Easy way to make high-burnout employees into low-turnover ones
By Xingrui (George) Mou
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Executive Summary
Bain & Co.’s survey suggests video gaming employee turnover is significantly higher than tech in general, thanks to heavily non-standard working hours and “churn-and-burn” mentality. Other reports suggest a whopping 20%+ turnover. This would lead to another $592 million annual costs to the industry.
Research published in Organizational Behavior and Human Decision Processes suggests that reducing “upward counterfactuals” - better scenarios that are imagined by people in a given situation - mitigates loss of employee intrinsic motivations during non-standard working hours by 15%. Implementing policies that reduce upward counterfactuals by having employees positively focus on the benefits of working non-standard hours (and thus increase their intrinsic motivation) could result in savings of $130 million across the industry.
Actively tracking intrinsic motivation and implementing this “positive focus exercise” in video gaming companies is almost entirely cost-free and does not change the actual work standards at all.
Impact: the costly problem of turnover with non-standard working hours
Loss of intrinsic motivation is closely associated with employee turnover, which can cause drastic financial loss due to extra cost for advertising the position, training the new hire, and recovering the lost productivity. A Bain & Co. report suggests video gaming in particular has a 33% higher attrition rate than tech in general (“Beyond the Love of the Game: Talent in the Video Game Industry”, Bain & Co., October 2023), leading to more inexperienced developers both in years and time in industry. However other studies have found the turnover to be far worse, suggesting the video gaming industry turnover rate was as high as 15.5% in 2018 (See “The Industries With the Highest Turnover And Why It's So High,” LinkedIn, 2018) and was closer to 22.6% in 2023 (“8 Employee Retention Strategies for Gaming Industry Leaders,” Learnerbly, 2023). Regardless, the high employee turnover rate has been linked to the extreme “churn-and-burn” non-standard work hours amongst gaming designers. But the result is not just performance but enormous financial cost from gaming industry employers.
Specifically, an estimated number of 54,000 people are employed in the gaming developer sector (“Video Games Software Developers in the US,” IBISWorld, 2023), and employee experience and tenure status is closely associated with their annual salary, ranging between $55,000 to $90,000. (“Video Game Developer Demographics and Statistics in the US,” ZIPPIA, 2023; “Video Game Developer Salary,” Game Industry Career Guide, 2015). Considering the 22.6% turnover rate and estimating 75% of their annal salary as the cost to replace each employee (“The Ridiculously High Cost of Employee Turnover,” WorkHuman, 2022), the total cost of employee turnover in the gaming industry is around $592 million/year, and the cost for turnover among young employees constitutes around $312 million/year.
Findings: thought exercises can change intrinsic motivation
Working during non-standard hours (9am - 5pm, Mon - Fri) compromises employee intrinsic motivation (the tendency to engage in an activity because of inherent satisfaction rather than a consequence), which consequently reduces employee creativity, productivity, and persistency. A recent paper published in Organizational Behavior and Human Decision Processes suggested that the loss of intrinsic motivation during non-standard working hours is often the result of a phenomenon termed “upward counterfactuals” – whereby employees are actively imagining better alternative scenarios (e.g., spending time with family, hanging out with friends) outside the current situation (working, in this case).
In this paper, three preliminary studies reported that when participants (including 123 full-time students from an East Coast University, 368 US-based full-time employees from Prolific, and 472 US-based and European-based full-time employees from Prolific) were made aware of that they were working on a Monday that is a federal holiday, the participants (non-standard) tended to generate thoughts about how they could have better spent their time, leading to 11.15% reduction in their intrinsic motivation. Intrinsic motivation in this case measured through a four-item questionnaire rating the extent of their positive feelings regarding the work they are involved in on a scale of 1 (not at all) to 7 (very much).
In a following up study, the researchers found that reducing the access to upward counterfactuals helps to restore the loss of intrinsic motivations. For the methodology, participants (270 US-based full-time employees from Prolific) were asked to work on a weekend, and 90 of them were prompted to think and write about the benefits of working on a weekend (e.g., to catch up or get ahead with their work - less accessible to upward counterfactuals), while the other 90 of them were asked to think and write about their feelings of working on a weekend (control group), and the final 90 of them were asked to think and write about how their weekend could have been better spent (more accessible to upward counterfactuals).
The study found that by asking employees to engage in a positive focus exercise by considering the benefits of working, a 15% increase in measured intrinsic motivation was observed as compared to those employees in the control who were asked to simply write about working on a weekend. Meanwhile, employees who were prompted to actively think of better things to do saw a loss of intrinsic motivation.
Intrinsic motivation has been reported to be negatively coordinated with employee turnover intention, thus turnover rate, at a coefficient of -0.33. So say a 15% increase in intrinsic motivation during non-standard working hours could lead to a 4.9-point reduction in employee turnover rate to 17.65%. The lower employee turnover rate will ultimately result in an annual cost of $463 million, which is a 21.8% or around a $130 million reduction in cost. If we narrow down the scope to a median-sized gaming company that has around 100 video game developers, by implementing strategies to improve employee intrinsic motivation, the company will reduce their cost by around $240,000/year, or around $2,400/year/full-time-employee.
What is noteworthy is that these counterfactual treatments were just thought exercises and required no actual work changes. The power of thought exercises, free to implement, thus offers significant financial returns. It also aligns with what employers and employees both recognize as essential: “work-life balance.” But is that the perception of it or the reality? By having employees focus AWAY from the upward counterfactuals, the perceived imbalance can change even when the actual imbalance does not.
Potential: changing minds without changing actual working conditions
This analysis aims to provide insights into strategies to cut down cost due to employee turnover for the senior managers in the video gaming industry that are facing high employee turnover rates due to the nature of the business:
Day One: Companies with turnover that is higher-than-industry-average (or in the case of video gaming even at the average) should consider how intrinsic motivation for non-standard working hours may be affecting their employee retention rates. The intrinsic motivation can be tracked following the four-item question rating method applied in the original study.
After: If low employee intrinsic motivation is evident amongst those working non-standard hours, these firms should strategize approaches to reduce employee accessibility to upward counterfactuals by simply asking them to think and write down thoughts about benefits of working non-standard hours, reflections on their recent achievements, and upcoming goals of their work. These positive focus exercises can be pulled directly from the academic paper as well.
Finally: These positive focus exercises are easy to institute and test as they are free to implement (cost free and risk free) and are in-of-themselves a sufficient change in working conditions.
The original article only included scenarios where employees/students had to work during non-standard hours, and this article does not support arguments encouraging employers to push their employees to work during non-standard hours, but rather provides a guide for those who have to work in these scenarios. The video game companies are also strongly recommended to adjust the intrinsic motivation evaluation matrix and manipulation techniques of accessibility to upward counterfactuals based on their own company culture.
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Xingrui (George) Mou is a PhD candidate in Biomedical Engineering at Duke University and a member of the Duke Advanced Degree Consulting Club. The research applications proposed in this article are solely the views of the author and do not necessarily reflect the views of the original academic journal article authors nor any individual member of our Editorial Board.