Boyden’s perspectives on the news and trends that are transforming industries
Employee retention used to be a fairly straightforward matter of providing competitive remuneration, advancement opportunities and other traditional incentives. But today, executives must be attuned to the less tangible aspects of human capital management, such as workplace culture and work-life balance. Their importance in the talent retention mix has been growing for decades, and like so many other trends, this was thrust forward by the pandemic. The ongoing Great Resignation could solidify it.
The mass exodus of employees has been most apparent in America, where a record 3% of the workforce quit in September 2021. Similarly, job-changing was at a record high in Britain in the third quarter. Part of this spike can be owed to dissatisfied employees staying put during the initial shock of the pandemic, then tendering their resignations once economies started to bounce back.
Employee churn could be forever changed by the Great Resignation, requiring new strategies not only for retention, but also for development and recruitment.
Most employees who took new roles will likely remain in them rather than jumping from one job to the next in serial fashion. This is especially true of white-collar workers who left their jobs seeking a higher purpose. They will choose a new employer carefully and stay longer, says Melissa Swift of consulting firm Mercer. Still, employee churn may continue to run high. One reason is that remote work has opened up more possibilities by softening geographic barriers, among other things.
The traditional strategy of identifying high performers and offering them promotions and higher salaries is less effective now, as many employees have developed a different mind-set towards their job. Their priorities have changed, making it necessary to rethink retention.
The first step is to assess the level of retention risk at your organization. Using exit interviews to determine why employees leave is no longer enough; rather, more proactive companies conduct “stay interviews” to learn what keeps employees around. It is also important to understand the threat posed by competing employers across industries. “When behemoths like Amazon or Walmart raise wages or add perks, the effects ripple beyond retailing”, The Economist notes.
Salaries remain an important part of retention at all levels. But executives must also consider factors that vary for different groups of employees. For lower-wage workers, healthcare benefits have become more important. Resignation rates are highest in industries like hospitality, which have more low-wage workers whose jobs require risky personal interactions. White-collar workers place more value on the ability to split their time between remote and on-site work.
A different approach to talent and leadership development may also be needed, particularly regarding the career paths of entry-level employees. A survey of large firms by the Institute for Corporate Productivity found that a majority feel they do not have adequate information about their workers’ skills, with a quarter surmising that LinkedIn knows more—making it hard to recognize those with potential for leadership development. Changes here may entail changes to organizational culture.
White-collar workers place more value on the ability to split their time between remote and on-site work.
As the Great Resignation continues to drain companies of their human capital, executives must also be more proactive about recruitment. Applying different retention strategies only works to a point; some employees will still resign. This makes it essential to have a plan for replacing them. While remote work is contributing to the problem, it can also be part of the solution. Many firms are also reviewing their requirements for certain roles, relaxing some and widening the pool of potential candidates.
Rapid changes in retention, development and recruitment have raised another question: What degree of churn is good for a company? If employees never quit, there is little to no influx of new talent. This would lead to stagnation, eliminating the opportunity to bring in fresh ideas and capabilities. A mix of experienced insiders and highly qualified talent from different backgrounds can revitalize an organization and take it in new directions that it might otherwise miss.
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