Retaining top-tier employees should be a major concern for HR leadership as organizations face increasing turnover rates and outside competition for their best talent. According to the ADP Workforce Vitality Report, wage growth continues to be a trend as a result of organizations working to improve retention. Turnover is on the rise and is becoming a concern for organizations' leadership and star performers. In the last quarter of 2015, the yearly turnover rate across industries was 24.4 percent, up from 22.9 percent from the first quarter of the year.
Understanding Turnover and Wage Growth Dynamics
Although the highest turnover rate was most often reported at the lowest wage and age categories, there was still significant movement among top-tier staff. Among employees aged 35–54, the turnover rate was 16.1 percent, and it reached 9.8 percent for workers over 55. Similar trends were reflected in the highest-earnings brackets, with turnover rates of 7.9 percent for employees making between $50,000 and $75,000 annually and 6.9 percent for workers making more than $75,000.
At the same time, yearly wage growth nationally for job holders was 4.1 percent when the same employee's wages are tracked through the year. Among employees in the $50,000 to $75,000 category, wage growth was slightly higher at 5 percent, up from 4.7 percent at the beginning of the year. Workers making more than $75,000 per year, wages grew at 3.7 percent among job holders and 4.1 percent among job switchers, respectively. Except for the highest paid group, $75,000 and above, job switchers' wages grew at a faster pace when they changed one full-time job for another compared to the job holders who held same full-time job.
With the improving economy, it is clear that high-value employees are finding more jobs on the market and taking advantage by making a job switch to significantly increase their salaries. As job openings continue to soar, you should look for ways to prioritize retaining these high-level employees.
The following is a look at five strategies CHROs can employ to increase the competitive value of their organizations to yield higher retention rates among top-level employees:
1. Focus on Salary Equity
As highlighted by the disparity in wage growth between job holders and job switchers, it often pays to change positions. Because of this, organizations may need to reevaluate conservative internal wage equity structures. It may be necessary to increase merit-based and annual raises to keep pace with market changes, stave off attrition and improve retention. Increasing total compensation in the form of bonuses, profit sharing and benefits is also a possibility to consider.
2. Implement Achievement Recognition and Engagement Programs Now
According to a study published by the Aberdeen Group, best-in-class organizations are 21 percent more likely to have formal recognition programs in place. More importantly, organizations with formal programs that measure engagement are 24 percent more likely to have employees who rank themselves as highly engaged. A stronger focus on employee engagement as part of the talent management mix can help reduce turnover.
3. Leverage Trends and Internal Data for Decision Making
Organizations now have more data about the trends that are affecting their industry, region and organization. Leveraging internal and external data can help organizations develop customized retention programs. Internal employee intelligence provides organizations with the information they need to understand how their employees really feel about their benefits, compensation and the organization overall.
4. Improve Talent Management at Top-Tier Levels
Leadership management, coaching and incentive plans can be a big part of targeted talent efforts geared toward increasing top-tier employee retention. Actively challenging and demanding more from top levels of the organization should serve to keep them motivated and increase feelings of ownership for the projects they are responsible for.
5. Manage Hiring Costs
As CHROs address the realities of turnover, there is an increased focus on recruitment. With more competition in the job market — especially for top talent — it's more expensive and complex to attract the best talent. Technology, tax credits and streamlined hiring processes can help manage costs while efficiently filling important positions.
The fight to retain top employees will continue to be a primary focus for HR leadership. By understanding what their employees want, recognizing their achievements and challenging them to do more, organizations will have the best chance of keeping their best and brightest.