Preparing for the Mass Exodus: As the Economy Improves Employee Retention Takes Top Attention

Employee Retention / Talent Management
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George, the human resource manager of BOHICA Company, got another call to report to the CEO. This was the second time this month he had been called on the carpet to explain why they lost four more people to a competing company. George’s only excuse was, “The competition is paying more than we are.” George knew on the inside what the real reasons were, but did not say them out loud. He tried to tell the CEO a couple of years ago when the economic downturn first started, but he didn’t listen then, so why try now. As he walked out the door he thought to himself, “He is getting what he deserves.”

BOHICA Company was having a tough time. During the past two years they laid off 40% of the workforce, outsourced 100 jobs overseas, and cut out all overtime. Employees complained they were working the jobs of two people and making less money. Morale was in the pits and productivity was not much better. In a conference room someone scribbled on the white board BOHICA Company stood for, “Bend Over Here It Comes Again.” It was supposed to be a joke, but no one was laughing.

To make matters worse, they cut out the bonus again this year for everyone except the senior executives. They wanted to protect their executives so they would not migrate to jobs elsewhere. George warned them this would backfire–and as usual, he was right. To add insult to injury, each day all employees had to pass by the executive parking lot and see all those new Mercedes’ and BMWs.

Later that day, Joe, who had been at BOHICA from the beginning, stormed into his supervisor’s office and said, “I am fed up with this place. Just wait, as soon as the economy turns around, I’m out of here!” He wasn’t the only one who felt that way.

Get Ready, Here It Comes Again

It is hard to believe just three years ago, employers were screaming for help and bending over backwards to attract and retain employees. Well, guess what? Those times are returning soon. Maybe it will not be as severe as the Dot Com era, but it is going to require top attention.

In the next several years, this nation will face a mass exodus of employees leaving their current employers for better jobs. As a business management consultant, I have surveyed and consulted with hundreds of organizations over the past several years. One thing is clear–there is a large chasm of discontentment in many organizations. Just in the past month, my surveys show voluntary turnover has increased by 30 percent.

See the “Happy With Your Job Survey”

Fueling this exodus and discontentment are a number of factors. These include an improving economy, corporate scandals, layoffs, poor corporate communication, and people working harder for less money. Rest assured, as more jobs become available, people are going to look for better companies to work for. This change represents a major shift from an employer driven job market to an employee driven job market.

Estimates show 48 to 65 percent of the workforce is dissatisfied with their current employment situation and will jump ship as the economic situation continues to improve. Adding to this churn, figures show a shrinking number of people available to fill jobs. By 2010 we could expect a shortage of nearly seven to ten million workers.

Consider the following driving forces:

Job Defections – Adding to my research, the Society of Human Resource Management (SHRM) and the Wall Street Journal website completed the Job Recovery Survey in September 2003. The key findings revealed 64 percent of employees said they were extremely likely to begin or increase the intensity of their job search. An additional 19 percent said they were somewhat likely to increase their search. The top six reasons they were going to shift to a new job are as follows:

Better compensation: 54%
Dissatisfaction with potential career development: 35%
Ready for a new experience: 32%
Job security fears: 21%
Looking for a career change: 21%
Poor management: 20%

Worker Shortage – As the economy improves, no longer is there a bottom-less pit of workers lined up knocking at employers’ doors. According to the Bureau of Labor Statistics, by year 2010 there is going to be a 7-11 million shortfall of workers. The shortage is partly due to the retirement of the Baby Boom generation and lower birthrates.

“We employ 11 million people now, and we’re going to need more,” says Steven Anderson, president and CEO of the National Restaurant Association. “We’re projecting a need for another two million by 2010. Our biggest concern is where to find these folks.”

Skill Shortage – Many industries already experience major shortages of talent. For example, the healthcare industry suffers from a nurse shortage, and now is importing nurses from other countries. This places a burden on employers to provide the best place to work possible to attract and retain key staff.

Importance of Job Satisfaction – Yes, people need jobs to pay their bills, but a large segment of the workforce places job satisfaction as the top reason for staying with or leaving companies. I interviewed one person shortly after 911. He said, “If I die tomorrow, I want to make sure I am doing a job that means something.” His comments are a reflection of a new trend existing in the workforce today.

Money and benefits are important, but it takes more than money to keep good workers from leaving. The Families and Work Institute published the National Study of the Changing Workforce. The report showed earnings and benefits have only a two percent impact on “Job Satisfaction.” “Job Quality” and “Workplace Support” have a combined 70% impact. That is 35 times greater than earning and benefits. I will show my readers how to improve identify and choose an employer that meets this important need.

Competition for Top Talent – Beginning in 1998, Fortune magazine hosts a national competition to get on the “100 Best Companies to Work For” list. Since then, almost every state in the nation has created a similar process. Applications for the Malcolm Baldrige National Quality Award increased by 35% last year. Employers realize to win the award, or to win a coveted spot on the “100 Best Companies to Work For” list is good public relations and an avenue for free marketing.

There are seven critical factors that must be present in every workplace leading to high job satisfaction and career success. These seven factors are based on my research and experience as a retention expert who has worked with hundreds of businesses.

By understanding these factors, employers can begin shifting their priorities to stem the tide of turnover.

  1. Strategy and structure
  2. Challenging and interesting work
  3. Personal and professional growth
  4. Worklife balance
  5. Culture, coworkers and work environment
  6. Masters and commanders
  7. Compensation and benefits

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