High employee turnover can be a huge drain on an organisation’s resources. Whilst new talent can bring fresh ideas, positive change and great impact, there remains a need for businesses to retain a sustainable workforce. As workers increasingly demonstrate an appetite for job switching – something that is particularly prevalent in the retail sector – the concept of ‘Circular HR’ could be a game-changer.

Circular economy and human resource management (HRM), otherwise known as Circular HR, has grown in prominence over recent years. Circular economy conversations primarily focus on a system where nature is regenerated. What is not often considered, and certainly overlooked, is that human resource plays a key role in this space. With people at the heart of every business, sustainable human resource management must be incorporated into the circular economy transition.  

In 2019, further to concerns that the European Commission’s action plan to accelerate Europe’s transition to a circular economy was missing a human dimension, an Erasmus + funded project into the topic of Circular HRM was born.[1] This project helped to establish Circular HR as a concept, applying circular economy principles (such as eliminating waste and extending lifespan) to talent management. The concept usually entails sustainable use and development of talent within the workplace. 

One aim of Circular HR is to enhance employee engagement and job satisfaction. Research from PwC last year showed that 23% of UK workers expected to change jobs in the coming 12 months, up from 18% in 2022.[2] This research was admittedly carried out in the context of a cost of living crisis, but surveys across the world corroborate this growing trend of ‘job-hopping’. In March 2024, Forbes reported that roughly 85% of a group of US professionals polled on LinkedIn were considering changing jobs in that year.[3] Young workers are one of the largest groups demonstrating this trend. Ironically, for a generation of workers who are showing a particular concern for climate matters and sustainability in the workplace[4], there is a lack of sustainable mindset in this job-hopping approach. Whilst Gen Z might be accused of showing less loyalty to their employers, the emerging sense is that loyalty is a two-way street for them – leaders need to win them over.[5] In essence, employees want to feel valued, and employers must provide attractive reasons for them to stay.

The approach of Circular HR can make a huge difference to the sustainability of an organisation as a whole. It goes beyond workforce turnover, addressing the need to maintain skills and adapt to a rapidly changing world. To promote sustainable resource management, Circular HR emphasises human-centred strategies, adaptability, fluidity, and continuous learning in a collaborative manner. 

There is not a one-size-fits all approach, but some ways in which employers might encourage the concept of Circular HR in the workplace are:

• Prioritising employee wellbeing – an organisation’s workforce can only be sustainable if its people are cared for and impacted positively by their role. There are many ways in which this can be addressed, including greater flexible working options, holistic health-centred incentives, and good reintegration strategies to ensure that employees returning from long-term leave are well supported.
• Identifying skills gaps – employers should look to identify the gaps, including addressing a lack of basic transferable skills and soft skills amongst the workforce to ensure solid foundations for employee development, encouraging engagement with training sessions, and promoting a culture of collaboration across the business to ensure that expertise is shared. 
• Promoting continuous development – at the heart of Circular HR and the transition to the circular economy is sustainability, and in turn, adaptability. Employers will be best placed to create a more sustainable workforce when they promote long-term skills development and introduce training in areas that will only increase in demand, such as technology.  
• Internal recruitment – there can be a tendency amongst employers to look externally when recruiting, seeking out candidates who are already ‘the full package’. Whilst this is an appropriate route in some circumstances, a Circular HR approach to recruitment would look to succession planning and upskilling existing employees that could be well-placed for the role.  

Despite there being many possible next steps in growing a sustainable workforce, there is only so much that employers can do to encourage workers to remain in their business. A whole-hearted approach to Circular HR ultimately embraces the opportunity to invest in workforce development. Not only does this improve employee engagement, but it ensures that even when employees do transition to roles outside of an organisation, they can continue to contribute positively to the industry more widely. This approach of genuine investment in employees, and a built-in strategy of Circular HR, can benefit the workforce beyond the individual organisations.

[1]Search - Erasmus+ (europa.eu)

[2]A quarter of the UK workforce expect to quit in the next 12 months as the cost of living bites - PwC research

[3]Younger Generations Want To Change Jobs. Here’s How Employers Can Keep Them (forbes.com)

[4]Deloitte's 2024 Gen Z and Millennial Survey finds these generations stay true to their values as they navigate a rapidly changing world | Deloitte China

[5]For Gen Z employees, loyalty is a two-way street | PwC