In this week’s edition of Augusta Business Daily’s “Mondays with Rick,” Gary Kauffman and I discussed the issue of retaining employees. We talked about how retention is critically important during times of tight job markets, such as those we have been experiencing in recent months and years. We had been expecting a little relief in the job market due to an anticipated recession, given the Federal Reserve’s increase of interest rates in the face of high inflation. However, recent economic data indicate an increasing likelihood of a “soft landing,” meaning that we might avoid a recession completely, or if we do have a recession, it will be short and shallow, with a very limited effect on employment. If that is the case, we will likely have a tight job market for the foreseeable future. As I have often argued, a company’s best weapon in a tight job market is not necessarily strong recruitment, but rather the ability to retain your existing employees. Following my discussion with Gary, I have talked with many employees, particularly younger ones, to see what they see as the best tools to retain them in their current jobs.
As I have noted in previous columns, higher salaries and other financial-related benefits (e.g., health insurance, retirement contributions) often are most helpful in attracting new workers, particularly those early in their careers. In other words, recruitment of employees is often driven by financial incentives. This was confirmed to me in my recent discussions with young adult workers. However, when it comes to remaining at his or her current company, those financial aspects of the job become “table stakes” to the employee. By table stakes, I mean that for existing employees, a strong financial package will keep you in the game, but it will not win the game to retain your employees. Your employees, particularly the younger ones, are looking for other things to be convinced to stay with you.
In my “Mondays” discussion with Gary, we went into significant detail about workplace culture and how it is playing a predominant role today in employee retention. So, I will not rehash that discussion here other than to say a couple of things. First, if you think overpaying employees will make up for a poor workplace culture, you are sadly mistaken. Second, if you have not examined your culture or asked your employees what they think of your culture, do not hesitate in doing so as soon as possible.
In addition to workplace culture, another thing we touched upon in our “Mondays” discussion was employee desire for the opportunity for development and advancement. Along with culture, the young people I talked to indicated that having their company invest in their personal and skill development significantly increases their likelihood to stay with the company. When it comes to advancement, all of those that I talked to addressed the importance of seeing a pathway for advancement in their company. While some had unrealistic timelines for moving up, most were more concerned with knowing what the pathways were and how to move along them.
However, what struck me most when discussing retention with young workers, was their desire to work for companies who demonstrated their concern and investment in their well-being. What was also clear was that these employees saw well-being as being multi-faceted. They saw their well-being in terms of physical health, mental health, financial wellness, social wellness, and happiness and they provided examples of how their companies supported them in each of these areas.
A few of the people I talked to discussed that their company either had a gym/exercise equipment in their office building or their company provided them a gym membership near either their office or home while also providing them time to work out. This demonstrated an investment in their physical health. Some also mentioned having the ability to speak to their supervisors about burnout or having access to therapists for any mental health issues they might be experiencing. A number also mentioned additional Personal Time Off (PTO) to deal with such issues or family stresses (e.g., parent illness). Additionally, a number also discussed how their company provided financial wellness training so that they would be better able to manage their finances to plan important purchases and reduce financial stress.
Lastly, a couple of people I spoke to were heartened by their company’s concern about their social well-being and happiness. They indicated that their companies were working with them when they found that their remote working environments isolated them socially and made them unhappy. Finally, some others discussed how their companies provide transportation assistance to make their commutes easier or bring in breakfast and lunch food as a regular office perk. These thoughtful measures by the company appeared to engender more loyalty to the company from the employee.
As you can see, the war to retain employees is heating up! A good salary and benefits are necessary, but not sufficient conditions for employee retention. Good culture, opportunities for development and advancement, and employee well-being are the new battlegrounds to keeping your best talent. If you have not already, it is time to be fully armed for employee retention!