Developing recruitment partnerships

By NEHRA, 9/29/2003

Many employers today feel secure in the stability of their workforce. Unemployment is high while opportunities are few. Competition among candidates for what little career mobility does exist remains intense. Could employees really be looking elsewhere?

The answer is a resounding "yes", according to a new "Emerging Workforce" study conducted by Spherion, a human resources consulting and staffing organization, in conjunction with Harris Interactive. Capturing the work expectations and preferences of American workers today, the study revealed that more than half (51%) of the labor force report high interest in changing jobs. That interest could quickly become action as 25% to 39% of these workers indicate that they would like to make a job change within the next 6 to 12 months, and yet, another 20% to 30% would like to do so in the next 12 to 24 months.

If only one-third of U.S. workers makes good on the promise to go elsewhere, U.S. businesses may be looking at spending more than $600 billion in turnover expenses over the next 2 years.

A shrinking pool of qualified talent

One may ask, if the desire for career change exists among a large number of employees, are there sufficient opportunities? Dramatic demographic shifts will make skilled workers a scarce and precious resource in the coming years. Further, if one views the recovery of the U.S. economy as inevitable, there is little doubt that the single most discriminating factor for business success will be an organization's talent level.

According to the U.S. Census Bureau, the workforce will grow smaller, less experienced and more ethnically diverse within the next decade. By 2008, the median age of the workforce will be 40, compared to the median age of 35 in 2000. By 2010 the number of workers age 55 and older will have grown by almost 32%, while workers between the ages of 35 and 44 will have shrunk by more than 10%. About 20% of new workers in the next decade will be immigrants with perhaps limited command of the English language, making knowledge workers at any point in their careers more difficult to find. As skill requirements grow, so will the expectations of U.S. workers, many of whom are balancing work and personal responsibilities in dual income households.

Managers must stay focused on the basics

The Spherion study reveals that a large majority of U.S. workers say their employer has put the same or less effort into keeping them satisfied on the job during the economic downturn. Savvy employers, however, have not mistaken a slowing economy for a long-term talent surplus. Some organizations are focused on rallying the troops and ensuring that employee commitment, satisfaction and ultimately employee productivity remain strong. It helps business today, but also protects against losing talent, stability and momentum when the recovery begins.

Unfortunately, there is no magic formula in retaining talented employees. Employers must focus on the basics to create a fair, equitable work environment that enables contribution, growth and recognition for work well done.

While retention efforts must evolve to fit the workplace, Spherion and Saratoga Institute, a human performance measurement firm, have identified five core factors that have the most significant influence on whether employees stay or go:

• Culture & Work Environment
  Strong workplace communications, trust in employer and work relationships
   
• Compensation
  Fair pay equated with performance and effort expended
   
• Training & Development
  Training, mentoring, education and career development
   
• Supervisor Role
  Overall performance of supervisor, working style and relations with staff
   
• Growth & Earnings Potential
  Opportunities for new skill development, promotion and financial reward
   

Signs of the times

The relative importance of each retention factor varies from employee to employee and is also influenced by external factors such as social and economic events.

In a 1999 study, Spherion found training and development to be a particularly high influencer on retention among workers. This may have been driven by widespread focus on the knowledge economy during the late 1990s and the pressure to gain the right skills for the digital age.

Similarly, events such as the war on terrorism, economic uncertainty and the rise in layoffs most likely boosted the level of importance employees give to culture and work environment. Feeling well informed at work becomes more important during periods of uncertainty. Since the September 11 attacks on America, employees looking to spend more time with family have been closely evaluating their work environment, the place where they spend the majority of their wakeful hours.

Also due to economic concerns and continued downsizing, compensation has moved up on the scale as a concern since 1999 and is now the second most influential factor on employee retention and satisfaction. In uncertain times, employees are understandably concerned about job security. The downfall of corporate giants such as WorldCom and Enron has added new worries about the stability of businesses, pension funds and 401K investments. Inevitably, economic concerns take priority when uncertainties are high.

As the economy changes and workplace values evolve, the order of importance of the five major retention factors will continue to shift. While it makes sense to monitor these fluctuations, the result should not be a reorganization of retention efforts year-to-year or event-to-event in order to stay ahead of the game. Instead, organizations must consider their approach to each of the five critical retention factors and fine-tune each area so that retention efforts are flexible and comprehensive enough to meet the many challenges and surprises the future may hold.

Are employers making the grade?

A snapshot of how U.S. workers in 2003 grade their employers on the five core factors of retention provides further insight. The Emerging Workforce study found that a strong majority of employees rate relationships with supervisors as excellent or very good, giving supervisors high marks as a positive retention booster in many of today's workplaces. Culture and work environment also received strong marks. On the other hand, less than one-third of U.S. workers approve of how their employers are handling compensation, training and development, and growth and earnings potential. These deficiencies outline key areas where employers can focus retention improvement efforts.

Employees see a lack of growth opportunities in their organizations, whether that is in training, promotional opportunities, pay or career advancement. Now may just be the time for employers to carefully examine and bolster any weaknesses in these areas that could elevate employee turnover in the future.

The roadmap to higher retention

The five basic influencers of retention serve as a roadmap that can help employers review and even score their own retention efforts. While retention is a complex issue, clues to addressing these issues are near at hand. By just asking employees, every organization can create a roadmap to tackle retention challenges.

Companies are hard pressed to improve retention without reliable feedback from employees on the programs already in place. Conducting focus groups and cost-effective surveys can position a company to better understand its strengths and weaknesses as the economy improves and employment opportunities become plentiful.

Through employee feedback and fine-tuning of specific programs such as training or performance-based compensation, employers can make valuable improvements in retention without extensive investments in entirely new programs.

Leverage free agent flexibility

It is also important to note that as the boundaries of the workplace continue to expand, more and more employees are becoming "free agents." A free agent worker is defined as an independent contractor, consultant or small business owner operating outside the traditional confines of the workplace and employer-employee relationship to self-manage work opportunities and career growth. Both technology advances that allow people to work anywhere and the desire among today's workers to have greater control over their career development have led to a significant and growing free agent population. Author of the best selling book Free Agent Nation (2002) Daniel H. Pink estimates that 33 million workers, or more than 20% of the total labor force, are already free agents.

Organizations can keep ties to many valuable workers who become free agents by promoting a strong alumni network. They also can integrate flexible arrangements and contract and project-based work into the workplace to continue to benefit from the knowledge and skills of the free agent population.

The next wave of profitability

Managers face tough decisions daily on the allocation of time and resources during a down economy, but complacency in the area of retention could be very costly. With 36% of the average company's operating expenses comprised of labor costs, according to the Saratoga Institute, human resource strategies play a critical role in future success. With great gains in productivity already realized from the overhaul of technology and capital structures, the next wave of profitability belongs to those companies that excel at securing and leveraging the best talent.

Virginia M. Lord is Northeast regional managing director of Spherion Human Capital Consulting and is a NEHRA member. She can be reached at 781-565-0980 or virginialord@spherion.com.