As the economy appears to improving, small businesses need to focus on retaining talent that is in high demand.
These “hot jobs” include information technology, R&D/scientific, engineering and executives/top management,” according to Loree Griffith, Principal with Mercer’s Rewards consulting business in the US.
According to a Mercer study, almost twice as many organizations today are reporting reduced levels of employee engagement compared to two years ago (24% versus 13%, respectively).
If prior experiences hold true, a major source of talented or skilled talent will be smaller companies with less benefits or lower salary scales.
“Employee loyalty has been eroding the past few years due to companies’ responses to the economic downturn,” said Griffith,. “Actions like layoffs, pay freezes and limited training opportunities have created an evolving employment deal for employees due to uncertainty about what is expected and how employees will be rewarded. Meanwhile, firms are still aggressively managing people costs while finding ways to re-energize and re-motivate engaged employees.”
According to Mercer’s 2012 Attraction and Retention Survey, more than 40% of participating organizations are expanding their overall workforce in 2012 compared to just 27% in 2010. Moreover, fewer organizations today than two years ago are making selected reductions to their workforce (16% versus 25%, respectively), Yet despite this positive news,
Mercer’s 2012 Attraction and Retention Survey examined the challenges, strategies and tactics organizations are using to promote employee attraction, retention and engagement. It includes responses from more than 470 employers across all industries throughout the US and Canada.
Turnover is another factor contributing to the attention employers are placing on employee engagement. Almost 60% of participating organizations are anticipating increases in voluntary turnover as the job market and economy continue to improve. Additionally, Mercer’s survey shows that certain positions are more sought-after than others because of skills shortages and market demand..
“Employees with the ‘right’ skill sets are in demand,” said Ms. Griffith. “Despite the increase in hiring, many firms are experiencing talent shortages due to critical gaps between skills employees possess and skills businesses need. Now more than ever, firms need to engage and develop their high potential employees and critical workforce segments.”
Rewards, cash and non-cash, are continuing to play an important role in fostering employee engagement and retention, particularly in times of reduced base pay increases and smaller bonuses. According to Mercer’s survey, merit increases are back, with the large majority (95%) of organizations providing some form of increase for 2012.
However, cash rewards are not the only consideration. As in 2010, organizations today are continuing to enhance the use of non-cash rewards to drive employee retention and engagement, particularly during times of limited merit budgets.
The most prevalent non-cash reward programs implemented by organizations over the past 18 months include: communicating total reward value to employees (offered more by 25% of participating organizations), use of social media to boost the employee work experience (25%), formalized career paths (22%), internal/external training (22%) and special recognition (22%).
Many of these programs are consistent with those used two years ago. However, more organizations are using programs such as social media and team building events to enhance the work experience. In addition, the provision of training programs has expanded since 2010.
Although use of non-cash rewards continues to grow, top reward elements that organizations expect to have the biggest impact on employee engagement and retention in 2012 are base pay increases (reported by 50% of participating organizations), followed by vertical career progression (47%) and leadership development (46%). Other reward elements that are viewed as having a moderate impact on employee engagement and retention include variable pay, health care benefits, work life programs, performance management, time off programs and training.