As world economies continued to rebuild following the Global Financial Crisis in 2008 and business confidence grew, we started to see an influx of new jobs, new technologies and an increasing HR focus on attraction; how do we recruit the kind of talent that will see our business deliver on its strategic goals? The world post-Covid is seeing a whole new landscape emerge. As companies downscale their cost structures and employee numbers at an unprecedented rate, we are seeing a significant rise in unemployment figures. In the United States alone, unemployment increased by 4.8 million people in the month of June alone to an unemployment rate of 11.1% with dire predictions that it could increase as high as 25% before the global pandemic is over. Here in NZ, we are seeing a similar trend, albeit at more conservative rates. Unemployment at the end of the June quarter sat at 4.2%, with the Department of Statistics forecasting it could go as high as 10% in the coming months.
When companies experience unprecedented drops in revenue generation on the scale that we have seen in 2020, one of the first things they have to do is proportionately cut their costs in order to survive. One of the biggest costs in any business is its wage and salary bill. Some organisations, particularly large and complex ones are old hands at the management of restructures and their outcomes, but for many SMEs the current situation will be the first time they’ve had to face a situation where decisions have to be made that will mean some jobs will go. And of course, as the jobs are reduced so, inevitably, are employee numbers. With supply inevitably outstripping demand in the labour market for the short to medium term, there is likely to be less HR focus on attracting talent, and a greater focus on hanging on to the talent already in place.
Once the dust settles…
As companies adjust to the new “normal” and restructure processes are complete, the newly refined organisation should emerge (if they’ve done things right) with a smaller, leaner group of employees who they have identified as strategically imperative to the ongoing success of the business, possess a technical skill set that the company relies upon or have been otherwise identified as the kind of employees they would like the business to be built upon.
You’ve already identified this group; it is a case of “cream rises to the top”. With a shift away from talent attraction, HR practitioners are now looking more closely at retention of key talent; how do we protect this select group of employees from “cherry-picking” by other organisations as they slowly start to rebuild?
Strategies for Employee Retention
There are a number of tried and true traditional HR strategies that should always be considered in ensuring staff retention is maximised and many of them are either cost-neutral or even cost-positive over time:
1. Salary and Benefits
Research shows that close to 50% of people who leave their jobs, cite their primary reason for doing so as salary.
Salary dissatisfaction typically comes in two forms; external equity(how I’m paid relative to the same job elsewhere) and internal equity (how I’m paid relative to other people at the company doing the same job).
External equity (how your pay practices compare with others in your industry) can be easily tested and is largely objective and fact based. Ideally, employers have access to market data through a provider such as Strategic Pay and routinely undertake a benchmarking exercise as part of their annual salary review. This process remains essential, even if you have decided against blanket salary increases in 2020. You still need to know which of your employees are paid below the market as these individuals pose the most flight risk. In a year where salary movements are likely to be conservative (but not null), this is a great opportunity to target what little budget you have available to correct these anomalies.
Ensuring robust annual benchmarking links to an external data source means that HR professionals are far better prepared, should an employee suggest they could be paid more elsewhere. Valid data sources are far more readily available to employers than they are to employees (who typically have to rely on misinformed or misleading views)
In our experience, internal equity tends to punch above its weight in terms of its overall impact. Nothing turns a happy employer into an unhappy one faster than hearing that someone else in the company is paid more for doing the same job or is paid the same for doing a perceived smaller job. There are a number of ways to avoid this predicament. Firstly, have a well understood, robust performance development process in place, with clear links between performance and pay. Secondly, clearly communicate the company’s remuneration policy to staff, identify peer groups of employees in a range of roles, and articulate what process employees should follow should they feel there is an injustice.
2. Eliminate Employee Pain Points
Whether it is through employee feedback surveys, direct feedback from staff, or paying attention to industry trends, it is important for any business to identify those aspects of an employee’s day job that cause unnecessary friction.
3. Have Leaders, not Bosses
The old adage here is true; people follow leaders, while they abandon bosses. Recently leading the organisation through considerable change and through a period of great uncertainty is a great opportunity for senior leadership teams to demonstrate their ability to lead. Some common attributes of great leaders include:
- Honesty and integrity
- A belief in the importance of people
- A clear vision of the way forward
- Inspire confidence
4. Keep a Watchful Eye on your Managers
Again, it’s a commonly held belief that employees don’t leave jobs, they leave managers. Mid-level management has by far the biggest impact on overall company culture and the way in which strategic plans are converted into operational actions.
So, while organisations are investing in time to train their managers to deal with the technical aspects of their positions, it’s also in their best interest to include some “soft skills” as well. This means teaching managers how to encourage and motivate different types of people, personality traits, conflict management, stress management, crisis management, and so on. This is particularly true as organisations emerge through this new era.
5. Engage, Engage, Engage
Coming out of restructures, employee engagement can often be low, especially if employees perceive the restructure has been poorly handled, or they feel at risk of further job cuts. As an employer, companies need to understand what motivates people to want to become fully engaged with the work they do and what has them simply going through the motions until something better comes along. Retention and engagement need to go hand in hand; organisations want to both retain their staff and maximise their positive work behaviours.
So what motivates employees to stick around and want to be part of the team? Well known drivers of employee engagement include:
- Offering valuable learning opportunities, both in keeping with the current role as well as cross-training in areas of future interest.
- Mentorship Programs – aligning employees with solid operators they aspire to emulate. These can also serve as another useful feedback channel for senior management.
- Highlight opportunities for advancement – if the post-Covid era is going to present opportunities for the organisation going forward, then highlight these opportunities to current staff and, where possible, look at promoting internal talent before casting the net more widely.
6. Be a Brand They Can be Proud to Work For
This is an age of activism, with upcoming generations who want every aspect of their lives to be part of a solution instead of a problem. Become a business known for the positives, known for its involvement and support of something meaningful to the employees and the organisation.
Employees who are passionate and care about the impact their lives have on the world will consider working for a positive branded business a serious benefit.
How can we help?
At Strategic Pay, our experience in remuneration, rewards and performance management enables us to help even the most complex organisations improve their employee satisfaction levels. So, if you would like some expert advice, don’t hesitate to contact us today at email@example.com or regional contact details can be found here.