A study shared this month by the MIT Sloan Management Review (MIT SMR), a research magazine for business leaders published at the Massachusetts Institute of Technology, reveals that the leading cause of American employees quitting their jobs voluntarily—from April to September of 2021—was a toxic corporate culture. Of the thirty-eight industries reviewed, the apparel retail sector ranked at the top of the list for most employees lost.
In an effort to understand the driving force behind high attrition rates in the US, the ongoing research project undertaken annually by MIT SMR, known as the Culture 500, was used to analyze 1.4 million company reviews on Glassdoor, a platform where current and former employees write anonymously about their salaries and workplaces. With the help of human-supervised artificial intelligence, the number of workers who left their job for any reason in the sample time period was identified and the language of the anonymous reviews for each company, (large corporations representative of their industries), was scientifically measured to create a data set on corporate culture. According to the report, a record 24 million employees left their jobs during that time.
How the Research was Conducted
In order to assess the language and define predictors that lead to turnover, a company founded by two of the researchers, CultureX, used a proprietary method of natural language processing, developed at MIT, to look at the frequency of various topics mentioned in the Glassdoor reviews. The experts looked out for language nuances and misspellings that might be misinterpreted or overlooked by the technology and determined the top topics that most affect desire to change employment. “Typically in natural language processing, the algorithm is in the driver’s seat—It identifies the topics, it classifies the text,” stated Donald Sull, a co-founder of CultureX and a senior lecturer at MIT Sloan School of Management, in a video posted to the site for the Culture 500 project. “Our approach, in contrast, tightly integrates human expertise with machine learning and natural language processing to produce a much higher level of accuracy.”
While compensation is certainly a factor in moving on from a job, it was not one of the top ranked predictors of attrition, according to the research. The most reliable predictors were revealed to be toxic corporate culture, job insecurity and reorganization, high levels of innovation, failure to recognize employee performance, and a poor response to the pandemic. A toxic culture that is created by disrespectful and unethical behavior, as well as a failure to be inclusive and equitable, is 10.4 times more likely to contribute to attrition than compensation. Information provided by Revelio Labs—a company that specializes in workforce analytics— with data sourced from public employment records, like online professional profiles and government labor statistics, was used to establish average attrition rates by industry. The industry rate for apparel retail is the highest at 19 percent, well above the rates for fast food, supply chain logistics, health systems, and airlines in a pandemic.
Social Gatherings Boost Moral and can Help Prevent Resignations
While a toxic culture can be challenging to change, the MIT SMR researchers used the same technology and data to suggest a few action items such as providing lateral job move opportunities for a change of pace, allowing remote work options when possible, organizing company sponsored social gatherings to boost morale, and—particularly for retaining retail sales associates—offering predictable schedules.
For an hourly employee working in a retail store, unstable scheduling practices are the norm as retail businesses vary the need for labor based on the amount of in-store traffic to increase profitability. To emphasize the benefits of predictable schedules on employees, the MIT SMR report points to an alignment with a separate study conducted a few years ago on behalf of the Center for WorkLife Law—an advocacy group that researches inequality at the University of California Hastings College of Law. The “Stable Scheduling Study” experiment began at three participating Gap stores in San Francisco and was expanded to twenty-eight stores in San Francisco and Chicago for 10 months and concluded in 2016. The following was required in those test stores:
Schedules needed to be published and finalized two weeks in advance.
The practice of on-call shifts, where employees are usually notified at the last minute about whether they need to come into work, was eliminated.
That stability reduces stress in the lives of employees who need to arrange for childcare, or have college studies or second jobs to attend to, and it improves mental health by eliminating some economic anxieties that arise when planned income is cut unexpectedly by reduced hours. Employees with consistent schedules report improved sleep and are able to have a better work-life balance by being able to set time for exercise and social activities. The experiment also had the added benefit of generating higher median sales. The researchers estimated that the Gap yielded 2.9 million dollars in increased revenue during the intervention period as the employees with consistent shifts were more productive and attentive to customer service.
A Particular Point of Toxicity in Apparel Retail
Taking into consideration that writing a Glassdoor review may serve more as a cathartic exercise to vent frustration rather than offer constructive criticism to company management, it is still hard to discount a pattern of similar comments from a variety of reviewers. In reading recent Glassdoor reviews for this article, a repeating complaint and cause of distress was consistently reported by store associates throughout the US on the profile pages of several Culture 500 apparel companies: the requirement to sell store-branded credit cards.
This practice by retailers has significantly increased since stores struggled to recover from the Great Recession of 2007-2009 and continue to compete with e-commerce giants like Amazon. Perks offered by private label card memberships promote spending, encourage store loyalty, but also contribute to large amounts of debt incurred by the customers and store employees alike who use them. According to a 2017 article in the New York Times, the private label cards have an interest rate twice that of an average credit card and retailers rely on the money collected from interest fees to make up for other profit shortfalls.
Reviews from 2020 and 2021 cited having work hours cut if card goals were not met and there were multiple mentions of this topic being a source of constant contention with managers who would “berate” store staff for not selling enough. Store associates one after another stated the perception that issuing the most credit cards mattered more than clothing sales and customer service. Language used by employees described the pressure of being forced to sell cards as “painful” and “gross,” and that their jobs depended on it. A former brand ambassador to a popular mall store posted last September that “you feel like your sole purpose is to sell credit cards, and if you don’t, you’re a bad employee.” Many reviewers acknowledged their discomfort in pressuring customers to join these loyalty programs as doing so would likely lead to accrued debt well beyond the price of the original purchase. An anonymous former employee from yet another company called the practice “dishonest.”
The 2017 Times article about private label cards noted the nonexistent benefit to employees for converting customers to cardholders: “The payoff for employees is low. Workers at some stores earn as little as 1 dollar for each new account they open, and the discounts that their customers get for signing up for a card also cut into the employees’ sales commissions.” But issuing the cards does not seem to be going out of style. PYMNTS, the news site that specifically covers payment platform developments, reported in October that the effort to digitize private label cards is underway—with the help of services like Apple Pay—to make them easier to use in the pandemic as well as save on card production and mailing costs. Yet it appears that for employees—many of whom wrote positively about working with clothing and styling customers—the task of pushing plastic aggressively as such a big part of the job remains toxic.