Employee retention in the current employment market

Employee retention in the current employment market

In partnership with the global decision-intelligence company Morning Consult, we surveyed 400 decision-makers and hiring managers about the measures they've taken in regards to the current state of the hiring market. The supply and demand for jobs appear to be reaching equilibrium, but there are considerable gaps between the skills that companies need and those that job-seekers can provide. The rise of artificial intelligence, especially, has left many organizations searching for qualified candidates.

Our "Hiring Managers: State of Hiring and Retention" study shows that many companies are reconsidering their open roles or freezing their hiring, given these conditions. In fact, 73% say they're upskilling their current workforce instead of hiring new talent. With such a major shift from external to internal recruiting, as well as the possibility of losing existing staff in 2023, employee retention may be more vital than ever for many companies.

Let's look at what some companies are doing to create supportive work environments and retain their top talent.

The best retention tactics are the ones you may expect

For a while, particularly in the early 2010s, employers offered perks such as free snacks, in-office happy hours, and table tennis in the break room. Perhaps the idea was to create a semblance of work-life balance by injecting more of the life component into the workplace. But it soon became clear that employees don't want that. Rather, they want benefits that will allow them to enjoy time away from the workplace.

The data from our study reflects that sentiment. According to 42% of the respondents, the best retention tactic is to provide competitive pay raises. The finding corresponds with reports of employees expressing their desire for higher pay, with 76% of respondents saying they've received salary requests due to inflation. 

The second-best retention tactic, with confirmation from 37% of respondents, is to offer a flexible schedule. Broadly speaking, flex scheduling is the practice of giving employees the freedom to decide when they arrive at the office and when they leave. Employers have known flex scheduling to be an attractant to job seekers, but it's also effective for holding on to the staff you already have. 

For employees, flex scheduling satisfies the general pursuit of work-life balance because they no longer have to fully arrange their lives around work. Health and well-being improve, too, because they can spend less time in stressful situations such as rush hour, and they have more time to address personal obligations such as doctor appointments. And for employers, creating a more employee-focused environment tends to boost job satisfaction and, therefore, engagement and retention.

Rounding out the list of best retention tactics in our study are:

  • Employer-matching 401(k)
  • Competitive health benefits
  • Bonuses 

"With such a major shift from external to internal recruiting, as well as the possibility of losing existing staff in 2023, employee retention may be more vital than ever for many companies."

Feeling at home

The COVID-19 pandemic had a silver lining for many American workers, as it compelled companies to allow their employees to work from home. In what is nominally a post-pandemic world, remote work remains popular and is unlikely to go away anytime soon. A recent Pew survey reveals that 35% of American adults who work "teleworkable jobs" choose to work all of the time at home, while 41% do so on a hybrid basis. 

Our study's respondents align with the pro-remote and pro-hybrid trend, though the exact figures differ. In the current working environment, only 38% of decision-makers and hiring managers report that their employees work fully in the office. The remaining 62% are split between fully remote (15%) and hybrid (47%). As for the impact of remote and hybrid work on employee performance, more than 50% of hiring managers agree to some extent that productivity has increased under these models.

Even companies that couldn't offer remote or hybrid work say they've tried to flex their scheduling. Most respondents say they've modified their scheduling due to employee feedback, showing that it's a popular initiative. 

Back to the office

Despite the popularity of working from home, many companies have returned to in-person work arrangements. According to a study by Unispace, a company specializing in workplace design and strategy, 72% of employers have mandated returns to the office, but 42% report higher attrition than normal, and 21% have lost key staff members as a result. 

In terms of sheer numbers, the respondents in our study have been less adamant about bringing their workforce back to the office, with 47% of companies putting forth a return-to-office policy. The most commonly cited reasons for such mandates are:

  • Direct, live human connection (51%)
  • Collaborative work environment (50%)
  • Improved performance (43%)
  • Improved engagement and development (41%)

Communication is key

The increase in remote work during and after the pandemic has shown that communication is important for establishing transparency about company concerns and promoting employee engagement. Our study corroborates that establishing clear and open lines of communication is the key to success but doesn't limit its value to the remote or hybrid workforce.

The question is: Which methods of communication are best? Fully 50% of respondents say written communication is the ideal way to broadcast key information throughout their organization. That includes emails and messages through Slack, with perhaps a slight advantage to the latter. Verbal communication is slightly less favored, with 45% of respondents designating it as the best method. 

The edge that written communication has over verbal may have something to do with the generational shift in the workplace. As the baby boom generation ages, more and more are retiring. In 2020, boomers occupied just 19% of the labor force, while Generation Xers, millennials, and Gen Zers took up much of the remainder. Younger people tend to prefer indirect communication methods such as text, so the shift from verbal to written communication may become more pronounced as time passes.

Feedback on feedback

Regular feedback can improve engagement by providing employees with direction and showing that you want to see them improve. Soliciting employee feedback has a similar effect because it communicates that their ideas matter and that they have a say in the company's direction.

The respondents in our study shared their preferences for soliciting employee feedback. The most popular methods, interestingly, show the reverse of the communication results, with in-person meetings (54%) finishing a hair's edge over written employee surveys (53%). Not far below the front runners are company meetings and Q&As, which are the preference for 48% of respondents. And the lowest-ranked feedback solicitation method was office hours, with just 24% of respondents.

Our findings suggest that employees are more willing to offer feedback when asked, especially when the setting is either private (1:1s), anonymous (surveys), or roughly impersonal (meetings, Q&As).

The findings from our survey provide valuable data about what employees want and what employers are doing. Still, you have to draw your own insights from the numbers to determine which retention strategies may work best for you. Consider what you've found here and see how you can translate it to your organization.

More tips about promoting employee retention:

One of the best methods for improving retention is to create an work environment that addresses and prevents burnout.

If your organization is thinking of mandating a return to the office, you'll want to think hard about the impact it may have on your employees.

Are your employees engaged? You have to ask them to find out.

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