Decades-old dialogue in HR circles about the war or race for talent is taking a sharp new turn as Covid-19 and the social-justice movement impact companies’ ability to only find and keep people. While there is much talk about laid-off and furloughed employees, as well as how to safely bring people back into physical workspaces, there is little attention being given to the prophesied “turnover tsunami” once the pandemic wanes.
In the United States, growth for this year is expected to be “in the range of 6% to 7% (notably the highest in 30 years) while U.S. unemployment is predicted to decrease to 2% to 4% percent,” says Federal Reserve Chairman Jerome Powell. “We feel like we are at a place where the economy is about to start growing much more quickly and job creation coming in much more quickly.”
With job creation on the rise, a significant number of workers are considering voluntary job departures as the pandemic subsides. To thrive in a post-pandemic world, organizations must not ignore such turnover possibilities. (Nevermind the accelerated pace of Boomer retirements contributing to departures.)
“I am definitely seeing turnover spikes in many industries,” shares Cathy Henesey, president of the Association of Talent Acquisition Professionals (ATAP). “It will be interesting to see how loyal employees will be in correlation to the way they were treated during COVID peaks and valleys.”
A Perfect Storm
“It’s a perfect storm on both sides of the marketplace — demand and supply — to drive movement of people,” observes Amit Parmar, co-founder and CEO of cliquify.me, a recruitment SaaS company. With clear signs pointing to a mass employee exodus, organizations cannot ignore the situation.
“Retention isn’t as much a reaction to the broader economy’s ups and downs as it is to a much more narrow view of how we, as employers, have treated our employees during the pandemic,” shares Gerry Crispin, principal and co-founder of CareerXroads, a membership community for talent acquisition leaders. “How you managed your workers, for good or ill, during this last year and [how we’ll manage them] over the next few months will dictate just how much at risk you are in losing your best and brightest. Still, whether it’s a tsunami or a trickle, regrettable turnover is always costly.”
The cost of losing an employee includes losses in productivity, engagement, and institutional knowledge — and lower morale among those who stay. It includes costs associated with hiring a new employee (advertising, interviewing, agency fees, etc.), as well as costs to onboard and train them. These costs translate into real dollars at about 33% of annual salary.
Imagine an organization of 10,000 people with 10 percent turnover where the average annual salary is $35,000. That’s more than $11 million a year in associated turnover costs.
Economic and job growth coupled with looming voluntary leave will have employers of all sizes scrambling to hire at a cost far higher than many organizations can afford. What’s more, most companies don’t have a talent crisis plan in place to activate when economic indicators begin to predict these challenges. A reactive mode in these situations is time-consuming, costly, and challenging.
Moreover, many organizations have developed diversity talent goals in response to the social justice movement requiring even more commitment to their talent strategies. “There is a lot of data that suggests that the exodus from companies is heavily concentrated among women,” points out Mike Ganci, chief customer officer at pymetrics, a hiring solution using behavioral science and AI technology. “They will need to double down on diversity and even more importantly, inclusion, so that they don’t go backwards on diversity goals and lose employees who are essential to their growth.”
In other words, employers need to get ahead of this storm. Here’s how.
Listen Carefully to All Employees
Employees want to be heard. More importantly, they want their feedback taken seriously and turned into visible actions. Crispin, a long-time veteran of HR, encourages leaders to ask questions of current and furloughed employees, as well as those who voluntarily left within the past year.
“Ask them, how do they view your efforts to attend to/care about the financial and family impact of the pandemic? How do they view the pressures and stresses of performance during the past 12 months? How do they view your communication efforts about company decisions, the uncertainty in the economy, and political and social tensions as they affected work and the commitments of your company? How have employee values about work-life balance changed in the last year?”
Identifying trends across the organization is key to removing assumptions and having informed conversations. The real value in assessing this sort of qualitative employee data is when responses are sliced and diced to understand trends by job function, level, ethnicity, location, gender, etc. By listening first, leaders can then prioritize and decide what needs to change, stay, or go to best support their people.
Assess Flight Risks
Having in-depth people analytics is vital to understanding the current state of employment inside your organization and preparing for potential retention issues or hiring surges. “C-suite leaders need to be connected with their directors and middle-level managers, who in turn need to be in tune with local teams and individuals,” advises Susan LaMotte, CEO and founder of exaqueo, an workforce consulting firm.
“Do your managers know the flight risk for each of their direct reports?,” asks LaMotte. “Are certain geographies more of a flight risk than others? Are you prepared to lose your top performers or high-potentials on the other side of this crisis?” Directors and middle managers are an essential resource at this time. And their role in assessing flight risk at an individual level informs people strategies, supports managers in having critical career conversations with their people, and influences retention.
Understand Changing Employee Motivations
The pandemic has changed the relationship that workers want and expect to have with employers. According to ATAP’s Henesey, “More than a third of employees have asked their employer for more flexible work arrangements, and more physical and financial safety and security than ever before. Employees are looking for work-life balance, career advancement opportunities, fair compensation, and continuous learning opportunities.”
Furthermore, Prudential reported one in three U.S. employees “would not want to work for an employer that required them to be onsite full time.” It’s important for HR leaders to acknowledge such external data, but more importantly, to turn their focus inward to understand the motivations of their own employees, and how those motivations differ by level, location, hourly versus salaried roles, and other audience segments.
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Communicate Internal Mobility Opportunities
Internal mobility is long-known for positively impacting employee retention. Yet, many people look outside, not inside, their organizations to make their next move.
“Some of the most forward-thinking talent leaders I have seen are executing internal job boards to drive internal mobility,” affirms Parmar.
To get ahead of turnover, employers need to discourage talent hoarding by hiring managers and make it easy for people to move up and around. In times like these, frequent and consistent promotion and providing clear opportunities for internal mobility are essential in retaining top talent. “The reality is that most people are not fully satisfied with their jobs and are willing to pivot and try something new,” Ganci points out. “Companies need to give current employees the opportunity to do just that, and meet them where they are today.”
Thus, HR and TA leaders will do a great service to employees by collaborating with internal-communications partners to amplify internal career opportunities.
Define and Strengthen Employer Brand
For many employers, Covid affected workplace culture and norms, how employees connect and communicate, where people work, what people wear, and how teams interview and hire.
To compete in the talent market, companies need to invest regularly in employer-brand research to understand perceptions and sentiment, what employees need and expect, what differentiates them from talent competitors, how they can attract talent, and why they may lose talent. Just as marketers research customers on a regular basis, we need to do the same with our workforce by focusing on who they are as people and what matters to them— not just on whether they’re engaged at work.
“Today’s informed candidate goes through an average of 12 to 18 touchpoints before deciding to apply to a job,” says Allison Kruse, member of the ATAP board of directors. “At the core of a strong employer brand is authentic, true content that resonates, informs, and inspires.”
Research Content and Channel Preferences
For even the most prepared organizations, turnover and subsequent hiring are both highly likely. “For several industries, life post-Covid may entail a completely different talent pool,” Ganci suggests. “In many markets, companies can’t get enough applications to fill open positions and are now in a compensation war as [employers] all keep trying to beat each other out with higher hourly rates.”
By understanding where your potential candidates hang out on- and offline, you become more targeted and strategic when it comes to spending recruitment dollars. Instead of measuring source of hire, measure all the channels that influence your brand. Knowing where your employees get their information (career- and non-job related) will help you develop a better talent strategy.
Ultimately, whether it’s a war or race for talent, organizations will always be scrambling unless there’s a mindset shift. While we have always talked about employment as a contract, it’s so much more than that.
“Employment puts food on your table and a roof over your head,” LaMotte reminds us. “When we shift our perspective as employers about what a job really is, and does, we think about hiring and retention in a completely different way.” And there’s no better, or more important, time than now to think about these talent challenges — not as a war but a marathon, an Olympic-sized commitment to our people.