Here's something you probably know but need to keep a laser-like focus on: As the job market continues to improve, so does companies' and talent managers' ability to hold on to their best employees.
Yes, retention is becoming a bigger challenge for many organizations, and a new survey makes clear just how much of a challenge it truly is.
According to Willis Towers Watson's Global Talent Management and Rewards Survey, not only do U.S. employers "continue to experience difficulty with attracting and retaining employees as increasing hiring and turnover levels show no signs of abating," but three in 10 employees say they are likely to leave their employer within the next two years, "adding more pressure on employers’ ability to keep top talent."
This raises a question you should definitely be asking: How ready and willing are you to replace a third of your current workforce in the next 24 months? I'd be surprised if you answer is anything other than, "we're not ready at all to hire that many new people."
The Willis Towers Watson study includes more than 2,000 companies globally, including 441 from the U.S., and it shows that labor market activity is increasing pretty rapidly.
More than half of U.S. employers (57 percent) said hiring activity has increased over the past 12 months, while only 14 percent said it decreased. Additionally, more than twice as many employers said turnover has picked up over the past 12 months (37 percent) versus those who indicated it had dropped off (16 percent).
According to the survey, this labor market activity is translating into all sorts of attraction and retention challenges. For example:
- Roughly half of U.S. employers are experiencing difficulty attracting critical-skill employees (52 percent), top performers (50 percent) and high-potential employees (48 percent).
- More than a third of respondents reported challenges in retaining high-potential employees (37 percent), top performers (36 percent) and critical-skill employees (35 percent).
“Given today’s shifting workplace and how technology is disrupting jobs and labor markets, the need for employers to successfully attract and retain the best employees has never been greater,” said Laura Sejen, managing director, Talent and Rewards, Willis Towers Watson, in a press release about the study.
She added: “We know from our research that employees are looking to work for organizations that offer fair pay, career advancement opportunities and job security. While employers generally understand these priorities, their views diverge from those of employees in a few key areas.”
What employees really value
Part of the problem for organizations grappling with retention is that companies and managers frequently don't understand what would really help make employees want to stay. As the Willis Towers Watson analysis notes:
Employees are looking to work for organizations that offer fair and competitive base pay, opportunities for advancement and job security. While employers generally understand these priorities, their views diverge from those of employees in a few key areas.
When it comes to attracting employees, companies understand the importance of competitive base pay, career advancement opportunities and challenging work. But they overestimate the importance of their mission and values, and don’t place enough emphasis on job security.
And as the analysis points out, the term "job security" doesn't always mean what many talent managers might think. The study found that employees use that term to cover a number of issues that flow out of their feelings on the job:
There’s a clear disconnect between employers and employees regarding the value of job security as both an attraction and retention driver. But to compete for employees who value job security, it’s essential to understand what these employees are actually seeking.
Only about one in four (26 percent) employees who express a desire for job security are worried about losing their job. For other employees, job security is a proxy for financial concerns, their own ability to handle changes or an expression of employees’ support for the current direction of their organization.
Organizations can address employee needs in these areas without unrealistic promises of guaranteed jobs and within the framework of the modernization agenda.
Career advancement key to attracting, retaining employees
The Global Workforce Study identified advancement opportunities as key to attracting and retaining employees:
- Over a third (36 percent) of employees cited opportunities to advance as a key reason to join a company and to leave (45 percent).
- However, only four in 10 (41 percent) indicated their employer does a good job of providing advancement opportunities, while nearly half (47 percent) said they would need to leave their organization to progress in their careers.
- From the employer perspective, more than half (58 percent) believe they are effective at providing traditional career advancement opportunities, while 42 percent say that compared with last year, career advancement opportunities are improving.
As Willis Towers Watson Laura Sejen noted:
Employers may be painting a more bullish picture on career advancement opportunities than their employees perceive. In many cases, employers’ positive view on these opportunities may be a reflection of an improving economy rather than better career management practices. Given the high percentage of employees who say they need to leave their current employer to advance their career, there is a clear misalignment between employers and employees on this question.”
The Global Workforce Study also found there is room for improvement in employee engagement in the U.S. Roughly one-third (35%) of U.S. employees were highly engaged. The survey also identified senior leadership as the top driver of sustainable engagement (i.e., the intensity of employees’ connection to their organization). However, less than half of employees (45%) have trust and confidence in their senior leaders.
A retention study you need to take seriously
My take: This is an incredibly comprehensive survey that was conducted from April to June 2016 and includes responses from 2,004 companies worldwide, including 441 companies from the U.S. It covers more than 31,000 employees selected from research panels that represent the populations of full-time employees working in large and midsize organizations across a range of industries in 29 markets around the world.
In other words, this is not a survey to ignore. It represents a deep dive into why employees stay, why they go, and what you need to focus on to have a better chance of keeping them working for you.
It also points out something you should know all too well: younger workers -- Millennials -- that are now the largest segment in our workforce, have a different perspective on work than other generations and therefore are motivated differently when it comes to their decision to stay with a job or not.
For me, this is the critical finding that the Global Talent Management and Rewards Survey digs into, and you would be doing yourself and your organization a great disservice if you don't read it closely and consider the findings carefully.
Editor’s note: Checkster fuels the Talent Insider blog, and it can help you find out a lot more about hiring (and retaining) job candidates with the Reference Checkup tool, and can help you better evaluate candidates and compare what your interviewers learn with the Interview Checkup.