Nothing like choosing a small non topical and easy subject, right?
This is on the mind of practically all leaders of any size of business right now and probably has been longer than we have thought or owned up to.
I work with a number of clients in diverse areas of operation and all are struggling with hiring, whether they use job boards or a talent agency. They have all also suffered from turnover rates that are less than satisfactory.
Employee turnover is a major reason why hiring is so hard right now. According to ADP Research Institute’s People at Work 2022: A Global Workforce View, 7 in 10 workers have considered a major career change this year. Another study found that 55% of hiring managers said retention and turnover are the top issues hurting their ability to hire staff and grow their companies. (That means turnover ranked above hiring, in general, as their No. 1 struggle!).
According to data published recently by Engagement Multiplier
58% of businesses are experiencing difficulty in hiring, 63% of US staff are open to job offers and 17% are looking, and 69% of people would leave for less than a 5% pay increase.
So what’s going on in the market and what are some of the issues? Like most things, it’s never one reason. But here’s some I have come across:
Employee enlightenment
Covid triggered a number of things, but one of them was that when away from the office, employees had time to reflect and not only enjoyed the freedom and choice but also realized that they didn’t have to be close to an overbearing boss who didn’t really care.
With time and distance to think, people started to consider all the reasons they didn’t like their jobs, which turned to questioning whether:
- Their work was meaningful
- They believed in what their organization was doing
- They felt appreciated, and compensated fairly
- They had opportunities to grow
Negative answers to these questions made them think about moving on.
Time to Think
So enlightenment was a part, but then as we gradually moved through Covid and started a hybrid work life, less and less people wanted to return full time. And if they were forced, they quit and took part time or ‘fractional’ work so as to allow a better work/life balance. And if forced and had no ready alternative, they just bided their time until another one came along.
The balance has changed
Partly because of some of the highest unemployment figures ever experienced, the balance between supply and demand has shifted, and with it, the market has allowed employees to “shop” and “demand’ more. The national unemployment figure for January 2023 was 3.4%, the lowest level since 1969. In Minnesota, the figure was about 2%. There are many theories as to why this is, and the one gaining most agreement is that of at the aging population with people opting out because of retirement.
People’s expectations
These have changed. Covid seems to be another catalyst for people to say…
“Wait a minute, I can save money and see more of my family. I don’t have to commute (waste of gas and time), I don’t have to buy lunch out, have drinks with people after work and dress up. I CAN get to the gym at lunch time and not have to change and shower to look good again in the office.”
“I want to work on my terms, and I’m prepared to earn less to do that.” This is especially the case as more than 53% of households bring in two incomes.
So, what do we do, and how do we address some or all these things? Well, here’s what we DO know:
Purpose is more powerful than money to decrease employee turnover
For many years now, studies show that money often isn’t the primary motivation behind taking a new job or leaving an old one.
The IBM Smarter Workforce Institute and Talent Management Solutions collaborated on a 2017 white paper, “Should I stay or should I go? Global insights into employees’ decisions to leave their jobs,” for which they surveyed more than 22,000 employees to find out why people leave their jobs, and what they’re looking for when they do.
According to data published by Engagement Multiplier, the best employees, those who significantly outperform their peers, are more likely to be attracted to new jobs for opportunities to:
- Learn new skills – 71% vs 60%
- Gain job responsibilities – 69% vs 52%
- Try something new – 59% vs 45%
In the LinkedIn Global Recruiting Trends Report, they asked “What swayed you to accept your current company’s job offer?” The responses:
- Better benefits compensation – 45%
- Opportunities for career advancement – 44%
As we can see, compensation and benefits are neck and neck with opportunities for growth.
The best candidates have to be able to grow, or you won’t keep them
This is especially true for Millennials – in the study quoted above, 74% of Millennials interviewed cited better career development opportunities as a top attractor. Flexibility was also high on everyone’s wish list, regardless of generation.
The Smarter Workforce Institute researchers came to a few conclusions based on the survey results for how to attract and retain talent.
They concluded that happy employees “who are willing to advocate for the organization can be highly effective recruitment ambassadors.” And that, of course, requires employees who are engaged enough to actively advocate.
They also found that “positive experiences and high engagement can minimize talent loss.” Their definition of “positive experiences” is, essentially, the must-haves for an engaged workforce, what they call “the five dimensions of the Employee Experience Index:
- Belonging – feeling part of a team, group, or organization
- Purpose – understanding why one’s work matters
- Achievement – a sense of accomplishment in the work that is done
- Happiness – the pleasant feeling arising in and around work
- Vigor – the presence of energy, enthusiasm, and excitement at work”
And then a real surprise was that ‘listening” thing again. One of their other recommendations is to “Listen regularly to the voice of employees” to retain talent. Who would have thought?
So what’s this all mean?
It seems that many companies are just not focusing on the things that matter to people when trying to attract talent.
There’s a disconnect between what recruiters, and leaders, think employees want – and what they actually want.
Employers are not treating their people issues as seriously as they would a marketing campaign, and they should.
Have we looked at what people in the workforce want from a job and an environment in which they spend 5 of 7 days?
And if we have, are we telling them this is who and what we are and what we offer?
After trending up in recent years, employee engagement in the U.S. saw its first annual decline in a decade – dropping from 36% engaged employees in 2020 to 34% in 2021. This pattern continued into 2022, as 32% of full- and part-time employees working for organizations are now engaged, while 18% are actively disengaged. Active disengagement increased by two percentage points from 2021 and four points from 2020, hence the term “Quiet Quitting” that has become part of our jargon.
The ratio of engaged to actively disengaged workers in the U.S. is 1.8-to-1, down from 2.1-to-1 in 2021 and 2.6-to-1 in 2020. This is the lowest ratio of engaged to actively disengaged employees in the U.S. since 2013, almost a decade earlier.
There is no easy answer, but what is clear is that there is a growing gap between what employers are offering and what employees want. What is also clear is that it is not always about the money. It’s more simple than we think, but it is getting the combination of the things that matter right, such as providing work that is meaningful, helping people believe in what their organization is doing, providing a safe environment in which employees feel appreciated, and are being compensated fairly and having opportunities to grow.
There, simple really, isn’t it!
Peter M. Beaumont is the Founder and Principal of ConnXN Consulting and is a Leadership & Organisation Accelerator as well as a Success Authority. He is also the author of The Relationship Roadmap, a comprehensive guide to building relationships with strategic clients.