While the recession is easing and unemployment figures are falling, there is another set of numbers that doesn’t look so good.
In a recent global survey of 319 senior executives, 65% reported they were highly or very highly concerned that high-potential talent and leadership would leave once the economy turns. 52% predicted an increase in voluntary turnover at their companies once the recession ends, four times the number expecting a decrease. And 39% think that new job opportunities will become the biggest obstacle to retaining employees in the 12 months following the end of the recession.
During the recession, issues such as lack of compensation and excessive workloads became common, as companies cut costs, restructured departments and conducted massive reductions in force. Now that better days are in sight, many employees are ready to make a move to companies that offer better compensation and opportunities for growth.
Too many companies have no retention plan to deal with the approaching wave of high turnover rates. Here are 5 ways to save your company from going under:
1. Recognize and nurture top talent. Identify the company’s critical workers–the people who play the most significant role in the organization’s success. If your budget doesn’t allow for compensation increases, build loyalty through strategies such as leadership programs, international assignments or other developmental experiences high-performing employees can’t get elsewhere. At the same time, make sure executives share in any financial sacrifice. Nothing will kill employee morale faster than watching top executives collect huge bonuses while employee compensation is frozen or scaled back.
2. Tailor retention tactics to generational needs. When it comes to employee retention plans, age matters. A recent survey suggests that younger employees prefer greater financial incentives, such as higher compensation and larger bonuses, while baby boomers and employees age 65 and older prefer increases in other benefits, such as health care and pensions.
3. Find ways to foster loyalty. Introduce employee recognition programs and focus on company pride, morale, and appreciation. Promote from within the organization and encourage employees to take an active role in their own career development process.
4. Reward retention, not just financial results. Make sure your senior leaders tie compensation, bonuses and other rewards not just to operational or financial numbers, but also to the turnover rates of their managers’ departments.
5. Keep the lines of communication open. If turnover increases or if more cuts still need to be made, don’t try to hide the news from your employees. Layoffs damage employee morale, yes, but keeping such decisions a secret will only increase anxiety and erode employee trust. Be honest about high turnover rates and allow employee input regarding their needs for retention.
Losing employees can have a significant impact on the corporate bottom line. If you factor in the loss of intellectual capital and experience, plus the decline in productivity and increased recruitment costs, the usual price of replacing a lost employee is two to three times his or her annual salary. Those are numbers nobody wants to see.