For the last two years, we’ve been talking about how the labor market is going to tighten. Well, it’s happened – and even faster than predicted. Some are calling it the “post-recession challenge” or the “turnover tsunami.” Simply put, employers that have been operating in the same manner since before the Great Recession may be about to see their employees pack up for greener pastures.
The challenges ahead are signaled by a few trends:
A Tight Labor Market
Stagnant growth in labor participation
Employees typically rejoin the labor pool post-recession. But the above-referenced Conference Board report says this hasn’t happened, primarily because employees who lost jobs opted instead to either stay home or go back to school.
A Rising Quit Rate
According to the U.S. Labor Department, the number of employees who quit ticked up to 1.9% in July 2015 from 1.7% in January 2014. A survey published earlier this year by Saba enterprise software company found that 36% of U.S. employees were actively searching for a new job and were, on average, looking to leave within the next seven months.
A Pent-Up Demand for Raises
Glassdoor reported that 43% of employees say they expect to get a raise in the next year; 35% say they will look for a new job if they don’t get one.
Employee Retention and The Coming Turnover Tsunami
The collective message: companies that survived by merely cutting costs (including reducing payroll) will find that “staying the course” is no longer a viable option. Employees are looking for opportunity, and the improved economy is giving them the power to find it. So leaders are going to have to change gears and come up with creative approaches to support retention.
And training and employee development should top the list. Why? In our research, Millennials told us that growth opportunity was their number-one priority. Add to that the fact that such growth is a way to engage employees and to engender connection between employer and employee. Even better, it shows not only that the employer cares and is invested in the employee, but also that positive culture matters.
Just as important, it’s good business. Education and training enable companies to be nimble and agile as employees gain new skills and knowledge. As for recruitment, in this tightening labor market, employers who offer development opportunities are sure to draw talented individuals from companies that don’t.
The Proof is in the ROI
Our clients across industries (finance, manufacturing, and insurance services among them) have seen the benefits in improved employee retention, realized training goals, and generally strengthened talent-management programs. We’re also seeing agility benefits in expanding tuition assistance programs to include short-term study options such as certificates, and certifications. While funding degrees has long been the staple of tuition programs, clients are finding these new approaches have the potential to educate their workforce faster, and at a lower cost.
And while some clients might forego tuition benefits under the mistaken belief that resources would only be wasted on employees who inevitably leave, one client in a particularly competitive employment market turned that idea on its head. Instead, they smartly differentiated themselves by not only expanding their tuition program, but also opting to help repay employees’ existing student loans.
The finances of Education and Training
Still, there continues to be a belief among some employers that such programs are beyond their budgetary capabilities. But take a minute to think about that. By ignoring employee development you’re risking not just the cost of replacing valuable people who go elsewhere; you also risk losing essential institutional knowledge.
The bottom line is that the Great Recession is no longer a viable employee retention strategy. To attract and keep people, you’re going to have re-think your approach. Even those companies renowned for being great places to work are going to have to adapt to this new environment. Developing the people you already have (and hope to attract) is one sure fire way to go.
Learn more about how, with EdAssist’s LoanRepay™, addressing the student loan crisis could be your key to top talent.