This is a real effect that companies lose actual days from promoting people. As you get more experienced in the job tenure in the tech job roles, people are less likely to leave. Maybe you are an engineer, but your skills aren't as fungible. If you're in a low-skilled job, you can easily get promoted to another low-skilled job, maybe for more money. If you're in a specific job, like petroleum engineering, it's hard to make the same money without staying in that same discipline, and it may not be easy to move to another petroleum company in your city with those attributes. You're limited a little bit when it comes to that in terms of job roles, even if the promotion has made you more marketable. It might have also made you more expensive, which in this market is harder. It's harder to Job switch sometimes when you're an expensive hire." 

In August, the EMC Index fell from 108 to 100, its lowest point since June 2022. The index peaked in December. The EMC Index showed a strong relationship between output and worker motivation and commitment. High-productivity workers are 2.6 times more likely to respond positively to questions about their work and motivation. 

An employee's industry sector also can influence their level of motivation and commitment. Technology had the biggest share by far of motivated and committed workers (42%), followed by information (37%), and construction and related trades (34%). Health care (22%), education (20%), and transportation and warehousing (19%) fell among the lower levels. Information, which includes publishing, web hosting, television, and telecommunications, has been on a downward trend. In terms of gender, men showed much higher motivation and commitment scores between the ages of 20 and 54.

ADP is planning more detailed reports on industry sectors as it plans to release future quarterly reports in the Today at Work series. "We've got a big focus on labor shortages, and one of the occupations is accounting," said Richardson. "More to come on that as we look at pay trends, shortages and demographics of the industry."

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