Don't underestimate the importance of job advancement for keeping talent.
Employers in the U.S. are facing a "talent paradox." Despite relatively high unemployment, many companies are confronting shortages in areas where they most need to attract and retain experienced workers. As the economy recovers, employers increasingly should be concerned about losing critical and high-potential talent, according to a presentation at the 2013 WorldatWork Total Rewards conference, held here April 29-May 1.
"There is typically a spike in voluntary turnover after a downturn," said Robin Erickson, a rewards specialist at Deloitte Consulting. The cost of voluntary turnover can be significant and includes loss of productivity, lost institutional knowledge and relationships, and added burdens on employees who must take on more work, she noted. The effects of higher turnover will become even more challenging because "what organizations want to do after a recession is grow."
According to a September 2012 Deloitte research report, when employees were asked to indicate the top factors that would cause them to look for new employment over the next 12 months, they most often cited:
- Lack of career progress—mentioned by 27 percent of surveyed employees.
- New opportunities in the market—22 percent.
- Dissatisfaction with supervisor or manager—22 percent.
- Lack of challenge in the job—21 percent.
- Lack of adequate bonus or other financial incentives—21 percent.
- Lack of compensation increases—21 percent.
- Lack of job security—20 percent.
- Excessive workload—20 percent.
- Lack of trust in leadership—17 percent.
- Inadequate or reduced benefits—15 percent.
"Pay is important, but executives underestimate the importance of promotion and job advancement, especially among Millennials and Generation X," said Greg Stoskopf, a director at Deloitte. He pointed to the following generation-based employee survey findings:
"People can be promoted without big increases in salary," Erickson said. "In many instances it's not all about the money."
Wanted: Career Paths
"Employees who believe their employers make effective use of their talents and abilities are overwhelmingly more committed to staying on the job," Stoskopf said.
Organizations should identify workers who are central to the execution of business strategy and then develop or update retention plans to meet the needs and expectations of these employees, he advised. Critical workers could include those who:
- Drive a disproportionate share of key business outcomes.
- Significantly influence an organization's value chain.
- Are in short supply from the respective labor market.
Providing identifiable career paths is an important aspect of retention plans, along with coaching and mentoring those with high potential, and moving proven performers into new roles that fit skills developed over time. "Of surveyed employees who plan on staying with their current employer, 72 percent felt that their talents were being effectively used," Stoskopf said.