The First Step Towards Change is Awareness
Facing the tightest labor market in decades, recruiting, and retaining talent today is no light issue. In our “point, click, find a new job” world, companies are fighting aggressively every day to win the war for talent, that is, all available and qualified candidates.
Approximately 4.3 million people didn’t come back to work after offices and businesses generally reopened in August 2021. The average number of retirements per year is typically around 1.5 million, but in 2021 the pandemic persuaded double that annual number of workers -- or three million – to do so. Repercussions from this “Great Resignation” have included a radical menu of changing priorities and tactics impacted by a labor crunch, persistent inflation, and intense, new business pressures.
Consider the following:
- The “war for talent” topped the list of risks that C-suite executives expected to grapple in 2022. According to a PwC Pulse Survey of 678 executives:
- 48 percent identified talent acquisition and retention challenges as the biggest concern
- Supply chain disruptions and vulnerabilities followed
- Companies have implemented – and will keep – a range of methods to retain workers, including hybrid work options, escalating career advancement, improving compensation, and make remote work a permanent option
- A 2021 survey of 1,404 workers by software company Ceridian showed compensation is a top driver:
- 49 percent stating they seek higher salary and better benefits
- 39 percent want greater flexibility, such as remote work and flexible hours
- 36 percent of workers would consider leaving their current job for the right opportunity
- 24 percent are looking for a new job
- A 2022 Gartner survey found companies willing to shorten the work week and reduce employees’ hours to justify keeping compensation flat rather than increase employee compensation.
- Finally, a 2021 Grant Thornton study found:
- 51 percent of surveyed U.S. employees are willing to give up a 10 to 20 percent salary increase if they received flexibility for when and where they work
- 46 percent of HR leaders polled indicated their companies are looking into reducing office space and providing further remote or hybrid work opportunities to greatly expand the pool of potential workers
Organizations today are literally buying entire companies to retain the “best and brightest” employees. A major aim of new mergers and acquisitions activity is acquiring companies’ workers -- especially in the Technology and Business Services sectors.
IT consulting firm Accenture PLC invested approximately $4.2 billion across 46 acquisitions in its 2021 fiscal year in part to “add skills and new capabilities in strategic, high-growth areas of the market,” a company spokesperson said.
Sign-on and Retention Bonus Growth
Employees and new hire candidates have the upper hand today in negotiating and are aware of their new advantage. Sign on bonuses are commonplace in every industry. According to GlobalData, advertisements offering a sign-on bonus have increased across all sectors by a whopping 454 percent in one year, from 10,312 positions in August 2020 to 57,123 in August 2021.
And it’s not limited to white collar jobs: The American Trucking Associations announced a historic shortage of 80,000 drivers nationwide in late 2021 with the shortage most noticeable among long-haul drivers who are retiring or trading life on the road for other jobs.
Retention bonuses are also on the rise to stop employees from leaving a job. According to Employee Benefit News, it costs 33 percent of a worker's annual salary just to hire a replacement. Businesses should also proactively address salary differences to not lose employees.
Relocation Related Retention Strategies
If not merging or acquiring a firm to get top employees to support your business, what are some of the top relocation-related strategies to support the war for talent?
Take a hard look at your relocation policies and, if possible, benchmark them against industry best practices and competitors. Can they be adjusted with new benefits to help put talent on the front lines immediately? Do policies need to be changed slightly or completely re-packaged to get the job done? Do they still accurately address competitive pressures, shifting market trends, new demographics, company culture and business drivers?
Increased Discretionary Offerings
For candidates needing relocation assistance, part of what can set an employer’s offering apart from other competitors is a creative, well-developed relocation policy and associated benefits. Many organizations are giving recruiters and hiring managers increased financial freedom and/or “back-pocket” discretionary relocation offerings when it comes to negotiating with “must hire or retain employees or candidates”. Such benefits might be above and beyond “the traditional”, but can help hiring managers and recruiters successfully negotiate with candidates while simultaneously showing the company as generous and flexible.
NEI is seeing more companies offer homeowners a guaranteed buyout or buyer value option home sale benefit and more current renters the benefit of new home closing costs. We are also seeing more exceptions for temporary living and household goods. Other benefits companies actively promote include:
- Pre-established amounts for spouse/partner career or job-finding assistance in dual income households with concerns about job opportunities in the new location
- Elder care assistance for multi-generational households
- Educational assistance for appropriate school searches in the new location
Granting relocation policy exceptions in such a tight labor market helps move offer acceptance rates, aids recruiting and can certainly support retention efforts. In fact, NEI sees fewer companies cutting back on relocation benefits and more expanding relocation services to entice employees to accept company move offers.
Companies are “pulling out all the stops” today to support recruiting and retention efforts. This includes integrating heightened levels of service that relieve most of the time-consuming relocation burdens experienced by top executives, critical talent, and those with unique needs – such as employees needing an extra level of service because they are caring for aging parents or children with compromised health concerns.
Services such as NEI’s ExtraCare guarantee an enhanced and customizable relocation experience that gives clients the ability to streamline their most important moves. With so much on their plate already, employees receiving a service like ExtraCare will minimize time spent coordinating appointments with relocation service partners or processing reimbursable expenses – leading to increased employee satisfaction and productivity.
The Second Step Towards Change is Acceptance
We live in an era where companies need to continuously evolve – just to compete. After the pandemic and with strong headwinds from global inflation, companies are fighting rising costs in numerous business areas.
It’s clear that compensation is important, but most executives feel they cannot buy their way out of this problem by paying more for every candidate. As more workers retire, it’s important to promote the right support programs. Between shifting employee values and company policies, this may include compensation, relocation benefits, flexible work locations and hours, career development opportunities, or extra services to name a few.
With so many choices, a flexible approach is a sound approach. As research and consulting firm Gartner recently commented: “With continuing changes around hybrid, annual compensation and societal issues, work will continue to be volatile in 2022…Flexibility around how, where and when people work is no longer a differentiator; it’s table stakes. Employers that don’t offer flexibility will continue to see increased turnover.”
If you would like to review your policy or discuss how to further enhance your company’s talent strategies in this challenging environment, please reach out to your NEI representative at any time.