The how, where, when, and why of work have become crucial components of the total rewards package for employees, and organizations concerned about attracting and retaining talent should focus on the entire employee experience, according to several studies.
Employees are not only looking for a career, they are looking for a better life in the workplace, which includes a future with a purpose, learning, career movement, experimentation, and plenty of flexibility, according to a study from Mercer.
Companies are finally realizing that the more they put into the overall employment package, the better they’ll position themselves to come out ahead of other employers in the competition for talent, according to Stephanie Penner, senior partner at Mercer.
That employee value proposition (EVP) includes components that touch upon most facets of employees’ lives, ranging from flexibility, health and financial wellbeing, skills development, and career paths, Penner told Bloomberg Law.
Let’s Make a Deal
Work is a transactional relationship, and if organizations want to have leverage, they need to create bargaining power by having something substantial to offer, according to Bruce Tulgan, founder of RainmakerThinking, a consulting and management training firm.
Employers are saying in one breath, "It’s so hard to attract and retain," but then they say in the next breath, "People have all these outrageous demands," he told Bloomberg Law.
Company leaders have to remember that the human element is essential in business, and organizations need an overall value proposition that will appeal to many different employees and not just select superstars, he said.
"A lot of employers don’t sell the job very well. They sell it as: pay your dues, climb the ladder, and fail to crystalize the value proposition. They keep bidding up pay and end up paying too much," Tulgan said.
Pay Will Rise
Employers are feeling the pain of the talent shortage and are struggling with how to handle it, according to Alan Guarino, vice chairman of the CEO and Board Services practice at Korn Ferry. It’s likely that wages will rise, but companies need to think critically of how to manage pay to use it more effectively, he told Bloomberg Law.
"They don’t know where to throw the dollar. It doesn’t look like we’re going to mint more people, so there is going to be wage inflation," Guarino said.
A Korn Ferry study estimates that the U.S. could face a labor shortage of 3.5 million workers by 2020, nearly doubling to 6.6 million by 2030.
Faced with those numbers, organizations will need to take a different approach to people beyond pay, Guarino said. Just as companies once invested in technology, they will to have to invest in innovative thinking to manage talent, he added.
The tight labor market is pushing a lot of organizations to think about what and how they pay their employees, according to Kent Plunkett, founder, CEO, and president of Salary.com.
"Low unemployment is good because it’s bringing up a lot of questions about compensation. Compensation is why people take the job. Surveys found that people name other factors, and it will influence things if compensation is the same, but pay is what matters to people," Plunkett told Bloomberg Law.
Compensation budgets do go up in full employment markets, but companies still need to be creative and think about what else can attract and retain people, Plunkett said. This includes paying attention to career development and making the workplace a more enjoyable place to work, he added.
Employees Want Purpose, a Future
Employees increasingly seek greater purpose and a better work/life balance, and as part of that, they want greater flexibility in when, where, and how they work, according to Penner.
"Companies are taking this very seriously," which is prompting them to become more with the flexible arrangements they offer employees, Penner said.
For example, the Mercer survey found that 80 percent of executives say they now understand that flexibility is a core part of the employee value proposition, up from 49 percent last year.
Flexibility helps to alleviate stress, but companies will also need to address other issues, such as health and financial wellness, if they want to employees to be engaged and thrive at work even as the business world continues to evolve, Penner said.
Flexibility at work is one of the "dream job factors" critical in attracting and retaining employees, according to a white paper from RainmakerThinking.
Tulgan said companies don’t have to cave into every request for flexible work arrangements, but they could allow managers more discretion and encourage them to actually use it. Too often, managers hesitate to use the discretion at their disposal, and it affects the employee negatively, he added.
"People leave when they don’t have enough support in day-to-day process. Middle level turnover happens because people get frustrated but stay anyway and seem like low performers. Then they are gone, and you are back where you started. It’s a vicious cycle of a staffing crisis," Tulgan said.
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