Across the labor market, signs suggest we remain in a seller’s market as employee resignations remain higher than normal and job candidates are closely evaluating why, how and where they work, with many choosing jobs that offer more flexibility. Among nearly 300 CEOs participating in Chief Executive’s recent Confidence and Workforce survey, 85 percent reported higher or the same voluntary turnover compared to one year ago (see chart at right).
Many have taken action to boost their appeal to existing and prospective employees (see chart below) and/or are exploring longer-term measures, from changes to compensation practices to holistic well-being initiatives. Tangible, forward-looking steps and questions CEOs may consider to solve the labor shortage puzzle include:
• Total compensation and pay equity: In addition to implementing signing bonuses and pay increases to attract job candidates and soften inflationary impacts for current employees, leaders should consider longer-term plans to adjust their merit-increase process and incentive-based pay, with individual contributions and performance to be more equitable and results oriented. They should also consider broader opportunities to provide equity ownership in the business.
• Employee benefits: The rising cost of healthcare premiums and larger deductibles are putting more financial pressure on employees. Business leaders should work closely with their benefits administrators to find creative ways to lower the overall cost of benefits while creating benefit plans aligned with the needs of the workforce. They should also consider opportunities to provide low-cost loans and/or crisis funds for employees.
• Skills development: Public/private initiatives to help prepare our workforces for the future are gaining traction. Vocational- and STEM-related programs leverage federal and state grants to provide apprenticeship and skill certification opportunities. Traditional internal training programs are generally not designed for the multiyear investment needed to develop the skills and experience required.
• Flexible work arrangements: Beyond providing the technology to enable knowledge workers to work remotely and/or utilize a flexible work schedule, business leaders should consider creative ways to connect people. Working remotely may be more productive for some than others. The isolation can create engagement and loyalty challenges, especially for new hires.
Managers may also need training and tools to help them lead a geographically dispersed team. What support are you providing managers to help them be efficient and effective? How are you compensating those who cannot work remotely in the spirit of fairness (e.g., balancing workload, more flexible hours, longer break times, additional days off, rewards and recognition, etc.)?
• Employee well-being: More than a third of organizations recognize the importance of well-being to workers’ overall health. Some are launching holistic well-being programs and/or training managers to help reduce the stigmas employees may experience when seeking mental health assistance. CEOs may consider assessing their organization’s approach to employee well-being and specific benefits offered, including the metrics used to measure outcomes and the return on investment.
• Stay interviews: Stay interviews are growing in popularity as a way to increase retention rates, help employees de-stress, increase their sense of belonging by linking what they do to the vision and mission of the organization and learn how workforce-related investments are viewed. Some organizations are requiring leadership training on conducting stay interviews and requiring them to be performed at least two times per year.
Even as companies adapt to address changing expectations of our current and future employees, solving the labor shortage puzzle sometimes feels like a catch-22. There are more than enough job seekers for the many open positions that remain unfilled. Yet, they may not possess the desired knowledge, skills and experience. Organizations seek a diverse slate of candidates but often lack visibility to diverse candidate sources. As inflation rises, companies look for ways to reduce operating expenses even as compensation and benefit increases are being used to attract job candidates and retain employees. To solve this puzzle, business leaders will need a balanced approach, starting with empathy for their employees and an authentic, visible and transparent leadership style.
