To get where you want to go, you need to know where you are. That’s true of most things and certainly applies to securing the workforce of the future.
A new national report was released recently 16 to help employers get data on pay, promotion, and hierarchy insights.
The inaugural report, 2019 State of the Workforce Report: Pay, Promotions and Retention, by the ADP Research Institute, provides, data-driven organizational benchmarks derived from the aggregated and anonymized HR and payroll data of U.S. workers. The results are further examined by age, gender, firm size, and tenure. The report, based on payroll from more than 13 million employees, was designed to help employers gain a better understanding of the hierarchical structure of organizations, pay levels, how pay and promotions are connected and how employers retain workers throughout their organizations.
Many of the key findings from the inaugural study focus on promotional activities, a topic of great importance to younger employees focused on career opportunities.
Overall, employers promote 8.9% of their employees annually and those employees received an average wage increase of 17.4%.
Interestingly, however, promotions within a team are associated with higher turnover among other team members. Dr. Ahu Yildirmaz, co-head of the ADP Research Institute noted that "While promotional opportunity may be perceived as a net positive, it can also have a negative impact for team members who have been passed over."
On the flipside, the probability for promotion exceeds 20% for employees as they reach higher levels of management within the organization. Firms are more likely to promote internal employees for management positions, and the percentage of internal hires increase for higher levels in the organization.
Here are some highlights from the report:
Monthly turnover rates for older employees are relatively lower compared to younger age groups.
- The overall turnover rate for those aged 65+ was 2.2%, while turnover successively increases across younger age groups to 8% for those aged 25 years or less.
- The turnover rates were very similar across genders, with males leaving their jobs at a rate of 3% per month and females at 3.5% per month overall
Women are promoted earlier than men, but face glass ceiling at fourth level of management
- The average number of years to first manager promotion for women is 6.6 years and 7.3 years for men.
- As women move up management levels, there is a steep decline at the 3rd level of management; this decline becomes more pronounced at each level of advancement.
Average wage is $29.03 per hour, with women earning 79% of what men earn
- Managers are paid an average of $47 per hour, while non-managers earn $25.
- Women earn $25 an hour, 79 percent of the $32 for males. The ratio of women pay to men reaches as high as 82% at the fourth level of management, but drops to 77% at the top levels of the firm.
Average number of direct reports per manager is 6.9
- Employees who have managers with more direct reports are more likely to leave the firm. For example, direct reports' turnover for managers with 4-6 direct reports is 2.3%; direct reports' turnover for managers with greater than 15 direct reports is 3.5%.
- Leisure/Hospitality (11.4 direct reports) and Education/Healthcare (8.5 direct reports) have highest number of direct reports.