If engagement creates tangible, financial results - why are engagement efforts so often a flop?
By the time you read this, you will have heard or read the phrase “The Great Resignation” countless times. According to an August 2021 study by PwC, 65 percent of employees are actively looking for new jobs. The year 2021 brought month after month of record-breaking resignation rates. Two out of three employed Americans are looking to change jobs right now, and even more are considering switching careers altogether.
Employers face a serious challenge: how do they hold onto their best and brightest employees when alluring external opportunities keep turning their heads?
The current climate is so dire that nine out of ten employers report that improving employee retention is a critical priority for their organization in 2022. And with ten million alternatives available to employees’ each month, it’s with good reason.
Wage and salary inflation has taken off in 2021. From McDonald’s starting wage of $21 an hour to Wall Street’s big increases for first-year analysts, many employers have raised compensation dramatically in nearly every facet of their business. For most employers, that’s a cost that’s unsustainable; for some, it’s simply impossible.
A rise in pay rates isn’t the only cost that employers are facing. Replacing employees has become increasingly expensive. The Society for Human Resources Management (SHRM) released data that indicates the cost for an organization to replace an employee is 50 to 60 percent of that employee’s annual salary. Another study by Gallup shows it’s more like 50 to 200 percent–an estimate they say is at the conservative end.
Either way, you’re probably doing the math in your head right now, adding up the annual pay of the number of folks who quit your organization this past year. At a 100-person company with an average salary of $50K, even a modest turnover rate could cost as much as $2.6 million per year.
These costs spring from several areas: Turnover directly impacts customer satisfaction. It interrupts or reduces the speed of your operational processes. It slows the company’s ability to grow or scale. And it puts an additional level of strain on the colleagues who must then cover the responsibilities of their departed team members on top of fulfilling their own responsibilities.
This human strain is often translated into additional work hours, which contribute to burnout--spurring more turnover--with stress spilling over into the employee’s personal life. That, in turn, morphs into another traditional cause of turnover: difficulties at home. The cycle is vicious.
Is there any question why organizations are focusing on stemming the tide of turnover and streamlining their recruitment efforts?
The issues with retention spread far beyond cost. An organization doesn’t just lose people. When an employee departs; institutional knowledge, processes, and key components of your systems often leave with them. Without well-executed succession planning and knowledge transfer programs in place, this is extremely damaging to your organization's ability to execute on its products or services.
Reasons why employees leave jobs run the gamut from the deeply personal and unrelated to the employer to changing individual professional needs, bad managers, and bad environments. You need to know why your people are leaving to understand how to keep them.
While 90 percent of Fortune 500 companies conduct exit interviews, there’s just a 35 percent response rate, so the findings are hardly representative. Not to mention that nearly every available employment resource encourages employees to be less than forthcoming or sugarcoat their feedback. So relying on exit interviews to understand why people leave is dubious at best. Over half of those same Fortune 500s view their exit interview process as unsuccessful in driving any meaningful change. (That’s not to say we recommend abandoning them completely; there are litmus tests you can use to see if you’re doing them right.)
So, how do we get the insight we need about and from employees that’s not necessarily only about why they are leaving?
The bright spot is that people aren’t usually leaving their jobs because of money. The answer to employee attrition requires deeper examination. More good news: there’s a whole host of untapped strategies available for employers to attract (and hold onto) valuable talent.
Your HR team or your recruiting agency may point to the upheaval and exodus of employee movement that’s occurring on a global scale. “It’s hard right now,” they’ll tell you: to interest job seekers, to convince candidates, to retain employees.
We agree. And that’s why traditional recruitment and retention strategies are simply not going to work. More has changed in the past 12 months of recruiting than in the past 12 years. Doing the same thing you have done and expecting different results is, well…you know.
It’s time to evolve.
Employer branding, coined in the mid-1990s in the Journal of Brand Management, took about a decade to gain some traction. By around 2005, top US companies began to develop formal marketing plans to sell their value as an employer, in addition to their general marketing efforts for their products or services. Between 2004 and 2008, we began to see Procter & Gamble, Unilever, Starbucks, Mastercard, Apple, and others attract top talent by getting very public about what it was like to work there. Yet, it was not until several years later that average C-Suite teams became concerned about their employer brand. In 2018, LinkedIn published an article that explained:
Fast-forward to 2021 when organizations are now devoting, on average, 10 percent of their marketing budgets toward their employer brand.
While most companies see clear value in strategic marketing activation around their products or services, many are not paying nearly enough attention to marketing themselves as employers, an initiative that requires a separate and specific strategy and often involves collaboration between HR and Marketing leadership. Companies who’ve never thought critically about what makes them an employer of choice (if they are one) are now bringing in expertise to develop and showcase their employer brand as a whole new segment of their marketing strategy in order to maintain essential staffing levels.
As companies everywhere experience significant challenges around hiring and retention, employers are finding that a critical focus on their employer brand, partnered with a communication strategy focused on an entirely new audience–potential employees–can make the recruitment process fruitful.
There’s no shortage of compelling data to support investment in employer branding. The employer brand is twice as likely to drive job consideration as company branding. More important, applicants are actively seeking this information.
Glassdoor found that over 75 percent of applicants gauge the attractiveness of an employer's brand by its website and social media channels before applying. Companies already use these owned platforms to tell a coordinated story about what they do and how expertly they do it. We now need to extend that storytelling to share with potential applicants how great it is to work there.
For those forward-thinking companies already focusing on their employer brand, it’s working. In a Randstad employer brand research study, over 80 percent of workforce leaders agreed that a strong employer brand significantly improves a company's ability to hire optimal candidates. Research conducted by LinkedIn reported a two-times faster hiring process, over 50 percent more qualified applicants, half hiring cost, and a 27 percent reduction in employee turnover.
The path to solving recruitment challenges with employer branding can be a clear, straight line. Wayforward uses a three-phased approach to Employer Brand development, developed and executed for our clients with our partners at Riveter Design. Here’s our collaborative three-phase approach.
Our thorough and efficient research phase means embedding ourselves in your organization to gain a deep understanding of what makes your company unique—so you can share your story with targeted prospective employees. (Companies with appropriate resources can also conduct in-house research.) A strong combination of research methodologies results in a well-informed employer brand.
Focusing on several key tactics will improve recruitment dramatically. Our implementation plan includes six specific changes to the traditional recruitment process and is designed to be completed within a six-week timetable to fast-track results.
Once the employer brand is in place and the tactics are ready to deploy, it’s time for your target audience to learn why your company is an employer of choice. Using your existing CRM (or working with us to implement a new one), we’ll help you develop a recruitment-specific pipeline, fueled by promotion on your owned channels, so the out-of-pocket investment is minimal.
Just as customers should need little convincing from your sales team by the time they’ve absorbed your marketing efforts, potential hires familiar with your employer brand should already be primed and require minimal effort from your recruitment team.
Candidates should be well aware of the value of working with your company by the time they interact with HR. The benefit of this process is that all of the work is done up-front, and without ongoing human intervention. This saves your team valuable time in addition to providing a growing list of interested and qualified candidates.
End game? By the time you’re sourcing candidates for your open positions, there is no need to convince them. They already want to work with you.
Whether you’re curious if employer branding could improve your recruitment and retention efforts or just want to learn more, schedule a consult with Wayforward today.
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