Driving Employee Retention and Performance through Recruiting

Despite Economic Uncertainty, the Labor Market Remains Highly Competitive

The numbers are unprecedented. Despite efforts by the Fed to cool inflation, the labor market remains unusually competitive. As of September 2022, there are 66 workers for every 100 job openings in the U.S. alone, and while U.S. jobs growth might have slowed, unemployment also dropped, leaving a strong labor market.

So far, even economic uncertainty hasn’t been able to loosen the market. Despite news of layoffs in some industries, the U.S. labor market overall is expected to continue to be very tight through the next year.

And workers are not afraid to move to organizations that meet their career and life goals. According to Gartner, turnover is expected to be 50% to 75% higher than ever. While this sounds good to workers, it means that retention must be a top priority. Even if your organization plans layoffs, it’s important to retain the people you do have to ensure continuity, drive performance, and be prepared to grow once the economy returns to a stable growth phase.

The Future of Work Means Organizations Must Slow Quit Rates

The knee-jerk reaction of organizations with high quit rates - especially of their top talent - is to raise pay, increase benefits, or both. Let’s break that down.

Increasing base pay alone doesn’t solve the problem

With inflation at a 40-year high, employees feel the hit in their household budgets. So it’s natural for organizations to make increasing base salary a top priority.

There are two issues with this attack. First, in uncertain economic times, budget cuts can mean there is no money for pay increases. Often pay rates are the first cuts in budgets where every amount of spend has to equal value.

Secondly, the hefty pay increases of 2022 alone have done little to stem the quit rates. According to Gallagher's "2022 Workforce Trends Report" on career well-being, nearly 8 in 10 employers have increased base salaries, but quit rates have barely budged.

Pre-pandemic perks no longer cut it. Well-being and inflation-busting benefits have become organizational must-haves.

It became clear in 2021 that pre-pandemic perks like beer on tap and ping pong tables were no longer of interest to candidates. More and more organizations are instead turning to new well-being and inflation-busting benefits. A recent poll of 708 companies found that more than two-thirds of U.S. employers want to enhance their benefits offerings for 2023. And data from financial services group LIMRA states 60% of employers are considering adding a new insurance benefit within the next two years.

Where possible, employers are working to stem employee cost-sharing increases and introducing new ways to ensure health and wellness benefits are used.

Other underlying causes

Even new benefits packages aren’t necessarily going to change quit rates. A March 2022 Pew Research study showed that benefits alone were not enough to stem resignations.

Of workers who quit a job, 63% say they saw no opportunities for advancement, and 57% said they felt disrespected at work. Of those with a child younger than 18 in their household, 48% say childcare issues were the problem. Similarly, 45% said a lack of flexibility to choose when they put in their hours caused them to leave and 43% left due to a lack of paid time off.

Microsoft’s "2022 Work Trend Index" also highlighted a lack of confidence in leadership, as well as concerns about personal well-being.

Quitting in place

Due to uncertainty about the future, some employees are responding by taking a wait-and-see approach to the job market. This means they are remaining at their job but lowering their performance and productivity. According to Gallup, this "quiet quitting" can affect 50% of employees. This means productivity is at risk and the quit rate may continue to go up once the economy comes more into balance.

When You Do Hire, Retaining New Talent Can Be Difficult

Along with the Great Reshuffle comes something called the Great Regret. A recent survey of more than 2,500 millennial and Gen Z job seekers conducted by The Muse reported that 72% of job switchers felt a sense of surprise or regret. Why? They feel duped.
After taking a new position, they’ve discovered that the job or the company is very different than they were led to believe during the recruiting process.

When things like remote work, number of expected hours, culture difficulties, and management styles aren't as described, 20% of these younger workers report that they would quit within a month and another 41% would quit at the four- to six-month range if things haven’t turned around for them.

All the hard work of recruiting, nurturing, interviewing, and onboarding is lost and the process has to start over, costing employers time, lowered productivity, and money.

Some Say the Solution Is Connecting Workers With Purpose

Recent headlines have been shouting that workers are demanding a connection to purpose. And data by McKinsey supports this. When surveyed, 31% of people who quit a job said they did so due to a lack of meaningful work. This has left organizations scrambling to update their mission statements, develop a wider organizational purpose strategy, and train on the organization's purpose.
But is redesigning your mission and vision statements alone enough to provide meaningful work?

The answer is no.

Let’s start by defining "meaningful work." A Stanford research publication defines meaningful work as "work that employees believe is significant in that it serves an important purpose." To be successful and drive retention from the start, organizations must be able to individualize and connect meaning to the job to be done. And that starts at the beginning of the hiring process. Organizations must personalize meaning and mission into each position and for every candidate.

Retention Can Be More Tactical and Begins With Transparency in Recruiting

When the job market reopened as the pandemic wound down, there simply weren’t enough workers to fill jobs. Recruiters and hiring managers were under a lot of pressure to fill roles and fill them fast.

The Muse CEO and founder Kathryn Minshew explains it this way: With companies desperate to hire and HR pros stretched thin, recruiters may be going rogue and stretching the truth to fill roles. Or, they could say things they think are true, but they don’t have the full picture of the workplace experience.

She advises companies to be honest about what it’s like to work there, including successes as well as areas for improvement. Interviews should be a two-way street, and you must give candidates enough time to ask questions about company culture.

"When people feel like they have opted into a situation with eyes wide open," Minshew says, "they’re much more likely to accept the good and the bad, and to show up as engaged, productive, satisfied employees.

Create a clear and accurate job description

Rather than fluffy mission statements, what if you were able to openly and transparently connect candidates to their personal purpose from their first connection to your employer brand?

To do this, you must be clear in your job descriptions and with every candidate touch point. Instead of a list of lofty or even undefinable terms like:

"Wanted: Rock star software engineer with five to seven years of SaaS experience to work in cutting-edge product development with a mission to make the world a better place for diverse employees. We seek candidates with flexible skill sets who want to grow their careers and help clients own their tomorrow."

Try this:

"Our product marketing team needs a software engineer with five to seven years of experience to quickly onboard and help to complete product updates due at the first 60, 90, and 120 days. Once these projects are finished and you are fully integrated into the team, we want you to be able to push the team creatively and continue to bring your experience to future project plans. Our team collaborates fully, and we expect you to be able to give insights in a thoughtful, team-focused way. This is an opportunity for you to showcase your experience and creativity, and help make our product better."

By connecting the job description to the purpose of the actual work - to complete product updates and work collaboratively on future projects - you better connect candidates’ expectations to the mission and purpose of the job you need them to accomplish.

Offer a definitive career path

Employers that seek top talent and want to maintain retention need to offer clear paths to promotion. Unfortunately, this simple fix is often overlooked. For years, many organizations worked off of the philosophy that their workers would turn over anyway and so only offered the job, not a career, with an implied understanding that the workers would work until they learned everything they could from a position, grew bored, or both, and then move on to continue their career.

But when you factor in the costs of turnover, loss of skills, and lost organizational knowledge, it’s easy to see that companies must offer something more. Instead, take an organizational, skills-based approach to careers and provide opportunities for growth. To do this, you must understand what skills your organization needs now, what future skills may be needed, and have a clear picture of how new hires can get from here to there and provide long-term value for the organization and the candidate.

Once you understand the skill sets needed, modern recruiting platforms can help recruiters search for candidates based on specific skills and can even filter out criteria that are less related to the job like gender, race, or education. Some allow hiring teams to conduct keyword searches by using boolean logic strings to home in on specific candidate skill sets.

The right technology can help recruiters to take a personalized approach while not sacrificing volume, with the use of email templates and programmed sequences. This is critical, as 1 in 5 recruiters from enterprise organizations reported managing as many as 50 or more job requisitions at once, according to hireEZ’s "The State of Outbound Recruiting in 2022" report. Some software even offers analytics that help recruiters measure engagement to understand better what messages resonate with candidates, allowing them to create a dialogue more capable of connecting with candidates on a deeper level.

The ultimate goal is to facilitate better conversations with higher-quality candidates for the job. To support this approach, recruiters should ask questions like: In the next two years, what skills do you want to gain? What types of work do you want to be doing? Is there a title or role you want to work toward?

Then connect the answers to organizational needs and create clear expectations for where any individual’s growth can take them - and what added value (such as increases in pay, autonomy, or status) can be expected.

Connecting Candidates to a Relevant, Personalized Mission Drives Retention From the Start

Retention is key to organizational health no matter the economic outlook. This becomes even more important in a labor market with fewer workers and a higher need for salient skills. This is where recruiting becomes key.

Recruiters play a pivotal role in fostering engagement and retention from the start. By attracting the right candidates with clear and transparent information, nurturing them at scale with a personalized connection to purpose, and offering skills-based conversations that explain a path to their future, you set up the perfect route to long-term organizational health and build near-term wins in a tight labor market.