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April 4, 2018

How to Retain Employees and Thrive in a Tight Labor Market

Tight-Labor-Market

Given the tight labor market and record-high numbers of job openings, workers are well positioned to demand more—and receive it.

What’s going on with workers? What’s driving resignation levels in this tight labor market?

The COVID-19 pandemic started as a collective trauma that all workers experienced simultaneously, spurring a variety of emotions:

  • Anxiety
  • Burnout
  • Depression
  • Frustration
  • Grief
  • Isolation
  • Panic
  • Stress

As a result, it morphed into a mass moment of reflection for workers to re-evaluate their goals, priorities, interests, and preferences.

Certainly, some tenured employees decided it was a good time to retire—even a bit early. And the SHEcession forced significant numbers of women out of the workforce (many of whom have yet to return).

But what about the employees who are still actively working? Some employees may have decided to pursue another career or go back to school.

Other employees realized that they enjoy working remotely and balancing professional and personal obligations, such as:

  • Childcare
  • Care for other family members
  • Their own wellness and wellbeing (for example, exercise or focus on mental health)
  • Volunteerism
  • Hobbies

According to SHRM data, the top five reasons that employees are leaving their jobs right now include:

  1. Higher compensation (32%)
  2. Improved work-life balance (29%)
  3. More competitive benefits (25%)
  4. Desire to find more empathetic leadership (21%)
  5. Better workplace culture (21%)

Given the tight labor market and record-high numbers of job openings, workers are well positioned to demand more—and receive it. Employees have options, and companies have to adapt their recruiting and hiring methods to become more competitive.

How Businesses Can Respond

Remember: It’s almost always more expensive to recruit new employees than to retain your current workforce. The questions at hand are:

  • What can you do to engage and hang on to your valued employees?
  • What changes will your business need to make, potentially for the long term?
  • Have your employees’ desires and priorities changed?

With the ever-changing landscape of employment and productivity in a post-pandemic environment, here are some strategies to help you reduce the impact of resignations.

Invest in Retention

Having a strong people strategy is one of the best starting points for making sure your existing workforce feels respected, valued, and appreciated.

Transforming your retention efforts is one of the first places to begin when discussing how to combat the tight labor market. Although most of the categories below can be included in a retention strategy, the big three to think about are:

  1. Competitive salaries and benefits. Review your salary structure, bonus programs, employee benefits, and other employee recognition programs to see where you have room to make improvements.
  2. Good company culture. A strong company culture with clearly defined values carried out by leaders is essential. Make sure the qualities of your organizational culture align with what your employees want to see.
  3. Employee engagement. Low engagement is a bad sign when it comes to retention. If you’re in this spot, there’s still time to improve employee engagement.

Focus On Servant Leadership and Communication

The absence of connection and communication leaves room for misunderstanding, worries, and resentments to fester. Wherever there’s a gap of information, people tend to fill it with their own assumptions—and those assumptions are often negative.

If you don’t know your employees, they’re a complete mystery. You don’t know what they’re thinking and feeling. You may misunderstand their behavior. You can’t anticipate their needs or deliver what they want.

Likewise, if your employees never hear from you, they won’t understand the reasoning behind company decisions and may misinterpret the actions of leadership. They might not feel they have a resource for communicating concerns or asking for help. They could feel encouraged to leave.

Companies that prize transparency and honesty in their culture seem to perform best and have the most engaged employees.

To many employees, their frontline manager is their most important relationship at work. To them, this person represents the company. It’s essential that leaders frequently engage with their direct reports to:

  • Regularly check in on them, professionally and personally, and find out what they need
  • Evaluate workload
  • Answer questions
  • Make accommodations as needed
  • Provide coaching
  • Offer resources and support
  • Help guide their career forward
  • Communicate expectations

The old saying that “people leave managers, not jobs” remains true. A fractured manager-employee relationship is extremely harmful to retention. The strategies above are especially important when leading a remote team.

Companies that emphasize connection and communication will be far ahead of the game in proactively addressing employees’ concerns before they decide that the best course of action is to leave.

Prioritize Flexibility and Work-Life Balance

Lots of employees enjoy remote work, but that’s just part of the equation. You know what employees want even more? The autonomy to decide where and how to work.

They want to be responsible for choosing the optimal work environment for their needs and the type of work they produce. They no longer want their schedule dictated to them.

Employees also crave more work-life balance, where “work” and “personal stuff” aren’t sectioned off into separate buckets to be dealt with at prescribed times. People want to tend to their most pressing priority at the moment, as long as they’re meeting requirements and satisfying deadlines. For example, employees can be involved in their children’s school activities, visit the doctor’s office, take their dog for a walk, or go to the gym during the workday without begging for permission.

There’s a growing recognition that work isn’t “one size fits all.” Not everyone is productive under the same conditions or at the same general time. This is why many companies are becoming flexible workplaces, offering such work arrangements as:

  • Options for 100% remote work
  • Hybrid work (employees demonstrate a willingness to come to the office when it’s justified and the reasoning is communicated well)
  • Flexible schedules
  • Shortened work weeks
  • Flexible or unlimited paid time off (PTO)

From employees’ and job candidates’ perspectives, workplace flexibility, and the option to work remotely—at least part of the time—are no longer seen as special benefits, but they are quickly becoming expectations for their next job.

Companies that resist this trend risk falling behind in recruiting and retaining top talent.

Re-Evaluate Expectations and Policies

With the shift toward flexibility and autonomy, employers must adjust to the evolving landscape and keep up with the times. This means reassessing workplace expectations and policies to benefit businesses and employees.

To encourage wellness and work-life balance, consider adjusting:

  • PTO policies. Many companies are increasing PTO or removing PTO limits.
  • Dress code. Given the fact that many employees worked from home for more than a year, perhaps attire standards have become less formal.
  • Remote work. What are the firm rules for remote or hybrid work? Do they allow for a flexible workplace culture?

It may not even be major, sweeping changes that companies have to make, but “spot changes” that are relevant to the moment.

Whichever changes you implement, be mindful about which employees the changes apply to and the precedents you’re setting. Many companies have become more generous with new hires in a bid to attract top talent. But don’t overlook tenured employees—they want the same treatment. Best practice is to treat all employees equally. Document all policy changes and notify employees in writing.

Conduct Employee Surveys

You may not know how to make your workplace more desirable if you don’t understand what’s most important or meaningful to your employees—or what problems exist.

Employee surveys are a great way to obtain feedback in a tight labor market. But, if you distribute surveys, you must also be willing to communicate the major findings and share which actions you’ll take next and why.

It’s also smart and proactive to conduct stay interviews with tenured employees to uncover what has kept them at your workplace and if they have any recommendations to share.

By the time an employee resigns, it’s obviously too late to retain them—but you can still glean valuable insight from them via a thoughtful exit interview. Ask them what went wrong or what they felt was missing at the company. In what way do they consider their new role or company to be superior?

Also, monitor employee reviews online.

Through these activities, a realistic and consistent picture of your company should emerge, helping you to identify areas for prioritization and improvement.

Want to employ the best retention strategy possible? Read the full blog with all 10 strategies here.

Jill Chapman is a senior performance consultant for Insperity Recruiting Services.

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