Employee Retention Strategies to Cultivate a Loyal Workforce
By offering a combination of financial rewards and work-life balance, you can help retain your employees and keep them engaged over the long haul.
Employee retention strategies remain on the forefront of business leaders minds in a tightening job market as competition for talent steadily grows. Companies are faced with the reality of market forces driving up human capital valuations, requiring tactical actions to prevent further migration of talent. Evaluating your arsenal of retention strategies and distribution methods can augment your retention programs.
Employers Are Spending More To Retain Talent
The ADP Workforce Vitality Report (WVR) for the third quarter of 2017 indicates that jobholders' wages grew by 4.4 percent year-over-year (YOY) compared to 3.3 percent wage growth for job switchers. The ADP Workforce Vitality Index reached the highest level at 115.1 up 3.5 percent YOY, since Q3 2016.
Ahu Yildirmaz, co-head of the ADP Research Institute (ADP RI), reports that "as employers strive to retain skilled workers, we see wage increases for fulltime job holders in all sectors."
Service Sector Remains the Hot Spot for Job Switchers
Professional and business services have strong annual employment growth rate at 2.7 percent compared to the national average of 1.9 percent. This also makes it a hotbed for full-time job switchers, as they average a 5.6 percent YOY wage improvement compared to 4.4 percent wage growth for jobholders. Growth opportunities accelerated the average annual turnover rates hitting 27 percent in Q3 2017.
The leisure and hospitality industry also saw gains in employment growth, to the tune of 2.8%. Full-time job switchers earned a 6.9 percent YOY wage increase compared to 4.8 percent for jobholders. However, it is worth noting that this industry tends to have the lowest wages at $26.02 per hour compared to $40.37 per hour for jobholders in the professional and business services industry. Leisure and hospitality also has the highest industry turnover rates, which reached a two-year high at 50.1 percent in Q3 2017, from a low of 42.2 percent in Q2 2015.
Q3 2017 Top Growth Segments for Jobholders
In Q3 2017, jobholders that procured the highest wage growth were profiled as: Workers under the age of 25 averaged 8.8 percent growth. Employees with less than 3 years tenure scored a 5.4 percent gain. Leisure and hospitality had the highest wage growth at 4.9 percent. The western region had 4.8 percent growth. Midsized organizations accounted for the highest wage growth at 4.6 percent. Females edged out their male counterparts with a 4.6 percent increase in wages.
Pinpointing the Riskiest Turnover Segments
Logically, the lower the wages, the higher the turnover rates as evidenced by the 62.3 percent turnover rate for salaries under $20,000 and 18.4 percent turnover rate for salaries in the $20,000 to $50,000 range. These two categories have the highest retention risk, but also represent the lowest human capital valuation.
A surprising revelation in Q3 2017 was the 4.6 percent YOY employment growth for baby boomers aged 55 and up (the highest of any age group). This was accompanied by an 11.1 percent turnover rate, the highest level since Q2 2015 but obviously lowest among all age groups. This indicates the job market's appetite for seasoned workers that have harnessed their human capital value (HCV) through years of stable output. Their HCV is seen as transferable with the added by-product of experience and maturity.
Assess Your Arsenal of Retention Options
Rising demand and thinning supply are bolstering human capital valuations. Bottom line, companies will have to pay more for labor. Organizations should reevaluate long-term objectives and which segments take priority, then inventory their arsenal of viable retention strategies. These can be a mix of salary increases; lump-sum payments and variable pay incentives. Non-cash bonuses range from gift cards, memberships, profit sharing, restricted stock and options grants and augmented benefits programs. Lifestyle improvement bonuses include increased teleworking/work-from-home days, vacation and personal days and schooling and certification program sponsorships.
By offering a healthy mix of both monetary rewards and work-life balance enhancements, you can help retain your employees and keep them engaged over the long haul.