Strengthening job market raises stakes for worker retention
Five steps for privately held companies
A stronger job market may be good news for those out of work and the unfulfilled, but less so for employers. After all, more jobs equals more competition for workers, and a time when mid-market companies are experiencing widespread skills shortages that are inhibiting their growth. In fact, about two-thirds of mid-market executives we surveyed for our recent Mid-Market Perspectives Report indicated that it is difficult to find new employees with the skills and education to meet the needs of their business.
Strengthening job market raises stakes for worker retention
A blog post by Roger Nanney, national managing partner for Deloitte Growth Enterprise Services, Deloitte LLP
The recent news from the Labor Department that the US labor market added 295,000 jobs in February is just the latest sign that middle market firms need to turn their attention to retaining workers. In fact, the Department’s latest report indicated that over the last 12 months, there has been an average monthly gain of 266,000 jobs, creating fresh opportunities not only for the jobless but for those looking to make a career switch.
A stronger job market may be good news for those out of work and the unfulfilled, but less so for employers. After all, more jobs equals more competition for workers, and a time when mid-market companies are experiencing widespread skills shortages that are inhibiting their growth. In fact, about two thirds of mid-market executives we surveyed for our recent Mid-Market Perspectives Report indicated that it is difficult to find new employees with the skills and education to meet the needs of their business.
With much of their focus on finding new employees with the right skills, companies may be neglecting a key aspect of successful talent management: keeping the workers they already have. Job mobility is on the rise and with it the risk that key personnel who aren’t sufficiently motivated or compensated will walk out the door.
With that in mind, here are five steps privately held companies can take to boost worker retention:
- Paycheck no longer enough
It’s no secret that in a tight market, it is even more important to compensate employees competitively. Yet, a paycheck alone is no longer enough in engaging and retaining employees.
As our nation’s demographics shift, the workforce is simultaneously getting younger, older, and more diverse and autonomous. Beyond a paycheck, employees—especially millennials—are looking for exciting and meaningful career opportunities. To engage talent in this environment, companies need to align their business and corporate objectives with the professional, personal, and social goals of their employees and offer employees an opportunity to make a difference, not just earn a paycheck.
- Provide meaningful work
Our colleague Josh Bersin says this quality above all others helps define what he calls a “simply irresistible organization.” That’s because employees who are challenged and given sufficient time and space to be creative tend to feel rewarded and less inclined to seek job satisfaction elsewhere.
This also means reducing the burden of additional meetings or manager check-offs. Mid-market companies have a tendency to add layers of oversight and complexity when they grow, and resisting this extra tax on employees’ time will likely give them the space they need to really tackle an assignment and add value.
- Invest in employees through training
Your employees are the growth engine of your business and you should treat them that way. Identify future leaders throughout the company and spend the time and effort to develop them. In-house training is one way companies can make reasonably certain that promising employees feel valued. Nearly two-thirds of the executives in our fall 2014 survey of middle market executives cited traditional internal training and development as the best way to cultivate future leaders. What’s more, covering the cost-in whole or in part-of external skills training and development was the second most-popular approach.
- Make your leaders accessible
Family-run and other private employers have a natural competitive advantage over larger corporations where employees have little access to decision-makers and may feel more like a number than a name. In fact, “strong, accessible leadership” was the most popular choice in the recent mid-market survey when respondents were asked to rank the qualities that potential employees find the most attractive. Effective and accessible management teams are those that value coaching and feedback, and they help their employees see how their efforts are contributing to the big picture.
- Foster open communications
Use the interactions cited above as a way to build trust and create an environment where even disgruntled employees feel safe sharing their feelings. Many family-run businesses tend to fall into a “loyalty trap” where they may feel like any employee actively looking for a job elsewhere is being disloyal to the company.
Resist this, particularly when it comes to those employees who have been identified as potential future leaders. Turn any conversation that starts with “I’m leaving” into an opportunity to discuss their career ambitions. You might not be able to keep them, but it will send a signal to other team members that they are valued and able to express themselves. When employees decide to depart, be sure to conduct an exit interview and look for patterns in the data so you can prevent the next one.
A strengthening job market doesn’t necessarily portend a wave of employee defections. Workers who are motivated, driven by purpose, and granted the tools and support to succeed are the ones who will likely repay you with loyalty. These insights are by no means exhaustive, but they are good foundational steps mid-market companies can take to boost retention and keep growth on track.