Attracting and retaining talent continues to be a hot topic. While there is no magic bullet, there are many different areas that contribute to attracting and retaining key talent.
We will consider four main areas:
Your employee value proposition (EVP).
Team culture -It goes without saying that it contributes to why people are attracted to businesses and why they want to stay.
Pay reviews - We know a lot of you are getting ad-hoc requests for remuneration and salary increases.
Wellbeing and burnout - Is it an enabler, a pillar of attraction, or retention? Of course, it is. With what we've experienced in the last two years, during the pandemic, it is really prevalent across any sector and industry, across any organisation, shape, and size.
Scene Setting - What’s happening in the market?
Inflation
Inflation is 5.9% and climbing, as of March 2022.[i] It's the biggest movement that we've had in inflation since the June 1990 quarter. We're feeling that inflation, and the consumer price index for wage increase comparison.
Low Unemployment
Our unemployment rate at the moment is 3.2% as of 2 February 2022, this is one of the five lowest in the OECD.[ii] This is having a downstream effect on finding workers. High labour turnover and continued travel restrictions on arrivals are also putting pressure on the domestic labour supply.
Minimum Wage and the Living Wage
The minimum wage increased from 1 April 2022, it has gone up from $20.00 to now $21.20[iii], that's a 6% increase from last year. The living wage is currently set at $22.75. This is also increasing from 1 September 2022, to $23.65.[iv]
The Great Resignation
This is a global term that has been coined from the offshoots of the pandemic. It is about the uprising of people leaving organisations, and a lot of people not necessarily having anywhere to go, which is a new phenomenon. Often people leave because they've got another opportunity.
The signals in a New Zealand context are saying that two out of five workers are planning to quit.[v] Although the New Zealand data is based on signal and intention, so we don't necessarily know the number of resignations that have happened across New Zealand yet.
As business owners and leaders within your businesses, you would know your staff turnover rate, but we don't as a market. In comparison with America, for example, they know that 4.5 million people quit their jobs in November 2021, which represented 3% of their entire employment market.[vi]
Try to reframe the great resignation, reframe it as an opportunity - an opportunity to reset some of the initiatives being implemented in your businesses to keep good people.
The Employee Value Proposition
This is a term that's been around for many years. The value proposition is the promise that you make as an employer to your employees in return for their commitment.
Exit interviews
Having conducted many exit interviews, we can tell you the common themes for why people leave their jobs - business leaders often think it's pay. Sure, pay comes into it. Remuneration needs to be adequately matched to the skills and competencies that you require. But a lot of the time, why people leave is because they don't feel valued and appreciated for their contribution. That is not saying ‘thank you, not acknowledging good work and what they bring to the role and valuing who they are as individuals.
Another reason why people leave is they don't feel they have a sense of belonging within your organisation, cushioned by a group of trusted colleagues in a cohesive and inclusive team environment. Focus on ensuring people feel valued and that they belong.
How do you ensure employees stay engaged, and how do you craft the work so that they're motivated to perform for you?
A lot of employees, want to know that there's potential to grow and want to stay engaged. Flexibility is absolutely critical. It is one of the key factors that workers are looking for when they either want to find a new employer, or they’re thinking about why they should stay with their current employer.
There's a lot more to flexibility than just working from home. It can also be about having flexible workspaces within your organisation, for example, do you have a mixture of shared spaces versus desk spaces versus common spaces? It’s also about job sharing, part-time work, and the ability to potentially leave earlier in the afternoon because they don't want to miss the school swimming carnival for the kids, and then being able to make up the time somewhere else.
A lot of us have restricted thinking when it comes to flexibility and think of it only as remote working or working from home. But it is much broader than that, it's workspaces, it's the work schedule and how you craft the work hours, and the ability to work hybrid, and swap and change hours.
All these things - feeling valued, creating that sense of belonging, and allowing people to either grow, and stay engaged with what they're doing in your organisation while being supported through flexibility - are things that will enhance your employee value proposition. Along with, of course, your salaries and the benefits that you provide to your employees.
Once you’ve nailed your EVP it becomes part of your story, and you can use it to attract people to your organisation. When you’re recruiting and putting up job advertisements, think about the description of your organisation and how it tells the story of what it’s like to work with you. Your EVP matters to attraction, and it matters for retention as well. What you give, is what you get and that's what the EVP is about.
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Building a great team culture
A recent industrial trades survey that had over 6,000 people respond, found that working in a great team was the most important factor when examining a potential new employer - Above pay.[vii]
But what does that mean and how do we create that? How do we know that we have a great team culture, and how do we use that to attract employees to our business? How do we share that story about the great team culture that we have?
Different generations have different wants and desires, for example, Gen Z’s want to know that they are going to work in a great team as the most important factor when they are examining a potential new employer. Gen X also found that really important. The second most important factor to Gen Z was that there is potential career progression.
Another interesting find to come out of this survey, was if you looked at the gender split of those 6,000 people that were surveyed, women tended to look towards wanting work-life balance as a critical factor, coupled with a great team as one of the most important factors for them to choose a new employer or to stay with an employer. Whereas men wanted a great team culture, they also wanted higher pay.[viii]
There's no ideal company culture to work towards. There's not a tick-box of things that you must have. What you need to do is identify what the ideal culture is for your specific company. No two companies are the same. You could have a franchise, like a McDonald's for example, and the culture within the McDonald's scattered throughout the country is different.
What this tells us is that we need to sit down and ask our people how to create the ideal culture that is unique for your company. And how do you do that? You get the data points from the people that work there, you ask them what is important to them and that becomes part of your culture.
We see a lot of organisations try and implement, with good intentions, incredible initiatives or benefits thinking that it's going to shift the culture. But what they haven't done is the research of asking if that's what people want. By doing this you will get some really good ideas, suggestions, and recommendations from your people. Then the real hard work for you as business leaders and owners is how you apply it.
Earlier we mentioned exit interviews and reframing them. Exit interviews absolutely still have a place, you get lots of data points within those exit interviews that you can weave into your value proposition and your offering to your people. We also recommend investing energy into doing stay interviews. If we think about what makes people stay, it’s that they want to feel valued, feel heard and they want to feel seen. So, implementing something like a stay interview - asking people what you would like your business to start doing, stop doing, and continue doing, is really important right now. Focus particularly on key talent.
Another thing that helps to create a great team culture is connection. Connection to why your organisation exists, feeling engaged with the type of work.
Lack of development opportunities is also coming out of research as a reason why people are leaving roles, as is a lack of training. What has happened because of the pandemic, is that when we have been given a development opportunity, we view it at the moment as work. We're not necessarily seeing it as this benefit that my employer's really trying to upskill me.
An alternative approach is job crafting. Job crafting is about gaining insights from your employees about what really motivates them and trying to craft the work and what they do for you, around what motivates them.
Knowing that development opportunities at the moment have been viewed as just more work, on-the-job training and job crafting are really critical to get people to stay. Molding and moving the components of the job to match what motivates the employee.
Pay Reviews
With the tightness of the job market, we are seeing a relaxing of hiring standards, and these are costly. Sometimes short-term motivators and solutions like monetary perks, sign-on bonuses, and retention payments can backfire down the track. It doesn't necessarily mean that you should stop doing them, but you should really think about the intention as to why you are doing it.
The first 90 days when an employee starts with you is critical. The pay or that sign-on bonus might be the carrot that lures them into your organisation, but if that's the only thing attracting them, it's unlikely that they will stay because they'll be constantly looking for that higher salary. So again, it comes back to your EVP, the story that tells potential new employees what it's like to work with you.
Your competitors will be using similar techniques to you, so while approaches such as sign-on bonuses’ have a place for particular roles, again, it comes down to culture and what you're selling, and the benefits that you offer for working in your business. Tell the story of ‘this is what we do’, ‘this is why we exist’, and ‘this is what it's like to work for us’, and with all that, here's the salary that matches.
Size your jobs and match remuneration properly. If you haven't done it yet, or you haven't done it ever, this is something we recommend, particularly with the shifts in the market. Get your job sized properly and get some market data on what's happening with your positions. This can often come through your industry bodies, or you can use providers like Hays or Strategic Pay. This is critical because a lot of employers are currently experiencing ad-hoc remuneration requests from employees.
Job sizing means looking at the internal relativities and comparing similar-sized jobs to the external market, sector, and industry. You assess the skills, experience required, responsibilities, delegations, and working conditions. You’re asking things like does the person have a team to manage? Does the person have a leadership position where they're on the hook for strategy and deliverables? All these things play into how you would size the job. When you review those elements, it then helps you with the market data that you've got to assign an appropriate remuneration and salary for that particular role.
It matters because when you are applying salary increases to your employees, or you are trying to respond to a request from your employee, you want to position that you have done your research. If you know whether your employees are competitive or not, then you are going back with a data-led response to what's currently happening in the market matched against their competency in the role.
With pay reviews, you should be creating some first principles for remuneration reviews and increases. Think about what the philosophy is for your business. These are things like if you're currently applying remuneration increases on anniversary dates, maybe look for an approach to shift that to your budgeting cycle. This way, you know what the budget is like, and then everyone's on the same cycle. That helps because then you'll have all the data points up until the point that you apply a remuneration increase.
Is an employee competitive? What this means is, that your employee is paid within a competitive range. Some employers will make sure that all of their employees are paid within a range (e.g. 85% -115%) of the market median. That allows you to work within a salary range, of say $100K to $120K. If they're anywhere in between that, they’re in a competitive range. That enables you to do progressive salary increases for the size of that job and their level of competency in the role.
With ad-hoc remuneration requests, ideally, your people should be coming to you with the business case. With answers to questions such as, tell me why you think that you need this remuneration increase? Have you delivered on the objectives of your role? Are you a high performer? Have you done your market research and know what other people are paying to justify why you want this increase?
If the employee has behavioural attributes that you want to see before you approve an ad-hoc remuneration request, ask for this business case. Apply a fairness and equity lens too because it will have downstream effects on pay parity and relativities across your organisation. It’s unlikely that the request will be kept confidential, so you need to be mindful and cautious around fairness and equity across your organisation with your decisions. That comes back to forming those first principles around when and how you will do those remuneration and salary increases.
You can come back to first principles every time you get an ad-hoc remuneration request. The first principles could be ‘we are committed to reviewing salaries on an annual basis in line with our budgeting round’, ‘we will go out to get market data’, or ‘we apply fairness and equity lens to how we apply remuneration’. Those are the types of first principles that you should have crafted and visibly on display for your people. Sometimes these are within the employment agreements themselves as well.
Wellbeing
It’s likely that most people have experienced an impact on their personal well-being with what we've all experienced in the last couple of years. This is important to acknowledge because it feeds into the benefits and the offerings that you can create. Wellbeing offerings are beyond your employer assistance program, it is linked to flexibility, and it’s linked to a dialogue of asking people how they are going.
A recent study found that 43% of workers are feeling burnt out or are feeling overwhelmed by the amount of work that they need to do. [ix] The pandemic has changed the relationship that we have with the workplace.
Some recent stats out of America have shown that we’re adjusting to living with the pandemic, it found that people are attending events like sporting matches and attendance is back up to 70 - 90%. But in workplaces, when employers are encouraging people to come back to work, that's only sitting around 30% attendance.
That tells us that we're not necessarily afraid to get back out there and embrace life, because we are attending things like that sporting match, or the concert, it’s telling us that our relationship with the workplace has changed.
We have re-evaluated our personal values, we have re-evaluated our priorities and our lifestyle patterns. Linking that back to the workplace, we want work-life balance and flexibility.
Look at your well-being offerings again, beyond an employee assistance program - look at things like support and encouragement of a healthy lifestyle. That could be some form of subsidy or internal programmes. Do you offer discounts with insurance providers, even down to the fresh fruit bowl that you might have in your workplace? Do you offer things like wellbeing leave or birthday leave? These are all things that benefit people's well-being. What also helps with well-being is having that social connection at work and great working relationships.
If you would like our support please get in touch or register for Karen’s next event discussing these topics here.
End Notes
[i] Stats NZ
[ii] Stats NZ
[iii] www.employment.govt.nz [iv] www.livingwage.org.nz
[v] Employee Sentiment Index research released by HR software provider ELMO, Jan 2022 [vi] www.forbes.com, 4 Jan 2022
[ix] Employee Sentiment Index research released by HR software provider ELMO, Jan 2022
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