Job-hopping 'career nomads' could be costing some companies

“Career nomads” – high-performing professionals who switch jobs, organizations, and careers at a faster rate than others – could be costing some companies more than others. A recent survey from organizational consultancy Korn Ferry found that companies with revenue-per-employee lower than $500,000 are likelier to see costs from high-talent job-hoppers.

Stats from the US Bureau of Labor Statistics show that older millennials (born in the early 1980s) have switched jobs nearly eight times despite the fact they are only mid-career, while the rate that people quit their jobs has increased 25% since 2013.

Companies fell for high-talent job-hoppers in the past decade because their underlying traits tend to align with the skills companies need for digital transformations – like learning agility, curiosity, and a tolerance for ambiguity.

The Korn Ferry survey found that people with high levels of intellectual curiosity are, on average, 2.2 times more likely to be career nomads, and those who have a tolerance for ambiguity are 2.5 times more likely to be career nomads.

Career nomads are also more attractive in areas like IT, marketing, and digital technology, where talent needs related to new tech development and new markets benefit from more diversified career experience. They can also be more useful to companies if they have a resume of recognizable brands, bringing insider knowledge of how other successful companies operate.

“Our study indicates the reasons people seek new challenges elsewhere are the same reasons companies want them to stay,” said Jean-Marc Laouchez, president of Korn Ferry Institute. “Career Nomads are intellectually curious. They have a tolerance for ambiguity. They are willing to take risks that can help them excel and provide value for their employer.”

However, career nomads present risk, in that their sooner-rather-than-later exit and the cost of hiring and replacing them is a real one. At Fortune 500 firms, the cost of replacing talent ranges from 50-75% of a position’s annual salary, after accounting for recruitment, training, and onboarding. Lost productivity costs, meanwhile, can range from 0.25 to 2.5 times the salary.

Korn Ferry’s data shows that among Fortune 500s, 44% see an average cost of $58 million each year due to job-hopping, but 56% see a net benefit of $46 million per year, on average. Organizations that earn more than $1 million per employee are most likely to benefit from career nomads, while those earning $500,000 or less per employee are most likely to see costs.

“Companies in more asset-intensive industries with more revenue per headcount are more able to take more risks on career nomads and either keep them challenged enough to extend their tenure or capitalize on the ideas and changes they bring during their short time with the organization,” said Tom McMullen, a senior client partner at Korn Ferry and head of the firm’s total rewards practice for North America.

Companies that are trying to snag and retain their nomads a bit longer can put a few strategies into practice across compensation and career development. Long-term incentives are unsurprisingly less important to this segment, so a competitive base salary and sign-on bonuses resonate more strongly with them.

Nomads also value “purpose” more than non-nomads, so opportunities for community involvement, social impact, and community involvement might keep them more engaged.

Moving nomads around internally – from region to region, business to business, and function to function – may also keep them from straying too early. “Developing internal nomads can be a competitive talent advantage,” McMullen added.