Workforce Retention Strategies in a Zero Unemployment Economy
Jessica Miller-Merrell | HR| By
U.S. job openings surged to record high levels this year as companies struggle to find people with the talents they need. Economists recently have reported that we have now reached zero unemployment, which is a level at which there are zero percent of job seekers who are unemployed actively looking for work. With the continued growth of the job economy combined with more options than ever for adult workers in the areas of freelancing and contract temporary labor, companies are struggling with retaining their top talent.
Recruiting and Retaining Employees in a Zero Unemployment Economy
Today, there are more than 6 million vacant jobs that American workers are unable to fill—the highest level on record, according to the Bureau of Labor Statistics. Meanwhile, 6.8 million unemployed Americans are looking for jobs, and the labor force participation rate is 63 percent.
As competition continues to increase, so do salaries, making employee retention of your best workers more important than ever before.
However, it’s not enough to simply retain your workers. Companies are moving beyond creative company perks and focusing on other retention and employee growth strategies to keep their workers happy, active, engaged and excited to come to work. A study by Glassdoor found that over half of employees believe if they lost their job they would be likely to find a new job matched to their experience and current compensation levels in the following six months.
As the economy continues to improve and employees have more job options, companies will have to provide additional compensation, expand benefits, and improve their employee experience. Here are some trends companies are using for workforce retention in a zero unemployment economy.
Companies are having trouble finding suitable workers due to a growing skills gap. Many are offering training programs at work as a perk, such as online courses from subscription services like Skillshare and tuition reimbursement, along with flexibility to attend learning and development programs. Today’s workers know the market and are as interested in furthering their education as they are investing time in their current jobs.
Training and development opportunities can help companies not only with retention, but also with developing their next generation of leaders.
Dedicated “Employee Experience” Leadership
In the past year, companies have paid more attention to improving their employee experience, paying attention to the ongoing interactions with their office environment, customers, supervisors, and peers that influence employees’ behaviors and satisfaction at work. Companies such as GE, L’Oreal, and Cisco have senior leaders with the title of “director of employee experience.”
If you don’t pay employees fairly, they will leave—and no perk will change their mind. A new poll by 60 Minutes and Vanity Fair found that the best way to keep an employee motivated is money, and 35% of respondents said it was the most important thing they look for in a new job. This also ties into career mobility. Opportunities for growth that go along with promotions and higher salaries are imperative to employee retention.
Pay more now, or pay even more later. It costs employers more to fill new positions than to increase salaries to retain top talent.
Flexible Work Hours
A global study by EY reports that 74% of workers want “the ability to work flexibly.” This could include flexible hours, telecommuting, and other types of work arrangements. It’s a candidate’s market, and while setting traditional work hours may seem more expedient to the work at hand, employees are looking for positions that offer flexibility as a perk, anything from flexible start and quit times (for employees with children in daycare, for example), to the opportunity to work remotely and save time and money on their commute.
Some companies are leery of offering unlimited paid time off as a perk, concerned that employees may abuse it. PTO, particularly in programs that allow employees to roll over and bank unused time, can represent a significant accrued expense for the organization. However, anecdotal evidence shows that employees take even less time off when offered unlimited PTO and treat it like the perk that it is. From SHRM:
“Some employers have already adopted unlimited vacation time with good results. These organizations include some start-ups, rapidly growing companies with innovative cultures and other organizations that see this approach as a natural extension of the modern corporate environment where work routinely gets done outside of the traditional 9 to 5 timeframe. The change can potentially lead to a more engaged workforce because management is trusting employees to manage their own time in a way that serves their personal needs while still getting the work done.”
The Bottom Line
Employers who want to win the talent war will have to step up their game when it comes to training, salaries, opportunities for advancement, and flexibility. Other perks like catered lunches, services like dry cleaning pick up and grocery delivery at the office (all with an eye on work-life balance) can also contribute to employee satisfaction and retention. In a zero unemployment economy, change must happen within your organization or you’re at risk of losing your best employees to another company who has better to offer.