Are you listening to your employees? Have you systemized your experience with onboarding, training, and employee learning and developmental programs? Are you ready to stop the turnover in your business?
Employees who aren’t happy with their jobs start dreaming about other opportunities. But, as we know, we are more susceptible to losing them once they start looking. Moreover, the pandemic left many wondering what they wanted. As a result, the market is so hot that top talent can have their pick. Called the Great Resignation, Great Reshuffle, or Great Reevaluation, people in 2021 and 2022 are keener than ever to expect higher pay, a more mature and consistent approach to pay raises, and growth potential, workplace flexibility, and a work culture that values the wellbeing of employees. However, with market conditions looking only a little better in early 2022, hiring and retention are likely to remain challenging for the foreseeable future.
What does the labor market look like in 2022? According to the Bureau of Labor Statistics, nonfarm employment has recovered 93 percent compared to before the pandemic. In addition, the unemployment rate dropped to 3.6 percent in March 2022, just slightly higher than at the beginning of 2020 before the pandemic — a 50-year low. After years of wage stagnation following the Great Recession of 2008, a pandemic lasting over two years, and skyrocketing inflation, workers have plenty of reasons to seek the best opportunities, including fair pay. However, the current market conditions are a challenge for employers looking to balance competitive compensation to attract talent and maintain pay equity to retain their talent.
Employers need workers more than people need to work. The initial layoffs in March and April 2020 were very tough on employees. People who managed to retain their jobs were overburdened, expected to produce the same or more with fewer resources, and hesitant to make any demands or moves with uncertain conditions in the labor market. Many employees felt mistreated by their employers during this period. But that situation has changed. Now, it is employers who are desperate for workers. Job openings began to tick up immediately following the layoffs in April 2020. As opportunity increased in the marketplace, so did voluntary resignations as workers quit their current jobs for jobs with higher pay, more flexibility, and better working conditions.
People are quitting for better jobs. Part of the trouble employers are having is workers leaving at higher rates for better opportunities, which creates endless churn cycles for hire. Quit rates climbed aggressively throughout the pandemic. Unemployment is also low, a sign that the labor market is healthy due to competition for labor.
Some people have left the workforce altogether. It’s important to note that the labor force participation rate has declined for decades, with a steep drop since the Great Recession. The pandemic forced a restructuring of lifestyles and a reordering of priorities, but the economic factors driving people to reject employment were already there. Some of the declines in labor force participation are due to changes in the population, such as the Baby Boomer generation retiring. But it also indicates how easily people can get jobs and how worthwhile the available jobs are. Employment isn’t worth it for many and hasn’t been since the late 1980s. This change may be due to the shift of manufacturing jobs overseas, wage stagnation, the work environment, the skills needed to obtain work, and many other factors.
Talent is vital to the success of a business, and finding talent is not easy and is expensive. There are many ways to calculate the cost of replacing employees, with estimates ranging from a few thousand dollars for hourly employees in low-wage positions to many times the cost of the individual’s salary, especially for executives. Still, any charge is unproductive if you lose talent you would rather keep. And it’s not just the cost of recruiting, onboarding, and training replacements of top-performing employees that you must consider. Lost productivity has a significant impact, especially in challenging positions where it can take a new employee six months to two years to gain the same level of productivity as the lost employee if they ever do. There are also impacts on employee morale, especially if the lost employee was a vital player in team dynamics or if the business is losing a high percentage of good employees to the point that the organization feels unstable. In addition, the remaining employees become concerned about the culture and health of the company. Organizations in this situation need to calculate their turnover, listen to their employees, and change the employee experience through onboarding, training, and employee learning and developmental programs.
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