It’s All About Retention

The most recent release of results from the ongoing National Study of Employers[1] identifies the following five trends between 2008 (in some cases 2005) and 2014.

  • Trend #1: The 1993 Family and Medical Leave Act has leveled the playing field—12 weeks has become the norm for leaves for childbirth, adoption, foster care placement, a serious personal medical condition or care of a child or spouse with a serious medical condition; at the same time, longer leaves are less available.
  • Trend #2: Demographics are destiny, though legal and attitudinal shifts have an impact, too!
  • Trend #3: Smaller employers are big leaders in providing flexibility and in not increasing co-pays in health insurance.
  • Trend #4: Telecommuting is on the rise.

And finally, the most significant trend of all is the reason most commonly given by employers for being generally more supportive of employees and offering them more flexibility…

  • Trend #5: The reason for providing employee supportive programs is the retention of employees.

Employee Retention Top of Mind

Clearly in the time period covered by this study, employee retention has taken center stage with many employers. In fact, a recent Harris Poll survey for CareerBuilder found that 32 percent of companies believe retaining talent will be their top challenge in 2014. This might have something to do with the pent-up frustration of employees who’ve been afraid to jeopardize a job-in-hand during recent times of high unemployment. As the job market continues to rebound, however, many of these employees are now looking to better their situation by moving on.

Most employers acknowledge that retaining employees has always been important. The cost of a new hire when taken together with the increased productivity of a tenured employee is usually a strong incentive for keeping an eye on turnover and allocating the resources necessary to bolster retention. Unfortunately, memories are short when the market place serves up hundreds of qualified candidates for every opening. In such an “employers’ market,” complacency quickly sets in.

Today, with research suggesting that employee turnover is expected to increase to 23.4% over the next few years (an increase of 17%)[2], employers are understandably concerned and turning their sights back to employee retention. In a concerted effort to keep their best people in 2014 (the Year of Retention or the Talent Poach), employers are resorting to everything from onsite fitness centers to unlimited vacation.

Perks and Work Flexibility Help

Although perks and flexibility are excellent strategies for retaining talent, in this battle, competitive compensation is perhaps the most critical component, with everything else providing valuable reinforcement. This is the case because, while compensation alone may not be enough to make someone leave, higher compensation is often the carrot used to lure the unsatisfied or ambivalent employee away. As Jason M. Lemkin, of Storm Ventures states:

“You have to get compensation right, as best you can, all the time. These days, anyone good is going to get a raise to move-and maybe a signing bonus on top of that.”

A Compelling Employment Value Proposition is Key

Employers committed to retaining their talent will start with compensation at (or above) market rates and then fold in a variety of perks, programs and supports that speak to people’s primary motivators to create the most compelling employment value proposition (EVP) they can.  If your organization is not yet focused on building a better EVP to retain current employees (and attract new ones) consider this: companies with a great EVP are recognized as “great places to work:” they not only have significantly lower employee turnover rates, they also reap the rewards of better overall financial performance.  

 

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[1] A study of employers with 50 or more employees conducted by the Families and Work Institute (FWI) in partnership with the Society for Human Resource Management (SHRM)

[2] Global talent exodus on the horizon as economic growth returns. http://www.haygroup.com/ww/press/details.aspx?id=37373


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