Last week we reported that Just under half (47%) of UK employers had expressed a concern over the sufficient availability of candidates for permanent hire in May 2018 and that the proportion of respondents receiving direct approaches from candidates for potential permanent and temporary hire fell by 10 and 7 points, respectively, year-on-year. These represent significant declines in a market of increasing skills shortages. This is further backed up by a recent report from Aldermore bank which states that over two thirds of UK SME bosses face recruitment and retention difficulties.
When looking at the reasons behind employees moving onto pastures new, bosses say the most common motive is a change in career (23%), followed by wanting quicker career progression (21%) and a pay rise (19%). In terms of where they then go, nearly a quarter of their employees (24%) land a job at a larger organisation in the same sector, a further one in seven (16%) move to a larger company in a different industry and over one in ten (13%) go to another SME in a similar industry.
For leaders struggling to stay ahead of competition this may be deflating. How are they supposed to offset all of these factors to prevent great employees, who have taken money and effort to hire, from jumping ship the moment they get a better offer? The good news is that motivations are changing. For generation X’ers and younger people starting their careers, remuneration isn’t their main motivation. This means that there is a lot bosses can do in order to retain their employees and avoid churn.
Encourage a healthy work/life balance
Juggling the stresses of work and family life has always been a challenge, but in today’s mobile world, it’s harder than ever. At the same time, modern employees demand greater control in the structure and flexibility of their jobs. As people go through different stages in their life depending on their age and family situation, their priorities will change. By offering flexibility that allows employees to change their working patterns depending on their current commitments and priorities, you will be able to better attract and retain employees and develop a relationship built on trust and loyalty. Not only that, but empowered employees who have control over their own working hours, are proven to be more motivated, more productive and to have better relationships.
There are also many ways to encourage a healthy work/life balance which positively impact on company culture without compromising efficiency. Access to exercise is a common benefit offered by many to help improve employee health and reduce stress, with obvious benefits for both employee and employer. Team building, away days and offering childcare facilities are other options.
A top down approach is key to getting this right and ensuring it becomes engrained in your company culture. Make sure senior managers are respecting employees’ personal time by avoiding emails and calls after hours or when away on holiday. Some companies are even introducing a ban on any emails sent after a certain time.
Training and progression
In a competitive market place, retaining employees is essential to reduce recruitment costs and to protect the loss of company knowledge, and is cheaper than re-hiring. Investing in your human capital can make a big difference to employee retention. By adding new skills and knowledge, you are investing in stability and future growth.
Four American companies - Southwest Airlines, Viacom, Dell, and Guardsmark - were used as examples during the last recession. They made the decision to invest in training during this difficult time, when other companies were cutting back. As a result, their loyal employees helped to ensure their survival.
Continuous learning should be part of everyday life at your company, and can be done through external resources, tuition reimbursement, utilising web based resources or through financial help for professional association memberships. Let your employees lead the direction to ensure it is an incentive. The best employees are ambitious. If they feel that they are learning new things and enhancing their knowledge and career, they will feel motivated to do their best for your business.
Rewarding good performance
Of course, salary cannot go ignored, and in order to get the best out of them, every employee will expect and deserve a pay rise from time to time. Some of the things you’ll need to consider are:
- When’s the best time to give a raise?
- How much should you award?
- Does each employee deserve the same amount?
- Is a raise the best way to reward good work?
The best managers regularly talk to their employees and take on board their feedback. Ask questions to find out if employees feel any dissatisfaction with their level of pay or any other area of their work. That way you can potentially resolve an issue that could lead to an employee seeking employment elsewhere.
Levels of pay should be in line with industry standards as a minimum if you want to retain the best people. Many executive search firms offer salary benchmarking services if you aren’t sure if the level of remuneration you are offering is competitive. Pay is also tied to other measures that affect job satisfaction, including feeling valued, maintaining expected lifestyle and keeping up with their cohorts. So if you want to reduce employee turnover, you will need to pay them what they are worth. Offering a good starting salary may help to attract good people, but increasing pay based on performance and progression is essential if you want to keep them. Adding a bonus into the mix is another way to encourage exceptional performance.
Align employee values with business values
More and more employees are choosing to work for businesses where there are strong values which align with their own. We recently wrote a blog about small businesses having a big impact through environmental causes. In The Sunday Times best small companies to work for list, including businesses with between 50 and 250 employees, many of the businesses at the top of the list lead on their values. One example is marketing agency BrainLabs, named the UK’s fastest growing company by the Financial Times, where employees take turns to sit on the agency’s green and social responsibility committee. There is an undeniable correlation between businesses who support charitable and environmental causes and employee retention. Businesses with strong values have greater camaraderie amongst employees, create a meaningful working environment, and have more reasons to recognise individual contributions leading to better employee engagement.
Whatever causes your business decides to support, make sure that it becomes a part of your DNA, and is included in corporate goals and messaging.
In conclusion, if you want to attract and retain the best people in your industry, make sure you have a handle on your company retention rates. You can easily calculate employee retention by dividing the number of employees who left during a period by the total number of employees at the end of a period to get the percentage. Try and split out retention rates for your best performing employees, which is where your retention efforts should be focused. If you have a high retention rate, there are likely underlying problems such as low employee morale, lack of progression opportunities, or poor management, which need to be addressed. Once you know how your company is doing, review your company culture and benefits package to incorporate some or all of the things discussed here, and then review your retention rates again.
Carl D’Ammassa, Group Managing Director, Business Finance at Aldermore, said: “It’s a job seeker’s market out there and this trend looks set to continue over the coming years. Talented workers within the SME industry are able to find new employment quite easily, with many individuals moving on when they feel they can get a better deal or could progress further and quicker in a different environment. Competition for the best industry talent has always been fierce and business leaders need to put measures in place to ensure their companies are attractive places to work for ambitious employees.
Remember, some employee turnover is to be expected, and can be a positive thing where employees have become complacent, or aren’t a good fit for your company culture. Use this as an opportunity to bring in fresh ideas and enthusiasm that will reinvigorate your team and drive productivity.
If you’re struggling to attract talented leaders to your business, download our FREE executive recruitment toolkit, with pro-tips and hiring hacks that make the process simpler, less expensive and faster.