As a talent professional, if you’re feeling a bit like Sisyphus, the Greek mythological figure eternally condemned to rolling a boulder uphill only to watch it roll back down, you’re not alone. Recruiters, hiring managers and others in need of workers are battling higher staff turnover rates, thanks to growing talent scarcity and skills gaps. So even if your employee retention efforts are robust, you still may not have the resources needed to fuel business growth.
In the U.S., the annual voluntary rate of turnovers has spiked since 2012, when it was 18.7% Since then, the rate has risen each year, reaching 25% in 2016, the latest year for which data is available, according to the U.S. Bureau of Labor Statistics. Viewed in a different way, unemployment in the EU 28 has fallen from a high of 10.5% in 2012 to 7.7% in 2017, enabling more job mobility in the region. Human Resources Online reported that double-digit employee turnover rates in most APAC countries are increasing year over year.
So what does this mean for your company, and how can you enhance employee retention?
According to Randstad Sourceright’s Jim Stroud, Global Head of Sourcing and Recruiting Strategy, employee retention has become so critical to a company’s talent strategy that it’s considered the new recruitment function. Because competition for in-demand skills is fierce — not just from direct competitors but also employers in other industries — companies are doing all they can to hold on to their best people.
“With economies around the world continuing to gain momentum, you’re seeing jobs go unfilled for longer and longer periods of time, especially in the STEM fields. As a result, recruiters are aggressively focusing on attracting passive candidates, which makes retention more difficult,” he added.
significant costs of turnover
According to the Work Institute in its 2017 Retention Report, the cost of an employee turnover can range from $4,000 to 1.5 times the worker’s salary. On average, it estimates that companies will pay 33% of the annual salary, so someone with a $45,000 compensation package will cost his employer $15,000 when leaving. The report estimated that total turnover costs in U.S. alone amounted to $536 billion in 2016.
It also reported that companies can recoup those costs if they actively budget for employee retention, estimating that a $100,000 investment would pay for itself if it prevents seven employees from leaving.
In your organization, have budgets been set aside to incentivize your workers in the face of growing competition for talent? Even if more money isn’t available, have you considered other ways to keep your best workers? Let’s take a look at some fundamental steps for achieving this.
aligning EVP (employee value proposition) to talent preferences
Companies that do a great job at retention understand the desires of their employees and make sure to align their employee value proposition accordingly. Unfortunately, many employers don’t do this well and find out when it’s too late. Often, they believe an employee’s decision to leave is based mostly on money but in reality, compensation and benefits are only the fifth most often-cited cause, according to the Work Institute, which conducted 240,000 employee exit interviews. What’s the No. 1 reason for workers moving to another company? Opportunities for career development, according to its survey results.
While pay is important, many workers in today’s environment want to know their employers offer a path for career growth, Stroud points out. “They want both financial rewards and the satisfaction that comes from a job that will challenge them and help them feel fulfilled professionally,” he adds.
Indeed, in the 2017 Randstad Employer Brand Research conducted in 26 countries with more than 160,000 working-age adults, career progression opportunities ranked among the top five attributes workers look for in an employer. Coincidentally, this attribute was the fifth-most associated with the largest companies in their markets.
Where most large companies fail to align their EVP to employee desires is around offering an attractive salary and providing a pleasant work environment (these two qualities didn’t even crack the top 10 that workers associate big enterprises with).
How can you align your EVP to the desires of your workforce? Here are three practical tips to beef up your employee retention strategies.
stay competitive in a market
Wile money isn’t the leading reason that drives employees to leave, you also can’t reward staff significantly lower than the competition does. Conduct regular salary surveys for key roles, and stay up to date about prevailing pay rates. If you are at parity, you probably won’t lose talent for this reason. Conduct competitive intelligence gathering to ensure other components of your compensation offerings (retirement benefits, stock purchase programs, health insurance and others) are also on par with rival businesses.
create a path forward
Because career opportunities are the No. 1 factor for employees to leave, make sure managers help their employees achieve a clear of view of their future with the organization. Some managers may selfishly want to retain a star performer in a role for longer than necessary, so remind them that they risk losing workers to a competitor, resulting in a valuable resource now working against you. Also, consider mentoring programs to engage high-potential workers, which will further help them envision a long career with your company.
create a good work-life balance
This was the third most-desired employer attribute that the Randstad Employer Brand Research found. In an article published in the Harvard Business Review, Lori Goler, the head of people at Facebook, explained the company’s best managers create career opportunities that “mesh with personal priorities.” Understanding the stresses that your employees undergo and the sacrifices they make to their personal lives should be a critical undertaking for your organization. By capturing insights on how these demands could potentially force workers to leave, it allows you to develop mitigation plans. As Goler writes, “People leave jobs, and it’s up to managers to design jobs that are too good to leave.”
These are just a few ways to help you create a stronger employee value proposition and retain critical workers who are in high demand. While your EVP is key to your employer brand strategy, there are more ducks you need to get in a row in order to create a strong employer brand. Find the building blocks you need in our handbook ‘Employer brand matters: developing, executing and measuring employer branding success’.