Employee Retention Heading Into 2022: How the World of Work Has Changed
Are you struggling to retain your top employees in this labor market? Utilize these employee retention strategies for 2022 and beyond.
Employees are quitting in droves, spurring the “Great Resignation” and hobbling employers’ retention efforts. While the reasons are varied, the most-attributed cause is the COVID-19 pandemic. Indeed, the virus has remarkably changed the world of work — and employers must adapt or see their business fold.
What’s fueling the Great Resignation?
Nearly half of U.S. executives report a higher or much higher turnover than normal at their organization in the past 6 months.
The Bureau of Labor Statistics (BLS) says 4 million Americans quit their jobs in July 2021. Resignations peaked at 2.8% in April, dropped to 2.5% in May, and then rose to 2.7% in both June and July. Additionally, a record-breaking 10.9 million jobs were available at the end of July.
Over 40% of American workers are actively looking for a new job, or intend to do so shortly — according to a 2021 report by the Society for Human Resource Management (SHRM). Note that this is double the rate in 2019. Moreover, nearly half of U.S. executives report a higher or much higher turnover than normal at their organization in the past 6 months.
According to SHRM, “While some workers could rise to the occasion when the COVID-19 pandemic hit, others struggled.” Also, “Many people managers couldn’t handle the challenges brought on by the pandemic.”
Per the SHRM report, the top reasons employees give for leaving are:
- Better compensation, work-life balance, and benefits
- Career advancement opportunities
- Wanting to make a career change (The pandemic made employees more aware of what they truly wanted out of a job)
Gallup states that employee engagement is rising, and the number of actively disengaged employees has dropped to a new low of 13%. However, 53% of employees are not engaged. These employees will come to work and do the bare minimum but will also quickly jump ship for a more attractive offer.
Retirement, unemployment benefits, family responsibilities, COVID fear
Another factor is early retirements. More Baby Boomers are leaving the workforce than ever before, and the COVID-19 pandemic plays a significant role in this acceleration.
There are also reports of people quitting due to being eligible for stimulus payments or unemployment benefits. In most cases, people who quit their jobs do not qualify for unemployment benefits. But due to COVID-19 reasons, some job quitters have received unemployment assistance during the pandemic.
Other workers chose not to return to work because of childcare or eldercare responsibilities, or fear of contracting COVID-19 on the job.
How unemployment benefits impact retention
The enhanced (pandemic) federal unemployment benefits, which ended in September 2021, has been much debated by economists, business groups, and employers. At the heart of the argument is whether the expanded benefits were incentivizing people to not work — and the answer really depends on who you ask.
Considering how tough it is to find skilled workers, it’s important to hold on to productive employees.
What’s not up for debate, however, is that employees who are let go through no fault of their own are eligible for unemployment benefits. This type of involuntary termination can increase the employer’s state unemployment tax rate. Also, replacing an employee can cost you one-half to two times their annual salary — and that’s a conservative assessment.
It’s worth noting that some employers are not confident that their hiring challenges will get any easier, even though the expanded unemployment benefits have ended. Considering how tough it is to find skilled workers, it’s important to hold on to productive employees.
The labor market is hot right now
As explained by ManpowerGroup, “Today we are in a worker’s market. There are more open jobs than before the pandemic, and fewer people in the labor force.”
Generally, when the labor market is hot, workers are more confident about quitting their jobs, because they know they will be able to find a new (or even better) one. They also have the luxury of transitioning right away to a different job, or taking a short break before switching.
The bottom line is that skilled workers are in high demand. To compete, employers must understand (and strive to meet) the needs of these sought after people — especially since retention hurdles are expected to persist in 2022.
Retention forecast for 2022
In a 2021 survey by Willis Towers Watson, North American employers said they “expect challenges in attracting and retaining talent to continue through 2022.” Specifically:
- 73% of respondents are having trouble attracting employees — nearly 3 times the number (26%) reported in the previous year. Nearly the same number of employers (70%) expect the problem to remain in 2022.
- 61% of respondents are having difficulty retaining employees and believe the problem will linger into 2022 — compared to only 15% in the previous year.
The survey found that employers are having the most challenges attracting and retaining:
- Employees with digital skills
- Hourly workers
- Production/warehouse workers
- Hospitality/restaurant workers
73% of respondents are having trouble attracting employees — nearly 3 times the number (26%) reported in the previous year.
How employers are responding to retention woes
To curb increased turnover, employers are:
- Applying a broader emphasis to diversity, equity, and inclusion
- Raising salary increase budgets, from initial projections
- Boosting workplace flexibility
- Offering tuition reimbursement
- Allowing employees in certain jobs to work from anywhere
- Providing off-cycle promotions with salary increase
- Awarding spot bonuses and referral bonuses
Other retention strategies for 2022 and beyond
- Take a data-driven approach to improving retention. This strategy can help you figure out how many people are quitting, why they are quitting, which employees are at the highest risk of quitting, and how to keep them from leaving.
- Know the signs of “intention to quit.” If you notice any, tackle the root causes.
- Develop a customized retention program. Ensure it fixes the specific issues occurring at your workplace.
- Reduce employees’ work hours instead of laying them off, when possible. If your state has a workshare program, consider participating.
- Lower employee job stress by offering health and wellbeing benefits. In addition, provide a safe and healthy work environment.
- Hire the most qualified person for the role. This will help minimize poor job/organizational fit.
- Give employees the resources they need to stay motivated and productive. These could be training, mentorship, ongoing feedback, professional development, team collaboration, self-service technology, and career advancement opportunities..
- Offer remote work or hybrid work opportunities, if appropriate. One study shows that 65% of employees are willing to take pay cuts to work entirely from home. Another study reveals that 83% of employees prefer a hybrid work model, which enables them to sometimes work remotely and sometimes onsite.
- Monitor your remote team for burnout. As the pandemic stretches on, many remote employees are suffering from burnout, especially working mothers.
If the job cannot be done remotely, make sure you have a plan for ensuring the safety of onsite employees and addressing their concerns about COVID-19 exposure.