Causes underlying the disruptive workforce trends in recent years continue to exert their influence, contributing to evolutionary change. Understanding the potential for progress that the change brings helps employers overcome talent management challenges and steadily build toward organizational goals.
Talent management continues to take center stage as employers struggle to attract and retain talent at all levels of their organizations. COVID-19 intensified the labor shortage , and has accelerated turnover for three years and counting — and most employers continue to see annual increases. In 2022, 51% experienced a rate of 15% or more in 2022, including 18% with turnover of 30% or higher.1
During 2023, growth of the real gross domestic product (GDP) in the US is forecasted to slow to 0.7%, while persistently high inflation and rising interest rates are expected to impact the economy.2 Some economists predict that the labor market is on the other side of the pandemic hiring frenzy, as companies begin preparing for an economic slowdown by cutting workers and easing up on hiring.3 But the labor shortage isn't a short-term issue, and trends will likely continue to vary by sector, with employers perpetually recruiting externally and internally to add or secure talent.
Longer-term solutions incorporate attraction and retention as part of an overall workforce plan
Employers have been increasing total compensation in response to labor shortages and turnover. In 2022, worker costs in private industry rose 5.1% for wages and salaries and 4.8% for benefits, compared to 2021.4 While these reactive measures may temporarily help preserve market competitiveness, few organizations can maintain above-market salaries for very long, especially if the company falls short of their retention goals.
Additionally, research suggests that inadequate pay is only one reason workers resign. Other reasons include a lack of career development or advancement opportunities, uncaring or uninspiring leaders, limited workplace flexibility and not enough support for employee wellbeing.5 While there's no silver bullet, history has shown that employers who specifically include talent attraction and retention as part of their overall workforce plan are more likely to hire and keep the talent they need to be successful.
Engaging employees by optimizing their work environment, learning opportunities and rewards
Approaching attraction and retention holistically can help solve the challenges of too many competing priorities and talent management complexities. As a starting point, employers need to align the essential elements with the overall people strategy.
Balancing the key aspects of a positive employee experience, including the work environment, learning opportunities and appropriate rewards, sustains long-term results. But an imbalance of investments — such as too much emphasis on compensation at the expense of the environment and learning — undermines the organization's goals. Strategically and effectively addressing each of these three levers, in relation to each other, adds up to an exceptional employee experience.
Work environment as a key driver of desirable culture
Successful work cultures promote an environment that prioritizes respect and caring for each employee, from their direct manager on up, and protects the best interests of all. Employee perceptions of their work environment are as important to productivity as the talents they possess, if not more so.
Strong and consistent culture
A well-articulated and compelling employee value proposition attracts top talent. Once onboard, retention requires a culture that delivers on the promised rewards, benefits and other aspects of the employee experience.
Looking out for the best interests of employees is a strategic investment in an empowered and effective workforce, and employers demonstrate their commitment through decisions and actions that put wellbeing first. Cohesive efforts and a purpose-driven work ethic promote higher levels of engagement, loyalty and trust in leadership, which can lead to higher-quality goods and services that drive a better customer experience. When a respected brand is built on sincere caring and support for employees and the community, it's likely to increase attraction and retention as well as commercial success.
It's important for managers to monitor workload. When staffing shortages occur, employees may help fill these gaps by taking on additional roles and responsibilities without additional compensation. Yet workload imbalances can overwhelm employees, compromising their wellbeing and potentially causing them to quit their jobs. If they do leave, the net gain for the organization is less than zero because the excessive hours worked contributed to the issue they were meant to help resolve.
The concept of work-life balance has broadened to work-life integration. Employees want and expect more choice over how and when they work so they can accommodate both personal needs and professional commitments. Flexibility doesn't diminish work responsibilities. Instead, it provides leeway for scheduling adjustments that work better for employees and their families, helping to reduce stress. The ability to integrate and prioritize work and life needs strengthens all dimensions of wellbeing.
Asking employees about their experiences with work and the organization is a common practice. Feedback is often gathered through formal or informal engagement and pulse surveys, which demonstrates an interest in objectively understanding their opinions, attitudes and the employee experience overall. Following up with the workforce acknowledges participants' time and effort, while commenting on results, at some level, recognizes their input.
To validate the importance of contributions, it's important to communicate any definitive actions that will be taken based on findings. Managers are uniquely positioned to receive and act on direct feedback from individual members of their team or the entire group. But a key responsibility is initiating regular and timely feedback. Regardless of the frequency of interactions, tact and proper consideration fosters an environment of mutual respect.
Learning as a key driver of talent development and retention
Establishing talent management as a core business process by integrating all aspects of the HR function helps identify opportunities for employee development. Learning succeeds when it leaves employees feeling confident about the value of the skills they acquire. Specifically, they want their employer to invest in development experiences that align with their goals and vision for future roles within the organization.