Successful Retention Strategies (Part 3 of 4): Total Rewards
With 3/4 of 2022 behind us, and despite record inflation and fears of recession, we are still seeing the most robust labor market in recorded history. Despite news of layoffs at FAANG companies, the broader tech sector, and retail giants such as Walmart and Target, candidates still have more choices and power in the labor market than ever. Even with historic wage growth of over 5% YoY, wages still significantly lag inflation leading to net wage growth of below -3%. Technology improvements and the continued failure of businesses to appropriately demonstrate caring and support for their people are still significant drivers of the current Great Resignation, which is rapidly becoming “Quiet Quitting” and “Ghosting” as employees – well, they stop showing up for their jobs rather than provide appropriate notice. We are still seeing that resignations are not impacting all businesses, industries, and sectors nor all career levels equally, yet all segments are impacted, nonetheless. Even the Executive level (Vice President through C-Suite) continues to cash in on this wave, driving up base salaries, signing bonuses, and restructuring bonus packages to be more favorable to them and less so to the companies they serve. This is the third of a 4-part series addressing Onboarding, Recruiting, Total Rewards, and Organizational Design strategies that collectively affect and reflect the retention strategies of an organization. As shared in the previous two articles in this series, there continues to be an absence of a single silver bullet to stop the resignation trend. There is still too little attention placed on the one focus area with the highest probability of making the most positive and significant impact on stabilizing the challenging labor and employment market. That focus – RETENTION STRATEGIES. In this article, we will shift our focus toward the role that Total Rewards play in employee retention. Total Rewards is a combination of both compensation and benefits. The term benefit is not intended to be applied exclusively to medical, dental, and vision benefits. Any benefits – vacation, sick pay, parental leave, tuition reimbursement, continuing education, Flexible Spending Accounts for Child Care, and more all fall into this category. When we open our minds and eyes to the breadth of options in the benefits category of Total Rewards, it is easy to see that there is an entire untapped arsenal of options available to retain top talent. That is not to say that compensation is not important. Still, we want to call out that many companies have relied too heavily on direct compensation as a retention tool and too little on other forms of compensation. Without getting too deep into the weeds, let’s look at some amazing ways Total Rewards can be leveraged to drive up retention and reduce unwanted attrition or turnover. Compensation In the years 2000 through 2019, the average annual wage increase in the US was 2.92% (Average Wage Index (AWI) (ssa.gov)), and the average inflation rate was 2.10% ($160,000,000 in 2000 → 2019 | Inflation Calculator (officialdata.org)). This does not mean that wage increases were evenly distributed. CEO pay alone from 1978 – 2018 grew 1,007.5% vs. 11.9% for the average worker over the same period (CEOs see pay grow 1,000% and now make 278 times the average worker (cnbc.com)). However, overall average wage growth was close to where inflation existed, justifying in the eyes of employers the 2-3% annual wage increases most employees who performed well in their jobs were used to seeing. But the pandemic upended all of this. There are many levers that compensation specialists have at their disposal beyond base compensation. Cassandra Faurote, Owner, and CEO of Total Reward Solutions in Indianapolis, shared some revealing trends in total rewards. Some of these have a minimal impact on the bottom line, and it was very eye-opening to see just how little it could take to obtain and retain top talent. According to Cassandra, “A new and very hot back-to-office perk is a Pet Stipend. This is a monthly sum that can be used on dog walking, pet sitting, or some other form of daycare for pets.” Many of us have pets and love them as much as any family member. After working from home with these pets for so long, it is important to make sure they are cared for. Cassandra’s research revealed that “1,300 job listings [in 2022] describe offices where workers can bring their pets.” And yes, the BEST Human Capital & Advisory Group is one of those. See our precious ”steakholder” Tyson’s profile on our website. The four-day workweek is another key trend. While not appropriate for every role in the green industry, judicious use of this schedule for office-based roles, leadership, or any role not mission-critical for onsite during typical operating hours can lead to impressive results. A Maru Public Opinion Poll conducted for The Business Journal in February 2022 revealed the following: 82% of workers would trade 8-hour days to 4 ten-hour days for the same pay. 88% of earners at $100,000+ per year wanted this. 76% of those making less than $25,000 per year also wanted this. The Midwest was 84% higher than all other regions in the country in their desire for the 4-day work week. 74% said they would leave their current jobs for a 4-day work week. 97% said they would be more productive. Cassandra also shared other key compensation drivers of retention that are too often overlooked by businesses, including free lunch (after all, who wouldn’t want a free lunch?), variable pay, performance management, and merit pay. Employees respond very well to variable pay. This helps them connect the importance of what they do to the company’s results. It provides them with greater control over their own earning potential. Through variable pay, employees can see what the company values most and put their best efforts into those activities that are most impactful to the company and their own financial goals. Cassandra shared that, according to World at Work, a global association for human resources management professionals and
BEST Receives the Certified Value Builder™ Designation
BEST invests in current and future business owner clients with the addition of a Certified Value Builder™ (CVB) Designation BEST keeps getting better – BEST Human Capital & Advisory Group proudly announces that Managing Partner Chris Cimaglio, CEPA, has earned and received the respected Certified Value Builder™ (CVB) designation from The Value Builder System™. Chris now joins an international community of trained business advisors, which incorporates the world’s leading thinkers in building value in companies for their owners and stakeholders. Chris earned his designation as a Certified Value Builder™ to support our client’s transition goals and maximize the value of their businesses. According to The Exit Planning Institute, 76% of business owners plan to exit their business in the next ten years, and many will turn to an advisor for help. For the last four years, BEST has become very involved in the succession and exit planning process to better prepare its clients for the eventual leadership transition of their business. It was a natural extension of their Executive Search services as many owners came to BEST looking for successors to lower their company’s dependence on themselves and assist with leadership and family succession. Other engagements arose from BEST’s HR Advisory services. BEST has now integrated The Value Builder System™ into its strategic advisory services for small and midsize business owners and CEOs. The Value Builder System™ incorporates several diagnostic tools, including the Value Builder Score, an evaluation system driven by an algorithm that evaluates a business on the eight core values acquirers consider when buying companies. The Value Builder Score provides a comprehensive assessment of the “Sellability” of your business, whether you want to sell next year or to know that you’re building a valuable asset for the future. As CEPAs and Certified Value Builders, our team is qualified to interpret your Value Builder Score. Those businesses that achieve a Value Builder Score of 90 or greater are worth double the average-performing company. In our Succession & Exit Planning Advisory at BEST, our mission is to dramatically increase your business’s value, anticipating a future sale or inevitable ownership transition. After completing a Value Builder Assessment, a confidential report follows to measure the owner’s readiness. The report provides a process for the organization to achieve full value before selling a business. The “Sellability” of your company is not determined by the owner, your revenue, or your impressive list of customers. The buyer determines it. The Value Builder Score is based on eight factors that make a company attractive to buyers and maximize what a buyer is willing to offer. Sound like something you want to know? Then let’s get started. The single largest transaction and transition of your life deserve special attention. At BEST Human Capital and Advisory Group, we are committed to helping our business-owning clients succeed in their business and personal lives. Unfortunately, we see clients working so hard in their companies and too many owners delaying their happiness and financial savings. Many do not have family interested in the business, which brings the question of succession planning when there is no succession? Many owners arrive at the end of their careers and find out the company is not positioned nor ready to successfully transfer to a new owner. As a result, these owners missed the opportunity to grow transferable value. On the flip side, BEST has also experienced working with owners who try to handle the business transition by themselves, which usually leaves money on the table and leads to regret.
Successful Retention Strategies (Part 2 of 4): Recruiting
As the year continues to see upheaval and tremendous instability with rising inflation, tight supply chains, and persistent pandemic fears, the labor market also remains the tightest in recorded history. The Great Resignation has left many businesses scrambling to fill open roles and struggling to figure out how to continue growth or achieve strategic plans with a seemingly revolving door of employees. There is no silver bullet to stop the trend, but there is one critical focus that has received too little attention leading up to and throughout this pandemic and the new challenges that stem from it. This focus has the highest probability of making the most positive and significant impact on stabilizing this challenging labor and employment market. What is it, you might ask? RETENTION STRATEGIES. This is the second of a 4-part series addressing Onboarding, Recruiting, Total Rewards, and Organizational Design strategies that collectively affect and reflect the retention strategies of an organization. The previous article focused on the Onboarding piece. This was important to address because of the egregious errors we saw many companies make in their rush to bring in talent. This article will focus on recruitment’s role in employee retention. While the apparent function of Recruitment is to add headcount to an organization or backfill open positions, little has been shared about Recruitment’s role in employee retention. In fact, employee retention starts with Recruitment. We all know that it is rare, if ever, when we get a second chance to make a first impression. The Recruitment function of an organization is the first impression candidates, and prospective candidates may receive. Thus, it is critical to make it a positive one. Following are several steps that Talent Acquisition partners can and should take to lay the foundation for long-term employee retention, whether internal or external to an organization. Be Real Often, recruiters approach talent acquisition as a transaction, “selling” the company by focusing on all of the exciting and wonderful features, perceived or real, about a company. It comes naturally for many recruiters because they are often selected to be a Talent Acquisition professional based on prior or exhibited sales experience. And while salesmanship is not necessarily a bad trait, it boils down to “how” not “that” you use the skill set. Whether in retail, B2B relationships, or even in the most complex business interactions in the M&A arena, no one wants to be “sold” to today. What people want are solutions to problems. A big challenge is that people don’t want to bluntly disclose the very problems they need to solve. Uncovering these concerns requires a consultative approach. A true consultant will reflect care and compassion, listening to understand first before being understood. A high Emotional Quotient (EQ) combined with an analytical approach will allow the Talent Acquisition professional to best consult with the candidate and help them understand the alignment between them and the role to be filled. This soft approach opens the hearts and minds of candidates to what they can expect when joining a company and often is the first trigger towards high engagement— a key we will address in other articles in this series and a critical link to employee retention. Part of consulting is ensuring prospects and candidates understand the good and the bad about a company. No company is perfect, just like there are no perfect candidates. The exclusive pursuit of only the perfect will always disappoint, leading to disaster and an impossibly long recruitment cycle. Every company has challenges. The right candidate must understand these challenges and be excited to tackle them. They should not be daunted by the challenges but willing to embrace them. Of course, there must certainly be something in it for them, and the advantages should be presented to balance the discussion. In the end, there should be a win-win scenario where the advantages and disadvantages are shared, where both see that the right candidate will enhance the company’s advantages while solving their challenges. The right candidate’s advantages should be the right fit to solve these challenges, while a company’s advantages should be able to support the candidate’s growth and development. Like a jigsaw puzzle piece with curves on various sides with high and low points, the highs of one should fit the lows of others and vice versa. This is being real. Be Engaged Automation permeates so much of our lives, and the intent is to make things easier and faster, to do more with less. Unfortunately, there are times and interactions where technology is just a poor substitute. How many of us receive blind outreaches on LinkedIn, email, or even spam calls about products or services that have no alignment to us, what we do, want, or need? Someone is throwing mud on a wall and hoping something will stick. But how do you feel about such an approach when you receive one? Do you think a candidate will feel something different just because you are the one deploying such an approach? Everyone, to one degree or another, wants to be noticed and be recognized for their accomplishments. They want to be wanted and sometimes pursued. When reaching out to the passive job market, craft personal messages that tell the prospective candidate you read their profile or resume. Connect the dots to show them what made you believe a conversation may be worth their time, and importantly— do your homework. When Talent Acquisition professionals are disengaged, they fail to pay attention to the little details that make the most significant differences. They fail to catch experience, education, and geography. There is a lack of analysis and understanding of career trajectory or directionality. But the most critical miss of the disengaged Talent Acquisition professional is a failure to follow up. They make promises they do not or cannot keep. Candidates and prospective candidates view this as disingenuous. The perception is that the Talent Acquisition professional— to put it lightly— is not very professional. If by some miraculous chance the candidate is
Successful Retention Strategies (Part 1 of 4): Onboarding
The current labor and employment market is the most volatile in recorded history. Never have employee candidates had more choices and power in the market than they do today. Add to this the pandemic, continued low wage growth for most people below the executive level, technological improvements, and failure of many businesses to appropriately demonstrate caring and support of their people. The result is the current crisis known as The Great Resignation. While the Great Resignation does not impact all businesses, industries, sectors, and career levels equally, all of these segments are nonetheless affected. Even at the executive level (Vice President through C-Suite), where people are arguably treated better than many front-line, entry-level people, and who are recipients of already higher pay and higher pay growth over the last 20 years and more, are cashing in on this wave driving up base salaries, signing bonuses, and restructuring of bonus packages more favorable to them. There is no silver bullet to stop the trend, but one critical focus has received too little attention leading up to and throughout this pandemic. This focus has the highest probability of making the most positive and significant impact on stabilizing this challenging labor and employment market. What is it, you might ask? EMPLOYEE RETENTION STRATEGIES. This is the first of a 4-part series that will address Onboarding, Recruiting, Total Rewards, and Organizational Design strategies that collectively affect and reflect the retention strategies of an organization. Employee Relations and Communication strategies overlap and lend support to these (4) categories, making them more successful at retaining key talent. Interesting to note that each of these areas (outside of Onboarding and Communication) is a dedicated Human Resources discipline. Each discipline is far too deep a topic to cover fully and impacts significantly more than just employee retention. Therefore, each area will be discussed from the standpoint of their impact on employee retention and not the totality of the discipline. A Typical New Employee Onboarding Scenario Let’s take a look at a typical start to a new hire’s onboarding journey. It’s your first day on the job. The day is filled with hope and promise. The interviews were exhausting, lasting several days stretched over several months. Many were conducted virtually due to the pandemic and precautionary guidelines (thankfully, they didn’t see your comfy fuzzy bunny slippers). The final interview included an in-person onsite series of interviews and a facility tour. You are nervous even though you are confident you made the right decision. As you walk into the office building for your first day, you notify the receptionist that you are here. He looks at you quizzically, not knowing who you are nor whom you are supposed to see. The receptionist asks you to have a seat, and he will track down who should greet you. “This is odd,” you think to yourself. “The interview process seemed relaxed, organized, and well-executed. Perhaps it’s nothing, and I’m just being critical. Relax – think happy thoughts. Today is going to be a great day!” Twenty minutes go by, and no one has come to greet you yet and begin your onboarding. You approach the receptionist and ask, “Sir, am I supposed to be meeting with HR first or my direct supervisor?” “I’m not sure,” he replies. “I contacted HR, but they did not answer. I left a message with the HR Generalist, who typically handles new hire paperwork. I am sure they will be here any moment.” And so, you go back to the seat in the receiving area where you had been sitting and continue to wait. Anxiety starts to build into frustration. “I did get the right start date, didn’t I?” you think to yourself. You pull out your cell phone, access your personal emails, and search for the welcome email with your start date information. “Yep, I got the right day and time.” After another 20 minutes, an employee comes in through the front doors. On their way past the front desk, the Receptionist stops them saying, “Akeem! So glad you are here. I left a voice mail for you a bit ago about this person starting today. Are you supposed to do their onboarding, or is the hiring manager?” Looking a little embarrassed, Akeem says. “I’ll handle it,” and he turns to greet you, arms full of coat, coffee, umbrella, and thick, overstuffed computer bag. Fumbling with everything to free up a hand, Akeem offers you a proper handshake and greets you. “Hi, I’m Akeem, HR Generalist. I hope you have not been waiting long.” Mentally you are quite miffed and barely contain the thought, “waiting long? I have been waiting for nearly an hour now,” from coming out your mouth. “Not too long,” you reply instead. “Very eager to get started for my first day.” This scenario often plays out in too many companies, from small independently owned businesses with under 20 employees to large publicly traded multi-national companies with over 60,000 employees globally. It does not matter if there is no HR presence, an HR department of one, or a large 100+ person HR department with defined HR discipline coverage and degreed/certified professionals, this first-day scenario and the corresponding train-wreck of an onboarding experience that follows it can happen anywhere. An experience such as this starts the time clock ticking towards resignation day. Not what any business wants when they spend so much money, time, effort, and energy to recruit the right person for the position. An effective new employee onboarding program is a critical step in retaining employees. The only constant in business is change, and change is the greatest source of stress, worry, and concern for most people regardless of career level. The onboarding process should be designed to reduce the new employee’s stress, anxiety, and concern by transparently and effectively communicating with them. Effective communication is critical. Each company is uniquely different, so each employee onboarding program should be customized to your company. Through the onboarding program, necessary compliance forms (such
Taking the BEST Exit and Succession Planning to a New Level for You
BEST invests in current and future business owner clients with the addition of a CEPA Designation BEST keeps getting better – BEST Human Capital & Advisory Group is proud to announce that Chris Cimaglio, a Managing Partner, recently earned the Certified Exit Planning Advisor (CEPA) designation after completing the Exit Planning Institute’s (EPI) intensive executive MBA-style program. For the last four years, BEST has become very involved in the succession and exit planning process to better prepare their clients for the eventual leadership transition of their business. It was a natural extension of their Executive Search services as many owners came to BEST looking for successors and to lower their company’s dependence on them and assist with leadership and family succession. Other engagements arose from BEST’s HR Advisory services. After training and partnering with the ExitMap® and BizEquity®, this has become a growing part of BEST’s clients’ needs. After publishing several articles on the topic and speaking at major industry events, Chris decided to complete the Certified Exit Planning Advisor (CEPA) Program through the Exit Planning Institute (EPI) to serve these growing needs better. If you aren’t familiar, the CEPA Program is the most widely accepted and endorsed exit planning program in the world, focused on cross-functional consulting and value acceleration. As a CEPA, Chris belongs to a multi-disciplinary network of high caliber, collaborative advisors in our area and across the globe. According to Chris, “This is personal for me, and I am passionate about it. I grew up in a family business and have worked with hundreds of them throughout my career. I have seen succession and exit plans work well, and others fail miserably. As a CEPA, we can now apply tested methods and approaches to change the outcome for these owners. We can do it together, collaboratively, and offer a more holistic program that helps business owners maximize the value of their business and personal financial plans to the next level and be prepared for what adventure comes next after they exit their company.” There is one indisputable fact – 100% of owners eventually will exit their business. It could be through family succession, sale, liquidation, closure, death, or any number of reasons – many of which are outside the owner’s control. According to an EPI report, over 75% of business owners who have sold their business profoundly regret it within a year after the sale. 50% of exits will be involuntary, and 40% of business owners lack even a basic business continuity plan should something happen to the owner (death, disability, divorce, or illness). BEST Human Capital and Advisory Group is committed to helping their business-owning clients succeed in their business and personal lives. They see clients working hard in their companies and too many owners delaying their own personal happiness and financial savings. Many do not have family interested in the business, which brings the question of succession planning when there is no succession? Many owners arrive at the end of their career and find out the business is not positioned nor ready to successfully transfer to a new owner. These owners missed the opportunity to grow transferable value. On the flip side, BEST has also experienced working with owners who try to handle the business transition by themselves, which usually leaves money on the table and leads to regret. We know in our hearts that it doesn’t have to be that way. The single largest transaction and transition of your life deserve special attention. Are you planning to exit and sell your business? Business Exit planning is quickly becoming a buzzword in the legal and financial communities. Your professional advisors position themselves to provide tax, risk management, wealth management, and contract preparation services. BEST Exit Plan Advisor has been trained to manage your team of tax, legal, business, and financial planners to navigate your exit strategy. Click here for our Special Section on Exit Planning for more details and a video on how to get started. If you want to see how prepared you are for transition, take the 15-minute Assessment at no charge: There is one indisputable fact – 100% of owners will eventually exit their business. The Assessment is a multiple-choice questionnaire that does not ask for confidential or financial information. Nevertheless, it is a critical first step in starting the discussion and planning process. Click here for FAQs and more information concerning our free, no-obligation exit planning assessment.
