February Job Growth Trends: The U.S. Economy Barrels Toward Full Employment
U.S. job growth trends remain extremely strong despite some negative factors in the global economy. According to the ADP Research Institute's February ADP National Employment Report, 214,000 positions were added in the U.S. private sector. Growth at large organizations was particularly robust, with 76,000 positions added. The services-providing sector accounted for nearly 208,000 new positions. Mark Zandi, chief economist of Moody's Analytics, states that "despite the turmoil in the global financial markets, the American job machine remains in high gear" and "full employment is fast approaching."
Fortune describes the job market's current status as one of the fastest periods of growth since the late 1990s, which is counted among the "strongest periods of economic growth in American history." Ahu Yildirmaz, vice president and head of the ADP Research Institute, regarded the growth rate as "surprisingly strong," particularly because of the instability of international markets and a strengthening dollar, which historically have a negative impact on large employers. As CHROs and other business leaders consider these recent job trends, understanding the potential organizational impact of near-full employment is important.
Prepare for Job Switchers
Higher employment can result in fiercer competition among organizations to recruit top talent and an abundance of opportunities for job seekers. The ADP Workforce Vitality Report has noted a strong trend in "job switchers," or individuals who switch jobs as a way to achieve wage growth or improvements in total compensation. Leisure, hospitality, education, health, finance and information are among the industries that may offer the highest increases in compensation for job switchers.
HR leaders must be conscious of increased opportunities for talent to jump ship in a market that favors job seekers. Ensuring your wage growth for job holders is competitive with your region and industry can reduce the appeal of defection for employees. Prioritizing nonfinancial aspects of total compensation, including benefits and flexible workplace options, could also offer protection against job switchers.
Tailor Your Work Environment to Top Performers
In today's global economy, some employee turnover is inevitable. The historic norm of employees who stay loyal to a single employer for life is no longer reflective of today's talent or job market. In light of these trends, Harvard Business Review (HBR) recommends that employers double down on retention tactics for high performers. The priorities of your best workers or most hard-to-replace talent may not be reflective of your workforce as a whole. HBR indicates that top talent is most likely to prioritize the following:
- Competitive compensation (66 percent)
- Bonuses and merit-based compensation (55 percent)
- Retirement plans (45 percent)
- Supplemental training programs (44 percent)
CHROs should work internally to benchmark talent according to skillset, performance and potential and develop metrics to prioritize organizational improvements in accordance with top talent priorities. In today's job market, it's impossible to please everyone. However, by specifically focusing your retention efforts on your best employees, you may be able to significantly mitigate your risks.
Balance Employer and Employee Priorities
In light of recent U.S. job growth trends, HR leaders should strive for a sense of balance as they shape a strategy to increase retention. For example, requiring employees to sign non-compete agreements can protect your organization, but these types of measures most often find success when coupled with improved employee engagement programs.
As the U.S. economy barrels toward full employment, HR leadership should realize that when talent is scarce and opportunities are abundant, job switching is inevitable. Because of this, it's become clear that CHROs should rethink and reshape their retention and total compensation plans to stay competitive in a market where the job seeker has the upper hand.
