The employment market has seen a lot of significant change over the past 5 years. Spurred by the pandemic and the shift to remote work, we’ve seen several shifts in workers’ behaviours. First, we experienced the Great Resignation Period, where people chose to leave their jobs because of work conditions related to the pandemic. Then, there was a period where people made the choice to stay in their current jobs because of uncertain economic conditions.
Now it appears the winds of change are blowing again. Our Toronto executive search team is seeing candidates starting to explore their options once again. Movement is picking up and the tide is going to keep shifting away from “the great stay” towards more of a candidate’s market again. Change is a big driver of this shift. AI, tech, and other disrupters are changing people’s roles. For some, this makes them uneasy.
For employers, this means now is the time to re-focus on employee retention and take steps to keep your best people or risk losing them.
In this blog, we’ll discuss:
- Why employee retention is so important
- Why now is the time to double down on employee retention
- What you can do it improve your retention program
Why Is Employee Retention So Important? 8 Reasons Why Employers Should Care
Keeping your people happy should be a priority for companies all the time. But, it becomes even more important as we transition back to a candidate market. Jobs, roles, and responsibilities are changing. This can potentially affect how people feel about their current job.
The economy has changed significantly in just a few short years. The cost of living has skyrocketed, and many people are seeking stable income to endure the current challenges while hoping for interest rates and living expenses to decrease. For some, simply paying the bills is a struggle, making the idea of quitting their job nearly impossible.
Instead of resigning, many are exploring higher-paying opportunities, even if it means switching employers and industries.
“Workers are open to the future, but present-day pressures may be clouding their vision of what the future could look like and how they can contribute. Although there are compelling business reasons for change—CEOs are urgently trying to evolve their companies to remain economically viable over the long term—leaders must double down on making the case for change to their most important stakeholders: their workforce. Unless employees understand and help drive change, transformation plans are unlikely to succeed,” says PwC in their Global Workforce Hopes and Fears Survey 2024.
Employee retention is crucial for several reasons:
- Cost Efficiency: High turnover is expensive. Recruiting, hiring, and training new employees require significant time and resources. Retaining employees helps reduce these costs and allows the company to invest in other areas.
- Productivity: Experienced employees are more productive because they understand the company’s processes, culture, and expectations. Retaining them ensures a steady level of productivity and prevents the disruption caused by frequent turnover.
- Knowledge Retention: Long-term employees accumulate valuable knowledge and skills that benefit the organization. When they leave, this knowledge is lost, and the company may struggle to replace it.
- Employee Morale and Engagement: High retention rates are often linked to positive workplace culture and employee satisfaction. When employees see their colleagues staying and thriving, it boosts overall morale and engagement.
- Customer Satisfaction: Employees who stay with a company longer tend to build better relationships with customers. Consistency in service and familiarity with customer needs lead to higher customer satisfaction and loyalty.
- Company Reputation: Companies known for retaining their employees often enjoy a better reputation in the industry. This makes it easier to attract top talent and build strong partnerships.
- Innovation and Growth: Retained employees are more likely to contribute to innovation and growth. Their deep understanding of the business allows them to suggest improvements and lead initiatives that drive the company forward.
- Stability and Continuity: Retention provides stability, which is essential for long-term planning and execution. It ensures that the company can maintain its strategic direction without constant disruptions caused by turnover.
Why Is Now The Time To Double Down On Employee Retention?
Companies that don’t prioritize employee retention risk losing their top talent to competing organizations. With more people open to looking for a new job, now is the time to double down.
According to the PwC survey, “of the 56,000 respondents who were surveyed across 50 countries, about 28% said they were “very likely” or “extremely likely” to find a new job within the next 12 months, up from 19% in 2022.” This stat is very telling that we are headed back to a candidate market with increased movement in the marketplace.
The survey also identified a number of key insights about employees who say they plan to switch companies:
- Job satisfaction doesn’t mean they’ll stay: 56% are moderately or very satisfied with their current job. 13% are moderately or very dissatisfied with their current job.
- Increasing workloads is a factor: Among those whose workload has increased by a large or very large extent, 41% say they’re likely to switch employers.
- They recognize the value of skills: 67% report that opportunities to learn new skills would influence their decision to a large or very large extent (versus 36% of those unlikely to switch). 51% moderately or strongly agree that they have skills not clear from their qualifications, job history or job title (versus 31% of those unlikely to switch).
- They may be feeling overlooked at work: 50% moderately or strongly agree they have missed out on jobs/career opportunities owing to not knowing the right people (versus 19% of those unlikely to change).
The good news is that many employees are happy with their current employer. The survey found, “Most employees say they’re ready to adapt to new ways of working. Many are eager to upskill, and they see potential in using generative AI (GenAI) to increase their efficiency. More than half agree that recent changes they’ve experienced make them feel optimistic about their company’s future.”
What can you do to improve your employee retention program? Here’s 7 steps to start with
If you don’t already have a good retention program in place, now’s the time to start. Here are some tips from our recruitment team on where you can start:
- Take action to prepare your people for change in an era of technology transformation.
- Speak with your people about the need for and importance of change.
- Share the current and future vision of the organizations. Update employees as things change.
- Ensure your people are paid fairly. Offer competitive wages that are at or above industry standards.
- Make work fulfilling.
- Offer flexible work options and promote work-life balance.
- Invest in new technology to support employees in what they do.
A Final Word On Why Employers Need To Focus On Retention
In recent years, the employment market has undergone significant changes. The market is shifting again, with more candidates exploring new opportunities as changes in technology, AI, and other disruptions alter job roles. This has created a candidate-driven market, making employee retention more critical than ever. Employers need to focus on retaining top talent by addressing concerns about job stability, competitive pay, and adapting to technological changes. A strong retention strategy is essential to maintaining productivity, morale, and long-term company success.
More Retention Tips From Our Executive Search Team
Stop the Revolving Door. 4 Ways to Improve Employee Retention
Should You Hire a “Chief Cultural Officer” to Improve Employee Retention?
A WAY Overlooked Factor That’s Driving Employee Retention Down
