Is the labor shortage negatively impacting your small business clients?
This post is part of a series sponsored by SWBC.
While the economy is creeping closer to a recession, employers are still neck deep in labor market challenges. As many small and mid-sized businesses struggle to fill open positions in the wake of the Great Resignation, holding on to the employees they do have has become critically important.
Consider the following labor statistics the U.S. Department of Labor recently reported for Q2 2022:
A record 4.5 million workers quit their jobs in March, climbing just above the former record set in November 2021.
Demand for workers is still very high. There were 11.5 million job openings at the end of March, another record high.
Hourly wages grew by 6% in March, higher than any level since 1997.
The layoff rate also hovered near historic lows in March, signaling the importance employers are placing on retaining current staff.
As a recession looms and businesses look for ways to cut costs, it does not appear they will be getting much of a break from the labor market in the coming months. Although there are signs that the Great Resignation may be cooling off, experts predict Q3 will still heavily favor job seekers.
Why Your Clients Care About Employee Retention, Right Now
High labor demand means employees are more likely to quit for greener pastures. Current data suggests people who resign from their current jobs are seamlessly re-entering the workforce in the same industry at a higher rate of pay. According to CNBC, “wage growth has been higher for job-switchers than those who keep the same job — they’ve gotten raises of 5.8% versus 4.7%.”
Resignation rates are up in most industries, but manufacturers, retailers, and those in the leisure and hospitality industries are having a particularly hard time retaining employees.
Given the current conditions, focusing on employee retention is paramount for your small business clients. Here are four strategies they can use to boost employee retention:
1. Empower and Engage Employees
Your clients know that their employees are key to everything running smoothly; they are the company’s greatest asset, so keeping them happy is always a priority. To set employees up for success, employers need to cultivate a culture and working environment that promotes their professional betterment.
When employees are disengaged with their job, it can impact the entire organization. This has been a particular challenge for employers who have shifted to a remote or hybrid work model since the pandemic. Because disengaged employees can lead to lost productivity and higher turnover (which can be extremely costly), creating a culture in which employees feel empowered to better themselves and develop their professional skills will help enhance engagement within the organization.
2. Foster Employees’ Professional Development
Employees are eager to take advantage of opportunities to develop their skill sets, regardless of the stage of their career. Your clients should consider implementing training or certification courses to foster professional growth within their role or the company. Some organizations even develop internal mentorship programs in which tenured employees assist in the personal development of the newly hired through coaching and advising.
3. Offer Competitive Compensation and Benefits
Attracting top talent to your organization by offering casual Fridays and free parking just isn’t cutting it in today’s labor environment. Although it may be a tall order in the current economy, to retain the best of the best through the Great Resignation, organizations need to offer competitive compensation and benefits. This shouldn’t be the only strategy used to achieve your ultimate goal of employee engagement and retention, but if your company has the means, it can be a great tool in your arsenal.
4. Don’t Overload Current Employees
One consequence of the Great Resignation is the increased levels of stress and burnout reported by employees who are expected to take up the slack when their teams are lean. In fact, a recent Deloitte survey found 77% of respondents have experienced employee burnout at their current job.
If your clients’ employees are being pulled in too many directions and are overwhelmed trying to manage HR-related tasks instead of their daily duties, they should consider delegating these time-consuming tasks to SWBC PEO. We’re dedicated to helping small businesses streamline operations and reduce costs.
When your clients work with us, our team of experts can provide much needed assistance in the performance of necessary HR-tasks such as payroll, employee benefits, workers’ compensation, and HR compliance, allowing them to introduce more balance into their employees’ workday and ensure business continuity through a tight labor market. Visit our website to learn more.
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