As the historically low unemployment rate continues to sustain a candidate-driven market, it is important for employers to consider the needs and wants of their employees if they are to attract new talent, retain existing talent, and avoid costly turnover of talent.
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The job landscape is as competitive as I have ever seen, so much so that we have seen candidates leave their jobs — sometimes in the middle of training — for another company offering more money or better benefits. This turnover can cost companies upwards of $100,000 after factoring in lost productivity, OSHA costs, and the costs of recruiting and training new hires. According to Adecco's real cost of minimum wage calculator, if a company pays 100 employees $9.51 per hour, the monthly turnover rate is expected to be 16.9 percent, which results in a monthly turnover cost of $101,400.
Here are a few strategies for companies to consider when looking to reduce turnover and recruit talent:
1. Offer Fair Pay
It's no secret that wages and salaries are chief among the factors that determine an employee's decision to accept or reject a job offer. According to recent SHRM survey, 95 percent of employees view pay as an important factor when deciding to take a job or stay at their current company, yet only 65 percent of employees are satisfied with their overall compensation and pay. If an employee isn't being offered a competitive salary, they will most likely move to a company that better fits their needs.
While there is no one-size-fits-all answer for exactly how much to pay employees, our recent research found that paying too low of a salary increases turnover rate. For instance, a company with more than 1000 employees that offered an average wage of $13.18 instead of $9.51 saw its turnover rate decrease from 16.9 percent to 8.2 percent. This, in turn, decreased monthly turnover costs by nearly half, from approximately $1,014,000 to $522,000.
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Companies should implement processes that allow them to monitor what competitors in the industry are offering to ensure salaries are competitive with the market rate.
2. Provide a Competitive Benefits Package
There is no doubt that pay is an important factor when an employee is deciding between companies, but the overall benefits package can also play a major role.
As an employer, it is important to offer a well-rounded benefits package that targets the specific needs of your candidates. A good way to gauge what elements of a benefits package are important to your candidates is to listen to your current employees to get a deeper understanding for what they desire. If possible, design your benefits package to align with those desires. For instance, if your current employees want an increased focus on work/life balance, consider offering paid time off to volunteer, consistent work schedules, or flex time. Other important benefits to consider include 401(k) plans with company match opportunities and comprehensive healthcare packages.
While the initial benefits package is essential, it is also important to keep in mind a worker's day-to-day experience at the company. Factors such as unexpected overtime, inconsistent work schedules, and a negative work environment can influence an employee's decision to leave. For example, excessive overtime can lead to physical fatigue, while inconsistent work schedules can place strain on the employee's child care and transportation needs or their second job, if applicable. It is essential to take the time not only to create a positive onboarding experience for new employees and offer regular positive encouragement, but also to communicate and offer manageable work schedules.
3. Promote Growth Opportunities
Providing opportunities for employees to grow in their careers is another strategy for reducing turnover. According to Adecco Staffing's "Way to Work" survey, opportunities for growth are top priority for millennials and Gen. Z. Mentoring programs, apprenticeships, and continued education are all programs that can upskill employees with transferable core skills. These programs not only provide employees with opportunities to learn invaluable skills, but they also provide you with a more skilled workforce — a win-win situation.
For instance, GE Aviation partnered with Community College of Vermont and Adecco to create a certified production technician program. The program helps workers receive the necessary training to fill open positions and gives them a leg up in the job market, but it also provides companies with candidates for difficult-to-fill positions.
In today's candidate-driven job market, it is essential for companies to offer competitive wages and attractive benefits to recruit top talent while providing continued education programs and a well-rounded work experience to reduce turnover and improve productivity. Without a comprehensive approach to attracting and retaining talent, companies risk losing their competitive edges.
Bill Ravenscroft is senior vice president of Adecco Staffing.