A boardroom issue
The world has changed, but good employees have always been hard to find and even harder to hang onto. COVID-19 has only further complicated this issue, and organisations across many industries are now facing severe staff shortages.
As economies start to open up again, the employment market is battling to keep pace with the jump in demand from organisations wanting to make up for two years of low production and profit. However, it has been dubbed an ‘employee’s market’ and for those applying for jobs, many are demanding top wages and comprehensive employee benefit packages. Lawyers, accountants and management consultants saw an average 2.6% rise in salary, followed by construction and hospitality workers at 2.5%. (opens a new window)
Salaries, and wages in addition to statutory employee entitlements such as workers’ compensation are proving to be a significant expense for most organisations. Workers’ compensation can often be one of the biggest expenses for organisations outside of payroll.
Getting a return on employee investment
The dynamic between the employer and employee has shifted. The Great Resignation, a phrase coined for the worldwide surge in employees leaving their jobs, is perhaps evidence of disgruntled workers who no longer find meaning in their work.
As employees reimagine and question the role work plays in their life, many organisations are having to reimagine the way they attract and retain their top talent. However organisations must be able to demonstrate they are getting a return on their employee investment. It is up to the employer to adapt during this period and respond with meaningful initiatives that create a win-win for both.
How are industries coping with staff shortages?
The mining, construction and health industries are particularly feeling the effects, and the technology sector is also suffering. For example, in the mining industry, miners have reported staff turnover rates close to 50%. (opens a new window) Job advertisements are soaring but no-one is applying for roles either, with Seek declaring it has recently posted the highest number of job advertisements in 23 years. Applications for these jobs are below historical standards, according to Seek.
Is offering higher salaries the solution to attract staff?
Despite a law firm (opens a new window) awarding all employees a 10% pay rise in October 2021, money alone isn’t enough. The company also expanded its parental leave policy. (opens a new window) Financially, employers are unable to continue to pay increased salaries as the hidden costs of increased payroll tax and workers' compensation premiums make this a very expensive long-term strategy. The new employee value proposition needs to be adapted to each team and individual, rather than a blanket one size fits all approach.
Here are three ways organisations are attracting staff and reducing staff turnover:
1. Flexible working hours and locations are now almost a non-negotiable, but every team and individual is different. Key to this is the sense of connection an employee feels to their workplace and the people around them. Working from home has become part of the new work environment, but organisations who can adopt a flexible model dependent on the needs of individual teams will be best placed. Some employers have already offered perks including 6 extra long weekends to attract staff so employees can clear their heads and prioritise mental health, but the concept of flexibility needs to be taken to a personalised level.
2. Re-designing work hours and pay. Those performing critical roles are now in a position to negotiate a personalised balance of work hours and pay that enables the employee to maintain their impact at work and job satisfaction. Empowering employees to design their own work/remuneration formula is a new phenomenon that only a few years ago would’ve been unheard of. This is now part of the new norm for progressive employers.
3. Employee benefits packages that respond to financial wellbeing and job security. With financial wellbeing and security a key concern for employees, some insured employee benefits such as income protection have become a popular addition to remuneration packages. Income protection is often held by an employee within their superannuation account. When income protection is provided directly by the employer, the premium ceases from the employee's super account. Over many years, this significantly adds to the cash-out balance at retirement. With the aging workforce in Australia, these type of employee benefits are becoming increasingly valued. Some employers are also making additional top-ups to employee superannuation accounts, which are generally tax effective for both the employee and employer.
Reskilling and empowering current employees
While employers are spending enormous amounts of time and money dealing with skills shortages through recruitment activities, a better and more sustainable approach to the problem is to reskill and train existing staff. Existing staff are an organisation's most valuable asset. This may take the form of work-based training and “earn while you learn” arrangements like apprenticeships to increase the skills pool available from within, rather than looking elsewhere. Helping employees reimagine or redefine their career at their current employer is a powerful concept. For example, initiating staff training and career development paths can create a more agile, loyal, motivated and productive workforce that is more likely to drive the organisation forward.
Re-engaging the older generation
A major health care provider recently announced plans to lure back retired health workers as part of a major recruitment drive aimed at adding another 500 staff to meet growing demand for its services.
Tapping into the knowledge base of older talent or those approaching retirement can be an efficient form of recruitment. Offering part-time or flexible work can be a great way for experienced minds to share their expertise and knowledge with current employees looking for mentorship and guidance.
Where to from here?
COVID-19 has forever changed the employment landscape. Employers are now re-evaluating their employee value proposition more frequently. More imagination is required to develop arrangements fit for specific industries, teams and individuals to help reduce the likelihood of employees looking elsewhere. Attracting and retaining key staff has never been easy. It has just got even harder.