Recent labor shortages have forced some restaurants to close or restrict hours. Culver’s, Wendy’s, Arby’s and others are offering up to $18 per hour along with a signing bonus. Yet some of their jobs still go unfilled.
What happened to the workers? Where did they go?
Earlier this year, some employers said workers were staying home due to COVID-19 and that additional unemployment benefits and government subsidies kept some workers at home. But these benefits have been reduced, and the subsidy checks have stopped, and still the unemployment rate is historically low. Wisconsin’s unemployment rate dipped to 2.8% in March.
What’s happening?
The number of job openings in the U.S. far exceeds the number of available workers, said Dave Balistreri, owner of Select Technical Staffing Inc. in West Allis.
“What you’re seeing now is extreme competition for available candidates in the workplace and a strong emphasis put on retaining the workers that companies already employ,” Balistreri said. “Sign-on bonuses, referral bonuses, increased PTO, flexible schedules, paid education, on-the-job training and a whole host of other things are being offered to compete for workers.”
Balistreri’s statement has been reinforced by the experience of members of the Lumen Christi Employment Network. Many have negotiated signing bonuses, expanded paid time off, flexible hours, assigned parking and a hybrid work environment. With the shortage of qualified candidates, the employer is in a very competitive market, similar to free agency in professional sports. Currently, the qualified candidate is at a competitive advantage. They are reaping the rewards, but when the market finally slows down – and it will – the advantage will again swing back to the employer.
In order to retain employees, companies are granting one-time raises that are upwards of 20%. They are permitting flexible scheduling of hours and increasing benefits. They know how difficult it will be to replace a critical employee and their knowledge of the company, customers and processes.
According to TERRA Staffing Group, the cost of employee turnover in 2021 was as follows: $12,000 to replace an employee earning $36,000 annually, $20,000 to replace an employee earning $60,000, and $50,000 to replace an employee earning $150,000. With this in mind, what can employers do to retain their best performing employees?
Here are some strategies for employee retention, as put forth by Society for Human Resource Management in Security Management magazine. According to the Retention Report in 2017, the three top reasons for employees to leave jobs were:
- Career development
- Work-life balance
- Manager behavior
These reasons still appear to be relative to today’s market churn, but we need to add a competitive wage rate. At this time, the country is experiencing wage inflation driven by shortages of skilled employees in certain industries.
Regarding career development, employers need to invest in their new employees, build their skill sets and provide opportunities for job growth and personal development. They need to provide opportunities for upward mobility and additional responsibility. Many employees leave because they don’t feel challenged, appreciated or even acknowledged.
In recent years, work-life balance has become an important issue for millennials. Time spent with families and for self-improvement are of great importance to many members of this generation. For many, the ability to work from home or in a hybrid environment is an important option when considering a position.
One strategy that has a positive impact on employee retention is onboarding. Less than 15% of American companies agree that they do a good job of orienting new employees and bringing them into the company culture. In the short term, this can lead to employee dissatisfaction and increased levels of turnover. Investing in a strong onboarding program can make the transition into your culture easier for both the new employee and the company while also reducing the potential for turnover and a loss of the investment in the new employee.
Another potential strategy is to protect your investment in your employees by making sure you are paying competitive wages and that your benefit package is meeting their needs. As stated earlier, the cost of replacing a key employee is more than the cost of making their compensation package competitive. These costs don’t consider how the loss of one or more key team players will impact your company’s morale and culture.
By being proactive and responsive to your employees’ needs, you can slow the churn and keep your competitive edge.
