In the face of an increasingly competitive job market, businesses need well-trained HR professionals and engaged managers to foster employee retention strategies in an effort to keep their skilled employees for the long haul.
Today’s burgeoning economy has caused job growth to skyrocket, which has made it more challenging for employers to recruit and retain talented employees. In a job-rich market, employees can demand more from their employers – or walk away – with other jobs to choose from. Since January 2017, the ADP National Employment Report estimated that more than 940,000 jobs were created. It’s not only finding top talent that challenges companies, however. In a landscape where employees have the upper hand, retaining that talent is equally as tough.
ADP reported that more than half (63%) of the workforce is passively looking for a new position, while 17% are actively looking. This is likely due to the rise in new recruitment technologies, which have made it easier for candidates to find job postings online and informally connect with recruiters.
Indicative of the power employees hold in the market, nearly half (47%) the workforce surveyed said they’ve left a job because it didn’t meet their expectations. A strong economy correlates with an increase in job opportunities, and often, more competition for recruiters to hire and retain quality employees.
In a February 2017 Forbes column, Tim Worstall, a Fellow at the Adam Smith Institute in London, suggested that the current unemployment rate of 4% is likely the lowest the United States will see outside the peak of an economic boom. The real indicator of growth, Worstall wrote, lies in the Job Openings and Labor Turnover Survey (JOLTS), which reported that available jobs have increased 4.2% from last year, but total hires have actually fallen in the last 12 months.
This suggests that employers may be struggling to hire and retain qualified employees. The survey suggests that some companies are having difficulty finding applicants well-versed in the skills needed for the jobs they’re trying to fill. According to the article, economists are arguing that companies may have to offer higher earning potential if they want to attract better applicants.
In the midst of a flourishing economy and a growing job market, employees may feel more confident leaving their current position to pursue a more appealing job opportunity. According to a 2016 LinkedIn study, the younger generations of workers are changing jobs at a much higher rate than their parents.
Millennials (those who graduated from 2006 to 2010) are on track to change jobs more than four times by the time they turn 32. In the LinkedIn study, Guy Berger, an economist for LinkedIn, noted that job hopping has been on the rise since the 1990s. Generation Xers (those who graduated from 1986 to 1990) averaged about two job changes in their first 10 years after college.
Research suggests job hopping is becoming a trend among the younger generations and that employers should start being more open to candidates with multiple jobs on their resume. A 2014 CareerBuilder survey showed that 45% of employees plan to stay with their current employer for less than two years. Millennials in particular have been known for job hopping because it can lead to higher earning potential and increased career advancement opportunities.
According to Forbes, switching jobs is one of the fastest ways to receive a salary increase. According to figures from Legal Technology Solutions (LTS), in a healthy economic market, an 8-10% increase in salary is average for a job change. Some reports show an increase as high as 20%. This means that, in some cases, staying with an employer for more than two years on average can cost 50% or more in lifetime earnings. However, when it comes to fitting in with a company’s culture, a mismatch can drive away employees faster than a smaller paycheck can. Poor work-life balance also tends to affect how long an employee stays with a company.
In years past, HR managers may have disregarded applicants whose resumes showed they were lacking tenure at previous jobs. However, that stigma seems to be fading away as job hopping becomes more common. Candidates should always be prepared to give an explanation for multiple job changes when asked, but employers are increasingly seeing those who job hop to learn new skills, add new challenges, or break into a new industry as top performers.
The combination of accessible networking sites and the growing number of job openings requires employers to have proactive employee retention strategies to retain their skilled employees for extended periods of time. Employee retention is typically contingent on companies providing career direction, competitive salary, advancement opportunities and value propositions, while prioritizing employee feedback and leadership transparency.
Some companies gather insights via exit interviews, while others ask tenured employees what motivates them to stay loyal to the same company. Understanding what kind of professional development employees want, and then facilitating relevant training, invites employee feedback and helps establish an engaged workforce. This act doesn’t have to be limited to HR or the executive management team. Managers should encourage their subordinates to speak freely and offer suggestions to improve business outcomes.
Communication with employees is critical to fostering loyalty and improving team value. Conducting regular performance reviews enables employees to better understand their progress and discover career path opportunities. Employers should ensure employees are connected to the company’s overall mission and goals, and clear expectations should be set for all positions.
While benefits like health insurance and retirement savings are critical to employee retention strategies, soft benefits like flextime, a flexible work-from-home policy and company giveaways can help provide value to employees. Celebrating achievements can also help improve employee morale and loyalty, whether it be through an awards ceremony, monetary incentive or a personalized congratulatory message.