The economy has made a robust comeback and the job market is strong. You will rarely hear any argument citing the scarcity of jobs. There are currently over 5.4 million open jobs in the United States alone, with a staggering estimated 10,000 Baby Boomers retiring every day. Yeah, you read that right – Every. Day.
It is safe to say that the Recruiting industry is solid, and companies are rushing to implement retention strategies for their existing employees as fast as they can.
With the two competing efforts battling one another, it is clear that recruiting and retention are on a fast collision course!
From a Retention standpoint, we know the following to be true:
1. Replacing an Employee is Expensive
You can just hire someone else, right? Sure – but it’s going to cost you! Varying studies have placed the cost of replacing an existing employee, regardless of their performance, anywhere from 40% of their salary for entry-level employees, to 213% of their salary for your leaders. Employers don’t always consider the details when factoring in replacement costs.
According to a study by the Society for Human Resource Management, a company is going to spend six to nine months of an employee’s annual salary just for training the new employee that is hired. Onboarding itself can cost thousands, plus the cost of lost productivity from current employees that need to participate in the training of new hires.
2. Many Companies Don’t Hire for Succession
When employees don’t feel that they are being developed for future roles, their engagement level declines. Among the candidates interviewed at our firm last year, the most common reason for looking was the lack of upward mobility or room for advancement. This included candidates from companies of all sizes.
If you are a smaller organization, simply delegating additional responsibilities to your employees, or developing their skills for other roles adds to their level of engagement, and hence, their willingness to stay where they are!
Failing to develop employees also leaves a skills gap when individuals retire, and companies are forced to scramble to replace the skills that were lost with the retiree.
3. Some Companies Have Not Figured Out the Value of Flexibility
Employees want to feel valued (if that fact hasn’t screamed out loud and clear yet). One of the major factors affecting employee happiness: flexibility – NOT money. An employee that has the ability to work from home when they need to is going to feel trusted, valued, and has been proven to take fewer sick days!
Part of this is due to the fact that they are able to complete their work within the same work day, but perhaps earlier or later than the typical 9 to 5. Even if they don’t take advantage of the work-from-home days, having the option available creates a different psychological perception.
An employee is less likely to leave a job that offers unlimited flexibility (regardless of how accountable the employee has to be for their work).
And let’s face it: happy employees don’t leave.
According to Forbes.com, 66% of employees that don’t feel appreciate would consider leaving their job. On the other hand, only 20% of employees that feel valued would consider looking at another opportunity. Consider that next time you’re thinking of cancelling the company happy hour!
Conversely, when looking at the job market from a recruiting perspective, there is an equal push in many of the same areas.
From a Recruiting standpoint, these also ring true:
1. Hiring an Employee is Expensive
Hiring an employee is an expensive and tedious process. Ensuring that the right candidate is hired is incredibly important, but not always an exact science. Companies need to take a great deal of time to determine whether the candidate fits their culture.
Additionally, scheduling multiple rounds of interviews with team members and senior leaders can take hours away from their primary jobs. This sacrifices productivity and increases individual workload. Flying out-of-town candidates in, and covering travel and entertainment expenses, also adds to the cost.
2. Companies Don’t Hire for Bench Strength
Recruiting often occurs in a just-in-time manner. Many employers are trying to run as lean as they can, so they only recruit for whom they need right now. If a company has low turnover, chances are that if a person leaves, they are left in a dire situation.
They simply didn’t have the depth available for another person to step into the vacant position immediately. This, in turn, puts their recruiting effort into high gear, and they are often forced to pay a premium for the person possessing the specific skills they need.
3. Flexibility Trumps Higher Salary When Making a Career Move
Having flexibility to work from home when necessary is more important to many job seekers when considering a new opportunity. I have read many a LinkedIn discussion where the audience was very vocal about the fact that they would turn down an offer for more money and a higher salary if their current position offered them the flexibility to work remotely.
Therefore, from a recruiting standpoint, employers have to bring more perks and benefits to the table than simply a bigger paycheck.
The Battle is Getting Fierce
At some point, relatively soon, corrections will be made on each side of the fence. The candidate market has become increasingly tight because of improvements in employee retention and a greater number of available jobs.
Recruiting efforts, as a result, will require even greater perks to attract top performers to leave their comfortable work environments.
- What will companies do?
- What strategies can they implement to avoid a candidate drought?
The answer sounds simpler than it is: develop and appreciate your employees.
Hire everyone with the intention of having him or her take their current supervisor’s position. This involves teaching your managers how to develop emerging leaders and high potential hires.
Hint: it wasn’t the way they were managed!
Different generations require a different leadership style in order to set them up for success. Recognize them in a manner that appeals to their interests.
In short, take the time to understand your employees’ needs and aspirations. Investing in challenging your current talent pool costs much less than replacing them.