Compensation Might Entice Quitters, But Then What?
The U.S. economy is now firing on all cylinders such that many companies are facing attraction and retention issues. Recently in the Wall Street Journal, David Harrison and Eric Morath’s piece “In This Economy, Quitters are Winning” looks at how American workers are choosing to leave their jobs at an alarming rate reminiscent of the technology boom two decades ago.
Having interviewed millions of employees TalentMap knows what attracts and repels people, why, and how a more engaging workplace can rise above the kinds of challenges and statistics cited by Harrison and Morath. A quick recap:
- 4 million Americans quit their jobs in April; that’s twice the 1.7 million who were laid off from jobs that same month.
- Worker confidence is linked to the nation’s strong economic performance and historically low unemployment (3.8% in May) the likes of which haven’t been seen since 2000.
- More than one in seven of America’s jobless were voluntarily unemployed people who left to look for another position.
- Job-hopping is most prevalent among young workers looking to bolster or change career paths.
- Candidates are getting interview opportunities the same day applications are sent out online.
- Quitters are winning by getting rewarded with bigger paychecks for jobs they want, where they want to live.
- Job-switchers saw roughly 30% larger annual pay increases in May than those who stayed put over the past 12 months.
- No industry or sector is immune to this voluntary exodus.
TalentMap focuses exclusively on custom research, workplace engagement measurements and post-survey tactics. “As a result of these studies,” says Norm Baillie-David, SVP of Employee Engagement, “we’ve developed a keen understanding of factors which have the greatest influence on employee engagement” (defined as a ‘heightened intellectual and emotional connection of an employee to the job and organization, resulting in discretionary effort’).
“With the U.S. labor market being as tight as it is, employees are going to go to the highest bidder. The frustrating part of this is that you can pay your people a bigger paycheck or attract recruits with rich remuneration packages, but you have to use the traditional arsenal of employee drivers to engage them.”
TalentMap clients have come to know that if they focus on what really matters (as opposed to what employees complain about), they can have a significant positive impact on employee engagement which in turn leads to better attraction, retention and productivity. Whether or not American companies need to change their compensation packages is a subject for debate. What is empirically true is that on its own merit remuneration has little bearing on peoples’ commitment to their organizations.
Yes, higher pay may satisfy compensation needs and wants – temporarily.
- Improving how people feel about their managers.
- Providing opportunities for professional training, development and different career paths.
- Creating a corporate culture that values its people, regularly thanks them for their efforts, supports work/life balance with flexibility.
Those are the kinds of meaningful employee engagement factors under an organization’s direct influence that can improve the workplace and keep lots of those 3.4 million Americans from voluntarily uprooting for greener pastures.
You can attract and lose employees with compensation. It’s a double-edged sword. But to keep your people it’s a combination of fair compensation plus engagement.