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
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
Starting A Great Retention
Strategies for Keeping and Attracting the Best and Brightest Talent Vast numbers of employees reporting burnout and wishing to leave, record-level quit rates, and millions of unfilled positions have led to concerning new terms, such as “The Great Resignation” or “The Great Reshuffle” and for Baby Boomer employees who’ve had enough – “The Great Retirement.” However, for most business leaders, it is becoming a “Great Headache.” We live in a time of “greats,” and they are generally not too good. In addition, we see firsthand high levels of career unhappiness across multiple generations. So, as employees continue to leave in record numbers and leaders worry about keeping their best and brightest while bringing others on board to fill gaps and continue their growth, how do we begin to get a handle on this and start a “Great Retention”? Of course, the pandemic is often seen as the root cause. After all, entire industries and labor pools have been affected (i.e., travel and hospitality), and some are seemingly changed forever due to the last 18 months. However, many of these challenges were already underway well before the pandemic – skills shortages, “war for talent,” record low unemployment, demographic shifts, generational attitudes concerning work, technology, and more. The pandemic has simply accelerated many of these changes. As business leaders, how do we move our own companies from a “Great Resignation” to a “Great Retention”? How do we change from the reactive mindset of the last 18 months to a more proactive approach designed to not only attract great candidates but to keep your best and brightest employees from seeking greener pastures elsewhere? In our discussions with clients and candidates, there are three “Cs” to pay attention to in the ever-changing employment landscape: culture, communication, and capital (the human form). Spoiler alert – although important, “Compensation” is not one of them. Your Culture When talking with candidates, we typically ask what is prompting them to seek a new opportunity? Far and away, the number one answer is culture. They report no empathy, understanding, work/life balance, and how their company handled the challenges of the pandemic has them looking to leave. In fact, according to a recent PI People Management Report, nearly 50% of employees are considering striking out for something new. Moreover, this trend is primarily driven by those earlier in their careers – 49% of millennials and 56% of Gen Zers are looking to leave their current positions. As we dig further into cultural challenges, we find a significant disconnect between company leaders and their employees in perceptions versus reality. For example, research from Human Resource Executive finds that 84% of CEOs believe empathetic organizations get stronger business results. On the flip side: 83% of employees would consider leaving their job to join a more empathetic employer. A case in point, we spoke to a candidate recently who was deeply insulted by his company leadership. He stated that the company went to a hybrid work schedule, usually a positive. “However, when they presented the plan, it was office days on Mondays-Wednesdays-Fridays because the boss said he didn’t want anyone taking 4-day weekends. They don’t get it – we have been working harder than ever, the company’s growth has been exploding, and he flat out accused us of being lazy. I’m burning out, working more overtime and weekends than ever, and more than a few of my team said, ‘I’m outta here.’ It is never enough.” Sadly – a true disconnect and a wasted motivational opportunity. Since the pandemic started, people who work from home across all generations are logging an average of two more hours of work per day. According to a recent Finery Report survey, 83% report working overtime was the norm, and 70% regularly work on the weekends. Pandemic burnout, resetting priorities, and a need for work-life balance are real. However, it also creates opportunities for companies with cultures that better address it through more flexible work schedules and letting employees have choices, setting clear work-life boundaries (fostering the need for a life outside of work), and increasing support. According to the Adobe survey, 78% of millennials and 74% of Gen Zers would switch jobs for a better work-life balance, even if offered the same compensation. Communication: Talk or They’ll Walk Working from home and hybrid work arrangements, while showing increased productivity, also make the employee feel less seen, heard, and valued. Our strategic partner, 15Five, a leader in employee engagement and management software, has just released their 2020 Workplace Report, and while there is no quick fix, a solution is emerging – frequent one-on-one meetings. When managers regularly communicate through ongoing one-on-one meetings, especially in WFH and hybrid environments, they increase their effectiveness as managers and their teams and company overall. The results are staggering: 82% of employees with weekly one-on-ones say they’re getting the support they need during the pandemic from their managers. 78% of employees state that weekly one-on-ones provide the necessary feedback they need to improve performance. 71% express more trust in their leaders, 72% feel more comfortable bringing up issues, and 73% are more motivated to go above and beyond in their role. Importantly, 1.4x are more likely to say they are currently looking for a new job with monthly or less frequent one-on-ones instead of weekly. Regular communication helps bridge the gap. Consider the outside pressures your employees have been under the last (18) months. It is no wonder that “burnout” is often cited as the reason for leaving a company or manager – they are losing the feeling of connectedness to their manager, team, and company. Staying up to date with an employee through weekly meetings helps managers understand how their people handle their work and where they need more support and guidance. The message– Talk, or they will walk. Communicate with your people frequently and one-on-one. Human Capital Investment Another casualty of the last 18 months has been learning and development (L&D) programs – only 29% of organizations have clear development plans for their employees. In
Rethinking Hiring in Horticulture
Effective Strategies for Hiring in the Horticulture Industry By Benjamin Molenda & Harrison Downing, Human Capital Advisors at BEST Human Capital & Advisory Group Are you excited at the prospect of increased demand in the Horticulture Industry over the next few years? But, on the other hand, are you concerned that you will struggle to supply material to meet consumer demand? You are not alone in these thought processes. Most companies are identifying areas to invest increased revenue in satisfying new requirements. Whether through R&D, new market channels, LEAN manufacturing approaches, supply chain amelioration, or bringing on talent for these and additional departments. When hiring in today’s changing climate, it is important to understand options, strategize a plan, and develop expectations, as the industry’s talent pool is critically thin compared to talent needs. The Process Scheduling interviews can be complicated, especially acknowledging that not only are your team members busy with their responsibilities, but the prospective candidate is likely busy in their current role. The chances of finding a quality applicant who is currently unemployed are slim. Thus, it is imperative to be realistic when setting a start date for a new hire. The traditional “2 weeks’ notice” is often satisfactory. However, occasionally, more time is required for the individual to leave their previous employer, potentially your same customers, and put them in a position for success. None of us want to burn any bridges. It is now a commonly accepted, if not begrudged, belief that quality professionals are not frequenting job boards and applying to postings. In discussions with many companies, posting a job is often more about marketing than actually identifying candidates. Utilizing current relationships to network opportunities, involving HR teams and other departments to brainstorm candidate flow, and inquiring with customers or suppliers on star players they interact with are among the options to identify talent in our close-knit industry. The graphic at right represents a recent mid-level position hire. The hiring project timeline included posting job descriptions on job boards, networking with industry leaders, and actively sourcing candidates through executive search. At a minimum, it typically takes (3) weeks to identify qualified individuals, (3) weeks to interview and offer, and (3) weeks for the individual to transition and start in their new role. For senior-level positions, plan to add a minimum of (2) weeks for each of the three steps. Because of this dynamic and the budgeting process, many companies start their hiring process a year in advance to identify what roles are needed in their organization. Hiring from within is a practical approach as it is quick, cost-effective, fluid with the company culture, and can motivate loyal employees who aspire to grow professionally. These items add up to expose less risk than hiring externally. However, internal promotion is not always the best option. Animosity between internal applicants can arise, leading team members not chosen to question loyalty. Another critical element to hiring from within is succession planning. As one hole is filled, another is created in the previous position. Active cross-training prepares team members for succession, strengthens the organizational chart, and motivates the team. Finally, from a legal and efficacy standpoint, a hybrid approach of external search and looking within ensures all available talent is vetted as there is a lack of candidates in our industry. Positions in Operations, R&D, Supply Chain, eCommerce, Analytics, and Sales are being created as companies match changing markets with innovation. Yet, retirement rates are increasing, reducing what is already a thin talent pool for horticulture. Add to this that CEA, Cannabis, and Hemp are hiring from the same talent pool as Ornamental, Nursery, Landscaping, Turf, and Greenhouse – there is indeed a growing talent gap. Casting a broad and flexible net when sourcing talent is crucial. One strategy includes considering all candidates, regardless of age. Another is compromising the amount of required product knowledge, customer relationships, or years of experience and instead focusing on a professional’s behaviors. This option requires increased front-end work through strategic planning and assessments. However, it will ultimately unlock a lucrative talent pool, allow for culture alignment, and increase productivity based on the candidate’s behaviors. We should not ignore experience and product knowledge. Painting a “purple squirrel” (what we call a perfect candidate) is an important thought project when conceptualizing a position, but how many purple squirrels have you seen? If there are (5) “boxes” that you believe must be checked for a role, it may be worth reducing it to a top (3). If a candidate shows strong behaviors, perhaps they can achieve the (2) boxes they cannot check with proper training and management. Conversely, it is nearly impossible to train or manage behaviors as they are set early in life. Behavior-based hiring dramatically opens the talent pool outside of the industry for the right fit. There will be repetitive conversations in interviews, but developing separate focus areas for each interviewer is integral to moving quickly. This approach also gives the prospect an understanding of potential interactions with the interviewer. Continuing to utilize virtual meeting resources early in the interview process allows for flexibility. One-on-one interviews with senior leaders are expected, but interview teams of 2-3 display company culture for the candidate and expedite the process. Once in interviews, an element to consider is how the candidate will be led based on their personality and responsibilities. The initial conversation with a candidate may be the most important. Spend it listening and learning. Listen 80% of the time and speak 20% of the time. Engage them about experiences, listen to what motivates them professionally, and focus on behaviors illustrated when describing achievements. Do not oversell the position or company as there is no perfect job or company. Accentuate the positives but be transparent about challenges and difficulties in the role. Truly understanding your prospect’s personality traits and professional behaviors will create a stronger relationship leading to higher buy-in, more productivity, and continued transparency. Congratulations, you have hired a strong professional! However, the process of engaging them is
Rethinking Age in Hiring
We recently sent an email to our BEST BRIEFS newsletter subscribers on the topic of ageism, and it definitely touched a nerve. Here is the original email content, followed by some of the comments we received on the subject. Our Original Message On January 20th, President Biden was sworn in and is now officially the oldest President the U.S. has ever had at 78 years old. A few weeks later, a 43-year-old Quarterback, with a 68-year-old Head Coach, and an 82-year-old Offensive Consultant, won the Super Bowl. These events alone should have us rethink ageism, but unfortunately, it is alive and well, and COVID has made matters worse. Studies show that workers ages 55 and older have experienced increased ageism from employers, particularly amid the pandemic. As people start to enter their 50s, they are more attuned to discrimination in the workplace. So much so that 58% of workers aged 50 or older have noticed age discrimination firsthand. Yet they’re known as being the most engaged in the workplace, not to mention the most experienced. Though our article on the topic of ageism (“Focusing on Youth in Hiring is Hurting Your Organizational Health”) was published before COVID, the point remains – it is time to rethink age in hiring, especially in industries (i.e., horticulture) where experience and qualified talent is increasingly becoming difficult to secure. After all, where are the Mentors and Coaches badly needed by younger generations to be found? Comments We heard from several business leaders on this topic, and here are a few of their comments. • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Personally, I achieved the most in my 50’s and 60’s: I wrote two of my three books, spoke 22 times across Canada and the U.S. won an award for Best U.S. Speaker in Canada from TEC, a Canadian CEO peer group, won five Best Place to Work and two diversity awards for United Way. I believe that individuals have to shake off society’s negative messages about getting older. We have to create our own “the best is yet to come mindset.” Oh, and my last book was all about companies that have strategies to maximize the creativity, productivity, and value of 50+ and previously retired employees. We make our own luck—and that applies to the organizations that don’t waste this valuable resource! • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • You are spot-on for highlighting ageism! It is the 60-year-old elephant in the room. I have been in meetings where it was disguised as “he/she probably isn’t up to date with technology as a reason for not considering an otherwise qualified candidate.” The older generation invented the computer. We darn sure have the intellectual capacity to learn some of the updates. Also, was there when the “Are you sure he/she will fit in with the younger members of our team?” Ageism comes in many flavors and is very active in today’s job market. Employers are crying for skilled workers who show up on time and give their best but overlook an audience right before them, ready and willing to contribute. Ageism is a cancer in the workplace. My new mantra is: I N D Y stands for “I’m Not Done Yet!” • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Special thanks to those who commented on our piece. Please complete the form below if you wish to subscribe to future BEST BRIEFS newsletters. In this unprecedented business environment and labor market, it may also be time to shift your thinking on recruiting and make an investment to bring on an experienced partner. One that can help you acquire the right talent and put your company in a position to grow. We can help. If your company is ready to strategically address, improve, and invest in the hiring of the most important part of any company – its people — contact us today!