The current economic situation has resulted in a bizarre labour market that looks healthy and unhealthy at the same time.
For example, in the UK unemployment levels are relatively low considering the economy temporarily shrank by over 15% during the 2020 Covid pandemic year. The BBC reported that in May 2022 the number of job vacancies exceeded the number of officially unemployed adults for the first time since records began.
This results in good outcomes for employees, such as greater security of employment and less pressure on the individual if they are made redundant as there are plenty of work opportunities available elsewhere.
However, this flips on its head for companies, some of which are chronically understaffed and unable to fill vital vacancies that will allow them to resume normal operations. This employment crisis is leaving fruit rotting in the fields and airports unable to process the summer boom in holidaymakers.
While recruitment remains this difficult, companies must retain as many staff as possible to maintain service levels and alleviate the burden on their HR teams, and the financial pressure on their cash flow.
Here’s a summary of methods companies could use to retain their staff this year:
Conduct a market-based pay review to ensure that salaries are competitive
A number of firms use internal ‘bandings’ and performance reviews to decide how much to pay staff and what pay rises should be applied year on year. In periods of low inflation, this provides a fair and transparent way to link performance to pay and provide employees with a progression in their salary.
However, with inflation currently sitting at 11% and wages surging in many industries, a purely inward-looking pay review process is likely being completely outpaced by other employers desperately bidding to attract new employees.
Your employees aren’t naive and will be aware if competitors are hiking salaries to poach talent, therefore you will need to respond to retain your team.
Conduct an external pay review, possibly with the assistance of an external consultant to provide assurances to your staff that your pay remains competitive with the rest of the market and should give them no reason to pro-actively look around for more compelling packages.
Focus on total reward
Total Reward is a more comprehensive definition of employee remuneration than Basic Pay or even total Gross Pay.
Total reward includes all cash remuneration, (such as salary, bonus, pension-matching), all benefits-in-kind (such as private medical insurance, cinema memberships and dental plans) as well as genuine discount schemes (such as 5% off groceries).
Having a respectable total reward package isn’t enough. You’ll need to ensure that this is communicated widely to employees. The value of supplementing salary with a variety of other perks is that the employees recognise and value the contribution you are making. Many companies take the step of using their HR/Payroll system to calculate the total reward of each employee and allow them to view it annually as part of their pay review.
Seeing it as a single number is very powerful and can be a motivating moment for the employee, who may not have realised how generous your company is when all things are considered. This single finger may remain in memory the next time a competitive salary offer from another firm crosses their desk.
Act tough on poor managers
Losing a great manager can be a demoralising experience but watching a poor manager leave can have the opposite effect.
Don’t underestimate the effect that senior managers have on the teams they lead. Put great effort into retaining the good eggs and spend more time addressing employee concerns or complaints about bad ones.
A bad manager is probably doing financial harm rather than good for the business, so they are not worth protecting for the sake of ‘saving face’ for the broader management team. It sends an excellent message to the whole organisation when action is taken over unethical, unprofessional, or unfair behaviour from a senior manager.