In many parts of the country, unemployment has decreased over the past few years. Currently, national unemployment is at a four-year low, at 7.4% - down from 10% in 2009 - and even lower than 5% in some big cities, such as Seattle.
This growth of the economy is not only good for employees in terms of having a steady income to support themselves and their families, but in terms of benefits as well. Now that each individual is more competitive in the workforce, employers are feeling the pressure to offer perks and benefits to retain key employees and keep them from looking for jobs elsewhere.
The Majority of Employees Do Not Feel Engaged at Work
A recent study from Gallup found that only 3 out of 10 Americans feel engaged at work, while 50% feel “just kind of present” and 20% were actively disengaged. These days, there’s less preventing disengaged workers from finding a new job that makes them feel more fulfilled.
Data from the U.S. Bureau of Labor show that the number of workers voluntarily leaving their job is up more than 10% in the last two years. HR professionals are even calling 2013 “the year of retention”.
The Costs of Employee Turnover
A study by SHMR suggests that it costs an employer 6 to 9 months in salary each time they have to replace a salaried employee. For a manager making $40,000 a year, that's a cost of $20,000 to $30,000 in recruiting and training expenses, along with other intangibles. But other studies predict that the cost is even more, and can cost up to 2 times the employee’s annual salary, especially for a high-earner or executive level employee. So, the incentive to keep key employees is obvious from a personnel, morale, and budget standpoint. (Read more about the cost of losing employees here.)
Increase in Hires, and Pay
As an example, Seattle is seeing huge increases in both pay and hiring. In 2010, worker’s pay fell as much as 2%, but began to rebound in 2011. Since then, workers have reported pay increases as high as 3.9%, compared to a national maximum increase of 2.9%.
However, 23% of employers in the Seattle area report that they are planning to hire more workers in the next quarter. However, it’s more difficult to hire right now because unemployment rate has dropped and demand is up. As a result, companies are offering better employee benefits and rewards. They are also searching for hires using methods they’ve never used before, and instead of hiring based on a certain set of skills, they are hiring based on a type of cultural fit and value-set, and then teaching the necessary skills.
Source: Seattle Times.
How To Retain Employees?
So, what can you do about employee retention? We recently outlined seven tips for employee retention. Some of these employee retention tips include:
Benchmark your employee retention rate
Use proven retention strategies, not guesswork
Don't assume employees are happy (create a high-feedback environment)
Implement a health benefits program such as a traditional health plan or defined contribution health benefits
Provide different benefits for different employees (focusing on the high-value, expensive to replace employees)
Conduct exit interviews
If you're a small business or employer, do you feel the pressure to retain key employees? Join the discussion in the comments below.