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Tuesday, Feb 27, 2024

Disruptions in the Labor Market

The Great Resignation has leadership teams everywhere asking critical questions such as: How much longer will the increased resignations continue? How do we hold on to our best employees? How do we recruit more top talent?

According to the most recent data from the U.S. “Job Openings and Labor Turnover” (JOLTS) report, a record 4.4 million people quit their jobs in September of this year, after a record 4.3 million quit in August, and a record 4 million in July. While there is debate about whether those numbers will continue to set records in the coming months, it is relatively certain that the rate of people leaving voluntarily will remain high as remote and hybrid work changes the labor landscape for all of us.

So, while trying to protect ourselves from the tiring—and costly—consequences of high turnover rates, we must adapt to remain attractive to our best employees and top candidates.

Interestingly, Ian Cook and a team at the Harvard Business Review conducted an analysis of more than 9 million employee records from more than 4,000 companies and found that “employees between 30 and 45 years old have had the greatest increase in resignation rates, with an average increase of more than 20% between 2020 and 2021.” (“Who is Driving the Great Resignation,” Harvard Business Review)
The obvious reasons for anyone to leave a company are dissatisfaction and better alternatives, and exit interviews offer direct insight as to what made a particular employee feel compelled to leave, but don’t discount that it might be a seasonal issue as well. Organizations that give bonuses may find that resignations are highest in the weeks and month following the distribution of those bonuses. Often times, those employees decide months in advance that they are ready to leave and have elected to hold-on for one last pay-out.

Talk of stay interviews are popping up everywhere now, and with good reason—it’s the proactive version of an exit interview. One of the best ways to get intelligible data on the matter is to go straight to the source. These one-on-ones between leaders and the staff can be a great starting point to understand what motivates employees to stay at your organization, what could be better about their work experience, and how they envision the next stage of their career within the organization.

Leveraging the insight gained from stay and exit interviews, develop or expand your employee retention program. The best retention programs begin with top notch recruiting practices. Employees tend to stay longer when their own values and vision are aligned with that of the organization’s; learning this during the recruiting phase can save time and money down the road.
Once you have identified and acquired top talent, now you need to keep them. According to Employee Job Satisfaction and Engagement: The Doors of Opportunity are Open—a report by the Society for Human Resource Management (SHRM), employees identified these five factors as the leading contributors to job satisfaction:

1. Respectful treatment of all employees at all levels.
2. Compensation/pay.
3. Trust between employees and senior management.
4. Job security.
5. Opportunities to use their skills and abilities at work. (SHRM report)

Beyond those key factors, some of the most effective retention tools & strategies I’ve used at my firm or seen my clients use in their organizations include:

• Benchmarking: Use benchmarking surveys to learn information about how the organization compares to its competitors on issues such as pay, benefits, bonus plans, and turnover.

• Strategic Onboarding: Ensure the onboarding process echoes the values and vision described in the recruiting process and build in adequate socialization opportunities for new hires to meet the staff.
• Mentor or Buddy Programs: Assign a dedicated team member, who isn’t a direct supervisor, that an employee can turn to with questions about the organization or for career advice.

• Learning & Development Programs: Employees with more access to training (in both hard and soft skills) are more inclined to stay. Consider going beyond the standard professional development opportunities, too; reportedly, 80% of Millennials and Gen-Zers would consider leaving a company that doesn’t offer personal development opportunities as well.

Most leaders, or at least the good ones, have always known that by taking care of your staff, you are protecting your organization’s largest asset, and the last two years have really underscored that in no uncertain terms. We must be proactive, adapting to the disruptions in the labor market, to safeguard our business as a whole and position our organizations for continued success.

Michael Kaplan, CPA, is managing partner at Miller Kaplan. Learn more at millerkaplan.com.

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