Employee Retention Strategies in a Zero Unemployment Job Market
Economists recently reported that we have now reached zero unemployment, or a level at which there are zero percent of job seekers who are unemployed actively looking for work. This number isn’t zero per say but is a natural unemployment rate that hoovers consistently between 4-6.4 %. U.S. unemployment numbers can never reach zero percent because of what The Economist calls frictional unemployment. There will always be people who are unemployed moving from one job to the other and those that cannot find jobs because of outdated skills and other extenuating circumstances.
Unemployment also remains low because your best job candidates have options, and not just in the traditional job market. As the economy continues to grow, adult workers are increasingly working as freelancers and contract temporary workers. The gig economy is growing at a rapid pace. A recent 2017 report by CNN found that the gig economy now accounts for 34% of the total workforce and is expected to grow to 43% by 2020.
This growth in the gig economy makes the war for top talent even more challenging. And as competition for talent continues to increase, so do salaries, making employee retention of your best workers more important than ever before.
In this post, we’ll share trends for workforce retention in a candidate’s job market, including financial planning, employee development, and engagement programs that help HR and recruiting leaders work to strategically retain and develop the top talent at their organizations.
Some companies are leery of offering unlimited paid time off as a perk, concerned that employees may abuse it. However, anecdotal evidence shows that employees take even less time off when offered unlimited PTO and treat it like the perk that it is. From SHRM:
“Some employers have already adopted unlimited vacation time with good results. These organizations include some startups, rapidly growing companies with innovative cultures and other organizations that see this approach as a natural extension of the modern corporate environment where work routinely gets done outside of the traditional 9 to 5 timeframe. The change can potentially lead to a more engaged workforce because management is trusting employees to manage their own time in a way that serves their personal needs while still getting the work done.”
Companies like LinkedIn, GE, Grubhub and Hubspot tout unlimited PTO as a primary job perk, and Netflix introduced unlimited vacation about a decade ago, telling The Wall Street Journal in 2004 it would focus instead on the work people accomplish rather than on how many hours or days they work.
Evernote doesn’t just offer generous PTO. The Redwood City, CA-based company encourages employees to actually take a vacation by offering a $1,000 stipend to travel somewhere new. Incentivizing employees to take time out to experience other cultures is also an imaginative way to spark personal development.
Training and development
Today’s workers know the market and are as interested in furthering their education as they are investing time in their current jobs. Training and development opportunities can help companies not only with retention, but also with developing their next generation of leaders. This isn’t a new perk, but one that companies have returned to in the past decade in response to a growing skills gap.
As part of its goal to employ a highly educated workforce, United Technologies Corp. (UTC) celebrated an important milestone in 2011. Overall investment in its Employee Scholar Program reached the $1 billion mark. In 2011, $12 million was granted to Georgia employees who earned 558 degrees, cumulatively. The worldwide provider of high-technology products and services to the aerospace and building systems industries employs about 2,000 employees in 23 facilities across the state.
Many United Parcel Service leaders can boast that they started as part-time package handlers and moved up, thanks to the Earn & Learn program that let them go to school while working. The program pays up to $3,000 a year in tuition reimbursement for part-time employees ($15,000 lifetime max) and $4,000 a year ($20,000 lifetime max) for part-time managers.
According to Forbes, investing in training and development is far cheaper than "buying" talent from the outside, especially when you consider that internal employees already fit your culture. Forbes explains that external hires cost 18% more on average than promoting someone internally. Expanding your training and development efforts both retains and develops your talent, making it a win for today and tomorrow.
Many companies offer performance bonuses as a standard perk, but San Diego-based Scripps Health doesn't reserve bonus checks for top management. In fact, in 2010 Scripps Health awarded nearly $4 million in bonuses to employees across the board who met performance objectives.
There are other ways to creatively reward employees. For example, USAA offers a strong 401k program with an 8% matching policy. According to SHRM, the average company in the U.S. matches 6%. Over time, that 2 % puts USAA at the top for matching 401k investments, increasing employee participation - and loyalty.
Some 45% of employers provide advice about preparing for retirement, according to a SHRM survey. A financial advisor might offer education or recommendations about retirement planning and other major life goals. Companies might also provide online, one-on-one, or group investment advice.
According to the Harvard Business Review, employee wellness programs should be seen as a strategic move, and not just a benefit. Healthy employees cost you less and they work harder. Not only that, they’re happier and they’re more likely to form bonds with co-workers. If you want your employees to stick around, here’s a great (and flexible) way to do it.
San Francisco-based Eventbrite helps keep employees healthy by offering a monthly $60 wellness stipend, which can be used on everything from gym dues to juice cleanses. Microsoft offers an annual $800 “StayFit” reimbursement program to help cover the cost of gym memberships and fitness programs.
Your employment brand
What is your company known for? And does it walk the walk? One great example of branding through benefits is Zappos, a company that established its brand on extraordinary customer service. In order to provide above-average customer service, you need to have employees that are above-average happy. Here are some of the benefits Zappos offers to their employees:
- Above-average medical, dental, and vision insurance coverage.
- On-site wellness and concierge services.
- Pet insurance.
- Pre-paid legal.
- 40% employee discount for those who love shoes and accessories.
- Free food for breakfast, lunch, snacks, and breaks.
- Monthly team outings and paid volunteer adventures that give back to the community.
- Nap rooms so you can rest and rejuvenate for the remainder of the workday.
All of the above also means that Zappo is mentioned in news articles about employee happiness and benefits frequently, resulting in great press for the brand. Consider what you want your company to stand for and carry that through to your employee benefits.
Even startups are investing in employee perks for retention and recruitment. With limited budget, they have to think outside the box to create a culture that makes employees want to stick with the company. For example, the rapidly growing startup BookBub allows every new employee to choose their own computing equipment, touting the perk on its careers page: “We never want our team to be held up by slow technology, so we believe in buying the systems that help each individual work best.”
Austin-based real estate startup Opcity has a full-time manager dedicated to building its culture and a meaningful employee experience. In addition to the standard benefits and free catered lunches, it also offers a weekly onsite massage therapist and a Grab and Go Market monthly stipend.
Drift is a startup offering innovative conversational marketing platforms (think SMS and chatbots), and if carries the innovation through its employee benefits. Besides the standard healthcare and free snacks, it has an employee book club and encourages all to participate. A great no-cost perk!
Denver-based startup GoSpotCheck offers another great no-cost perk: Dog-friendly office space. Its careers page says, “Although studies show that office dogs are good for business, we choose to have them in because they make us feel all warm and fuzzy.”
You don’t have to invest a lot for these creative perks and they genuinely make employees happier.
The bottom line
Companies are moving beyond standard company benefits and focusing on other retention and employee growth perks to keep their workers happy, active, engaged and excited to come to work. It’s good for your employment brand, great for PR, and even better for your candidate pipeline.