Whether it’s the Great Resignation, the Great Attrition, or the Great Renegotiation, the bottom line remains the same: the war for talent continues apace, and companies face challenges not only in recruiting new talent but also keeping existing talent. The voluntary quit rate of employees is 25% higher than pre-pandemic levels. Across industries, surveys indicate that more employees than ever are considering leaving their jobs in the next six months.
In this environment, employers must look carefully at all aspects of the Employee Experience Lifecycle, from recruiting to championing. In a recent study, McKinsey looked at various factors that impact recruiting and retention. We see five key takeaways from this study that can help employers and leaders improve their employee experience for better retention:
5 Key Takeaways for Better Employee Retention
1. Money Matters, but it Isn’t Everything
While compensation remains vital to employees, companies can’t expect to simply throw money at their recruiting and retention problems and expect them to disappear. In one chart chronicling top reasons for quitting, 36% of people surveyed by McKinsey cited “Inadequate total compensation” as a significant factor in leaving their previous jobs. Yet that factor was sandwiched between “Lack of career development and advancement” at 41% and “Uncaring and uninspiring leaders” at 29%.
“I don’t suspect that money is a primary motivator for most people because they know that they can find the compensation they need eventually,” says Nolan.Godfrey, Regional Director and Executive Consultant. In other words, with employers luring people toward new positions with higher pay and signing bonuses, job seekers can look to fulfill their less tangible needs and be confident that compensation will be adequate.
2. Industry-hopping is the New Career Path
Of the job leavers in the McKinsey survey, 48% took positions in different industries, pointing to a larger trend of reshuffling talent and opening up new possibilities for career development.
“I think that because of this, companies will get a more diverse workforce with more experience,” says Tyra.Bremer, Director, Business Development and Executive Consultant. “In the past, focusing on only recruiting from within the same industry meant that “companies missed out on really good talent,” she points out. By removing those hard and fast job requirements and being open to people from other industries, companies can revitalize their talent, bring in new perspectives, and even potentially rejuvenate innovation.
3. Flexibility is the New Imperative
Employers have already discovered through the disruption of the pandemic that many employees now expect workplace flexibility. The McKinsey study confirms it: “Adequacy of workplace flexibility” was a top driver of retention, and workplace flexibility remains a high factor in taking a new position across all categories in the survey.
“Employees are essentially saying, ‘if you’re not offering workplace flexibility, I’m not going to come there,’” says Bremer. Employers have to offer flexibility to attract and retain the best talent.
4. Leaders Need to Learn the Language of the New Personas
McKinsey breaks employees into five categories based on what they look for in a job: Traditionalists, Do-it-Yourselfers, Idealists, Caregivers & others, and Relaxers. Other than Relaxers, those who have left the workforce, the other four groups represent the broad range of the workforce. The Traditionalists represent those who are more likely to stick with current employers, tend to be more risk averse, and value traditional value propositions such as higher pay.
These are the employees that companies are used to attracting and retaining, but there aren’t enough of them to fill all the jobs available. To attract and retain talent for long-term growth, companies need to learn the language of the other personas.
“A lot of it is just as simple as multi-generational differences or expectations,” says Erin.Ellis, Executive Consultant and Coach. “There’s a disconnect in trying to understand what the other personas are looking for.”
Kristin.Derwinski, Executive Consultant and Coach, agrees. If you’re comfortable with that traditionalist role, you have to think about other ways of looking at work. It’s completely different now for a lot of other personas. Leaders and employers need to consider value propositions.
5. Look at the Employee as a Customer
In some sense, segmenting the talent pool into personas is similar to segmenting potential customers for marketing purposes. By looking at the potential or current employees as customers who want and expect different things from the employer, leaders can personalize employment and help make the overall employee experience better. “Organizations who segment their employee base this way can better understand how to talk to those different groups,” says David Thurston, Director, Business Development and Executive Consultant.
There is no magic solution to the ongoing talent crisis, and companies will likely continue to face challenges as the labor market remains tight. But by putting the “human” back into “human capital” and considering non-traditional needs beyond compensation, companies can improve retention and help create an employee experience that produces company champions.
Self-Check:
- Do our leaders speak the language of non-traditional employees?
- What is one way we can improve our value proposition to new and existing employees?
- Do the McKinsey findings reflect our recent company experience? How?
