At this point, we’re all familiar with the tumultuous changes in the job market in recent years, and we’ve all heard the term “Great Resignation” a million times. Although the market is shifting, the war for top talent is far from over, making retention a key factor to keep an eye on.
Continue reading to get an in-depth look at how the job market has been shifting, the direction it could be headed in, and how your team can begin implementing proactive practices to better retain talent and stay competitive despite changes.
As the economy began to emerge from its initial pandemic slowdown in 2020, the demand for workers rebounded faster than the supply of workers.
This led to a tight labor market that favored job seekers, and for the first time in a long time, workers were quitting their jobs in droves and demanding more from their current and prospective employers.
Today’s job market continues to change rapidly, but the war for hiring and retaining top talent isn’t over, and the Great Resignation’s lasting effects are evident. Let’s take a look at some of the staggering numbers to put things into perspective:
So, why exactly were so many workers quitting, and what were they looking for from their next employer? According to a Grant Thornton survey, employees who switched jobs in the last year cited pay (37%), advancement opportunities (27%) and benefits other than health and retirement (18%) as their top three reasons for leaving. Pay and benefit offerings were also the top two reasons respondents turned down other job offers (42% and 33%, respectively).
The results speak for themselves – pay, benefits, and growth opportunities are top of mind for workers. Providing a better digital offer experience that outlines the value of their compensation and benefits, as well as providing current employees with a clear picture of their total compensation will be essential to keeping up with employee expectations in both the short-term and long-term.
As a result of the Great Resignation, yet another catchy term has emerged – “serial quitters” (a person who regularly quits jobs within 12 months of starting). In part, the record-high level of American workers quitting their jobs is being driven by serial quitters. Of American workers who started new jobs last year, the percentage who left their previous place of employment in less than 12 months grew 6.5%, which is the highest it climbed since LinkedIn began tracking this data.
Unsurprisingly, the pandemic played a key role in this phenomenon occurring across industries. Hospitality and healthcare in particular were hit hardest during the pandemic, and they led the pack in driving up the rates of workers who began frequently starting new jobs and quitting them not long after. Although job-hoppers have been earning higher wages than those who remain at the same employer longer, cash isn’t everything. Some regret the choices they made when their new jobs don't live up to their expectations or they don’t align with their new company’s culture, which makes it all the more important to effectively communicate your company culture from day one, as well as to reiterate it for all employees throughout their tenure at the company.
Fast forward to spring of 2022, and the picture is starting to look a bit different as the economy takes a turn. After factoring in the combination of slowing VC investments, high inflation rates, and rising interest rates, some tech companies are pulling back on hiring and overall spending.
According to a publicly sourced tracker of tech layoffs called ‘layoffs.fyi’, more tech companies laid off workers in the first three weeks of May than in all of April. Fortunately, it’s not all doom and gloom – the number of open tech positions is actually higher now than it was this time last year.
Companies will need to shift their strategies and focus on retention to keep the best talent, and some have already begun to do so. For instance, in an effort to keep top talent around, Microsoft announced its plans to double its budget for merit-based raises and increase annual stock compensation for employees by at least 25%. While not all companies can do the same, there are actionable steps you can take to begin improving your retention rates. Take a look below.
Now that the economy is shifting yet again, so must the strategies your HR team takes if you want to remain competitive. Below are three ways to begin improving your retention strategy to benefit from higher retention rates.
As we saw earlier, pay, benefits, and growth opportunities were the biggest reasons employees decided to leave their current companies. Did you know that roughly 40% of compensation is non-cash? You read that right – almost half of an employee’s compensation comes from things like benefits, perks, equity, and more, yet most employees don’t understand the true value of their total compensation.
Instead of focusing on salary alone, it’s crucial to communicate the full value of the equity, benefits, and perks that employees have by working at your company. Speaking of equity, it can be complicated to understand, and it can also result in huge earnings for employees as your company grows over time. Someone may leave your company for a minimal bump in salary, only to discover that they’ve abandoned hundreds of thousands of dollars in potential earnings by leaving their equity behind!
Fortunately, there are tools to deliver equity information and education to your employees in a way that is straightforward and seamless. It’s important that you not only communicate what employees’ current equity is worth, but also provide them with insights as to how it can grow with time and the possibilities it has to expand based on different scenarios. By understanding their current and potential stake in the company and having a clear grasp of their total compensation, you can incentivize employees by reminding them why it’s worth it to stick around.
The pandemic changed everything. Company culture is no exception. Of the many workforce shifts that have occurred since 2020, an emphasis on facilitating a positive company culture has not gone away. Now that so much of the workforce is remote, maintaining a strong company culture is crucial for creating an environment that promotes strong retention rates.
What steps is your team taking to implement a positive company culture, and how well are you communicating your company’s culture to the prospective and current employees?
In today’s remote-working world, ping pong tables and cold brew on tap are few and far between. Below are a few ideas for maintaining strong communication and creating lasting relationships despite the distance:
For more ideas, read our article about the overlooked benefits that lead to greater retention rates here.
Adapt. Adapt. Adapt. After so many changes over the last several years, if there’s anything that’s been made apparent, it’s that companies that are adaptable are the ones that will thrive despite any difficult circumstances they encounter. Employees took this idea and ran with it – flexibility is no longer a nice-to-have from their employers, it’s something they demand and expect.
Flexibility can look like:
For more employee hiring and retention tips, make sure to check out our free eBook “Compensation 201: How to Upgrade Your Comp Practices and Win Today's Top Talent.”
Learn more about how your team can begin boosting retention with the help of Welcome’s Total Rewards tool by booking a demo.
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