A recent survey by PricewaterhouseCoopers (PwC) indicates that the Great Resignation is set to continue — 1 in 5 employees claim they will change jobs within a year. More than 1 in 3 say they plan to ask for a pay raise. According to PwC, higher pay is the biggest motivator for a job change, but finding fulfillment at work is “just as important.” [Published by Goh Chiew Tong at CNBC, May 24, 2022.]
A study published by the U.S. Chamber of Commerce a year ago (June 2021), and updated 6 months later (Jan 2022), confirms that American small business owners are still facing unprecedented challenges trying to find enough workers to fill open jobs — compared with more than 20 years of the 21st century so far.
The Perspective of Crisis
The top employer complaint is not being able to hire qualified workers for open jobs they need to fill.
In the words of Curtis Dubay, Chief Economist at the U.S Chamber of Commerce, “The latest data and surveys reveal a national economic crisis that is getting steadily worse.”
- At the end of 2021, there were over 10 million vacant job openings in the United States — a record high, despite employers adding a whopping 3.8 million job openings during 2021.
- For 2022, there is less than one available worker for every job opening (≈3 workers available for every 4 job openings), which is the lowest the ratio has been all century. The past average is closer to 3 workers for every single job opening.
- Roughly 94 percent of state and local chambers of commerce report that businesses in their areas are having difficulty finding workers. Most industry association economists also say employers in their sectors struggle to find qualified workers.
The labor shortage means that businesses must turn down work, reduce hours, scale back operations — or in the worst cases, close entirely — and some closures are permanent.
In Every Crisis There Is Opportunity
Having a skilled, trained, and committed workforce is key to business growth and profitability. In the competition for a decreasing pool of skilled employees, employers have the opportunity to assess their current hiring practices, identify deficiencies, and come up with better policies to help hire the employees they need when they need them.
Moreover, there is now a pressing opportunity for small business owners to formulate and exercise innovative strategies — to wisely realign their organizational culture to attract and retain key employees — and to leverage and optimize the value that their workforce returns on organizational investment.
In her report dated May 28, 2022, Gwen Moran at Fast Company advises, “Fortunately, there are a number of steps your organization can take to keep employees engaged and motivated.”
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Start with Their Goals
The first step to keeping employees engaged and ready to grow with your company is to get clear on their career goals and then match them with your organization’s needs.
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Show Them a Way Up
For improved workforce retention, employers must shift their focus to include employee priorities. Gone are the days of a buyer’s market when it comes to talent. Now you need to be sure your employees are ready to grow with you.
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Encourage Meaningful Contributions
Encourage employees to share their great ideas for new ways of doing things, and establish rewards for proposing and developing new things for the business to do. A culture that encourages employees to act like owners and allows them to develop their careers can avert typical turnover. Employees might also participate in an employee stock-ownership program. Employees finding meaning in their work and getting to make an impact pays off in the long run.
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Create a Culture of Personal Development
Use “career calisthenics” — reaching up, down, and out for new learning or development opportunities for employees. Look for mentoring or shadowing engagements and stretch assignments and other learning opportunities throughout the organization.
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Give Them Paid Time to Grow
It’s also important to make sure employees don’t feel like you’re simply squeezing extra work out of them without advancement, such as new titles, raises, or bonuses. If those trappings aren’t in the budget, an incentive might be to take away some of their more mundane work, so it doesn’t become punitive. Help create the job they want instead of watching them find it at another company.
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Guard against Burnout
One study found that roughly half of employees report feeling somewhat burned out. Lack of clear communication, the need for flexibility, and remote or hybrid work environments are among the top concerns. Employees want a renewed emphasis on mental health and well-being.
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Review Compensation and Benefits
Employees can be tempted by bigger salaries at other jobs. Fair compensation is a top priority for talent. Job titles don’t necessarily match job roles, and worker pay levels need to ensure fairness compared with market data. Benefits have increased in importance since the pandemic.
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Focus on Employee Experience
Attention to benefits doesn’t mean trying to “buy” employee loyalty with silly perks or trendy offerings. Companies should strive for engaged employees who feel an emotional connection to the organization.
Serious Business Analysts Agree
An up-to-the-minute assessment by Helen Tupper and Sarah Ellis, dated July 4, 2022 and published in the Harvard Business Review (HBR) supports the forecast that employee turnover will be 50–75% higher than companies have experienced previously, compounded by it taking 18% longer to fill roles than pre-pandemic. Managers are spending time they don’t have searching for new recruits in an expensive and competitive market. Unless efforts are refocused on retention, managers will be unable to drive performance and affect change.
It’s all about leadership mindset. Leaders need to take action to enable businesses to keep talent while still being able to deliver on results.
The HBR analysis assures us that the solution lies in taking a fresh look at how retention is managed. Managers need help with three things:
- They need help shifting the focus of career conversations from promotion to progression and developing in different directions.
- They need help creating a culture and structure that supports career experiments.
- Managers need to be rewarded not for retaining people just on their own teams, but retaining people — and their potential — across the entire organization.
Work With Your Financial Professional
Structuring an effective compensation and incentive package can be a complex and time-consuming task. The help of an experienced financial professional can be invaluable during every stage of this undertaking.
At Baum CPA, our advisors possess much expertise in employee compensation and benefits, financial accounting, business and payroll taxes, plus a wealth of innovative management and leadership wisdom for small business owners — all targeted toward entrepreneurial success. Aren’t you ready to ask for help with your labor challenges and opportunities? Click here to book your first consultation appointment today.
This blog and its authors provide this content strictly for informational purposes. No content herein should be misconstrued as financial advice. Everyone’s specific circumstances vary — Always consult with a qualified, licensed financial advisor, legal counsel, and tax professional before venturing into any investment or business activities.