How to Pull a Spotify and Reduce Employee Turnover by 15%
Aug 11, 2022
Fortune recently published an article on how Spotify reduced employee turnover by 15% between 2019 and 2022 by embracing work from anywhere. This result is impressive, so the question is “how did they get there?” Let’s explore how you can create a successful “Work from Anywhere” framework, boost retention and empower your best workforce.
Putting a 15% reduction in turnover in perspective
Before we get to the how, it’s important to acknowledge just how impressive it is to reduce employee turnover by 15%. Turnover is very high these days. According to a recent McKinsey article:
“Of workers McKinsey recently surveyed, 40 percent say they’re thinking about leaving their positions in the next three to six months—but companies are still relying on traditional levers to attract and retain talent.”
According to the Society of HR Professionals (SHRM), it costs between 6 and 9 months of salary to replace a salaried employee. To put that into an economic perspective, for a 300-person company, changing the retention rate by 1% per year (assuming an $80K average salary) is worth $120K to $180K annually.
That’s just the direct cost of replacement. For every employee who churns out of an organization, there is a ripple effect on productivity and likelihood of others leaving, as teams and working relationships are disrupted and workload burdens shift unpredictably. This phenomenon is called “turnover contagion.”
Spotify has thousands of employees, so a 15% reduction in turnover is a huge positive impact on the business.
An intentional framework leads to success
An interesting aspect called out in the Fortune article is that Spotify started planning its Work from Anywhere initiative in early 2020 with the goal of becoming a fully distributed company by 2025. Of course, those plans were accelerated by the pandemic. They ultimately rolled out the program in February 2021 that gave far greater flexibility in workplace location (based on where Spotify operated) and also calibrating salary bands by country versus city or region. Spotify expanded operating countries beyond Sweden and the U.S. to Germany, the Netherlands, and Spain, and to 43 U.S. states. Six percent of the workforce relocated as a result.
Those choices were guided by insights gained from a couple of years of surveys conducted by the Spotify HR group, which showed that employees overwhelmingly wanted more flexibility.
The key take-away here is creating a data-driven, intentional and meaningful framework to guide and support workers. Note that Spotify’s work location flexibility wasn’t unbounded, yet still achieved a high impact.
The Challenge of Equipping Flexible Workers for Success
Spotify didn’t share all of its secrets in the Fortune article. However, it is clear that they took pains to equip workers for success with clear guidelines and information.
Another key aspect to success is making sure that remote and flexible workers have the physical equipment they need to be productive and engaged.
That’s not easy to do anymore, because employee outfitting processes were built on the assumption that workers and all the service departments that support them are in close proximity in an office environment.
Once those workers move out of the office, that process breaks down in the face of complex supply chains, logistics across geographies, and time-consuming manual processes. The results are wasted staff time, IT innovation opportunity costs, hidden technical debt, security and compliance gaps that create data breach risks, lost productivity and higher employee turnover.
Outdated employee outfitting leads to suboptimal onboarding, such as when equipment doesn’t reach new employees in a timely fashion. Onboarding matters. According to a survey cited by SHRM, 69 percent of employees are more likely to stay with a company for three years if they experienced great onboarding.
But onboarding is just the start of the journey. Poor support for technology repairs, delayed upgrades and outmoded technology are costly both from a retention and productivity perspective. According to a Gartner 2021 research report, employees with outdated technology suffer an average of $13K in lost annual productivity.
HaaS is the solution to equipping a distributed workforce
To modernize employee outfitting for a geographically diverse employee base, organizations need a unified, automated workflow process that ties IT, HR, facilities, finance and security teams together. But software on its own isn’t enough. Companies need those workflows to drive real-world logistics that can deliver, collect, repair, and upgrade equipment (laptops, peripherals, furniture) to a distributed workforce.
That’s the reason why Firstbase innovated the industry’s first and leading Hardware-as-a-Service (HaaS) platform. Firstbase offers powerful administration capabilities, asset tracking, and reporting visibility, integrated with a world-class, distributed logistics operation that literally delivers the goods to your workforce across dozens of countries.
The benefits of moving to a HaaS platform spread across many teams:
- IT teams gain smarter and more efficient operations, freeing time to devote to higher value initiatives that move the business forward.
- Security teams gain tighter asset tracking and controls to reduce data and compliance risks.
- Facilities and workplace services teams get a practical solution for shipping big and bulky furnishings to far-flung employee locations.
- HR teams gain a more competitive onboarding experience, plus full lifecycle support for timely repairs and proactive upgrades that promote employee engagement and productivity. Plus, smoother offboarding processes.
- Employees get a delightful, self-service experience.
- Procurement teams gain a consolidated and lower overhead approach to managing IT and other equipment suppliers
- And with our HaaS consumption model, finance teams gain capital efficiencies by shifting capital towards high-ROI activities like new innovation, while optimizing cash flow by paying for non-differentiating assets like laptops over time. And they benefit from reduced procurement and vendor management overhead.
Meet the moment
Flexible work is creating the biggest workforce disruption in a hundred years. Employee outfitting is a critical business process that is in need of transformation to meet the moment. Organizations like Spotify that tackle this need intentionally are seeing huge dividends.
If you’d like to learn more about Firstbase and how we can help your organization build a modern employee outfitting pillar of your flexible work framework, request a demo .