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Retention Surveys Reveal Gaps

 

A new survey says base-pay increases continue to have the biggest impact on employee engagement and retention, but experts say employers need to pay careful attention to which employment practices matter most for engagement within their organizations, which often vary by industry and by company.

 

Friday, October 12, 2012
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Now that the economy is improving and the job market is opening back up, two national surveys are reporting that employees are somewhat less satisfied with their current jobs, particularly their pay and prospects for development -- and they are starting to consider greener pastures.

 

According to Mercer's 2012 Attraction and Retention Survey of more than 470 U.S. and Canadian employers, while more than 40 percent of the respondents said they were expanding their overall workforce in 2012 -- compared to just 27 percent in the firm's 2010 survey -- almost twice as many organizations today are reporting reduced levels of employee engagement compared to two years ago (24 percent versus 13 percent, respectively).

 

"There is this eroding loyalty of the worker, where one in three U.S. workers is seriously considering leaving their jobs," says Loree Griffith, principal of Mercer's talent rewards and communication in New York. "That goes hand in hand with their feelings that perhaps there are other opportunities opening up, particularly for those who have the right kinds of skills."

 

To lessen the chance that employees will leave, HR leaders should take a more "holistic" approach to the incentives they provide in addition to salaries and benefits, such as work-life balance initiatives and career development, Griffith says.

 

"Employers should map out career path development not only vertically, but also horizontally, so employees can better understand what kinds of skills, competencies and knowledge they will need to enhance their career opportunities within the company," she says.

 

According to Mercer's survey, the most prevalent non-cash reward programs implemented by organizations over the past 18 months include: communicating total reward value to employees (offered more by 25 percent of participating organizations), use of social media to boost the employee work experience (25 percent), formalized career paths (22 percent), internal/external training (22 percent) and special recognition (22 percent).

 

"Many companies are developing total reward statements and creating online portals where employees are modeling the various benefits, savings and opportunities of their rewards," Griffith says. "Employees are also using these portals to track and identify career opportunities in the company, as well as social networking with other employees, to learn about their career movement experiences."

 

While more employers are developing such non-cash reward programs, base-pay increases continue to have the biggest impact on employee engagement and retention, as reported by 50 percent of the survey's respondents, followed by vertical career progression (47 percent) and leadership development (46 percent). Moreover, merit increases are back, with 95 percent of organizations providing some form of increase for 2012.

 

Mercer's survey jibes well with the Society for Human Resource Management's 2012 Job Satisfaction and Engagement Research Report, in which the percentage of U.S. employees who reported that they were satisfied overall with their current job fell from 86 percent in 2009 to 81 percent in 2012. Moreover, fewer than four out of 10 employees reported being very satisfied with the elements that have the greatest impact on how they feel about work: opportunities to use skills and abilities; job security; compensation and pay; communication with senior management; and their relationship with their immediate supervisor.

"During a recession, people tend to look at their jobs a little bit differently because they are just happy to have a job," says Mark Schmit, SHRM's vice president for research in Alexandria. Va.

"Now it's back down to 81 percent, near pre-recession levels. Employees are starting to look for new jobs because there are now more openings."

 

A big driver of the roaming eyes is base pay, Schmit says. While 60 percent of SHRM's survey respondents said that pay is very important, only 22 percent were currently satisfied.

"If there are jobs available that pay more, that's going to be a concern," he says.

 

If an organization can't pay more because they don't have the resources, then HR leaders need to provide alternative incentives to keep people, such as better benefits and flexible workplaces, Schmit says.

 

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"People will also leave if they feel they don't have an opportunity to use their skills and abilities," he says. "Oftentimes that means they are not receiving training to enable them to use their skills, and so people don't feel their talents are being fully utilized in their jobs. It's up to organizations to recognize that and provide career path training."

 

Indeed, in SHRM's 2012 survey, "opportunities to use skills and abilities" bumped "job security" from the No. 1 influencer of job satisfaction.

 

John Hausknecht, associate professor of human resource studies at Cornell University in Ithaca, N.Y., says employers need to pay careful attention to which employment practices matter most for engagement, and it can vary by industry and by company.

 

For example, in many industries, turnover rates for entry-level frontline service positions are high, and people might leave for an additional 25 cents or 50 cents an hour, Hausknecht says. However, most knowledge-based workers might be more sensitive to advancement opportunities, or internal mobility within the organization.

 

"Whether the strategy is providing training and development opportunities, or adjustments in base pay or a merit program, if done well it can work – it's just a matter of where to target those investments,"

 

Richard Finnegan, founder of the Retention Institute in Orlando, Fla., believes that most organizations greatly underestimate the power of very effective supervisors at every level, and studies by Gallup, Kenexa and other organizations strongly reinforce this notion.

 

"A 2-percent raise doesn't make you get out of bed early in the morning to get to work," Finnegan says. "The consistent driver of engagement is a better boss, one whom employees say they trust. HR leaders should develop managers who can build trust, and they should encourage senior executives to remove managers who aren't able to do that."

 

HR leaders can use turnover rates and engagement statistics to better distinguish which bosses are building trust -- and which aren't, Finnegan says.

 

"They should convert both of those metrics into dollars," he says, "so executives fully understand the power that great managers bring and the losses caused by managers whom employees don't trust."

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