Back when I wrote Emerging Power Dynamics Between Employers and Employees, the world was a year into the pandemic, (most of us) had settled into working remotely, bubbles were still very much a thing, and there was a growing optimism – at least here in the U.S. – due to the rollout of vaccines. And with words like virtualization and the Great Resignation buzzing around the mainstream, it seemed – after COVID-19 itself – work, jobs, unemployment occupied much of our collective consciousness.
Now, here we are. Another year later. Boosted unemployment benefits and stimulus checks are no more. For many employees, calls for a widespread return to the office interrupted by two coronavirus variants must have felt a bit like a jerky amusement park ride. And for employers across a broad spectrum of industries, the desire to hire is, well, on fire. Which is awkward, because there is also a labor shortage: When it comes to jobs, it is very much a seller’s market. The pendulum has officially swung.
According to the Bureau of Labor Statistics (BLS), employer demand for workers is back to pre-pandemic levels. The number of workers willing to re-enter the labor force…not so much. This is a bit of a head-scratcher since the unemployment rate is under 4%, which, while not as low as 2019’s 3.5%, is still quite low historically-speaking. This, despite December 2021 figures that show long-term unemployed at 31+ percent of the total unemployed stats.
There are industries like leisure and hospitality that continue to add millions of jobs, have increased wages and are offering sign-on bonuses, and yet employment in the industry has declined by 7.2 percent in the past two years. This begs the question: What are the missing workers doing if not working?
Recent economic and U.S. Bureau of Labor Statistics reports hold a few explanations:
- Some retired (even early), due to a pandemic that hit certain age groups harder.
- Others changed jobs to move away from areas with acute shortages, sharpening deficits in the hardest-hit sectors; while still others are hesitant to return to in-person, people-centric sectors, citing health risks.
- Immigrant workers continue to struggle to access job opportunities due to visa delays (the labor shortage hit federal and state government departments, too) and restricted borders.
The worker shortage has accompanied a more concentrated demand re-acceleration in some sectors. These demand spikes are harder to service without automation improvements. Take the restaurant industry, where a higher concentration of online ordering strains peak kitchen capacity and staff requirements for prime dining hours. Such spikiness has accelerated not only digital automation and ghost kitchens but physical process efficiency, onsite automation, product complexity reduction, and of course, pricing.
But it is no one thing. And the pandemic continues in various waves.
So, what does all this mean? Again, in my previous post, I discussed the shifting power dynamics between employers and employees, leaving the latter with a bit more bargaining power. And that seems to very much be the case and will continue trending in 2022. Given this new reality, now is the time for employers to activate a broader set of strategies to retain talent beyond compensation merit adjustments. In fact, relying on financial incentives to retain employees is unsustainable as they can be outmatched by competitors.
If your company is looking for ways to attract, energize, and retain top talent, here are five sustainable pillars of employee retention:
- Provide them with meaningful and rewarding work
- Commit to career mentoring and professional development programs
- Regularly communicate appreciation and give recognition when deserved
- Create an inclusive and connected workplace
- Maintain a steady flow of restorative and recharged perks
Initiatives around these pillars – when implemented correctly – have positive spillover effects beyond improved employee satisfaction and productivity: they reinforce talent acquisition strategies, build brand equity, drive customer satisfaction, and more.
We see companies that lead in eNPS (employee net promoter score) on Comparably.com finding innovative ways to strengthen the sense of connection among employees, reinforcing company values and norms, and creating excitement for the vision and direction of the company. A couple of examples include:
- Salesforce.com has announced the development of a 75-acre retreat. This facility enables Salesforce to build out activities that reignite a feeling of culture and loyalty which has been hard to maintain in a virtual setup. Other, smaller firms, have experimented with Airbnb or home purchases in attractive locations where employees may ‘retreat’ and work, taking turns in 1-2-week cycles.
- UKG has recently launched a “Close the Gap” initiative, a seven-figure equity initiative that covers education and training, technology, and tools to ensure equity for UKG’s employees.
No doubt, as more workers re-enter the labor market, and in some cases enter for the first time, we will most likely see a softening of this “seller’s market” dynamic. I, for one, hope not too much.