Since the middle of 2021, companies have struggled with extreme labor shortages; and once hired, some have struggled to hang onto key employees, many of whom are being wooed away with higher salaries and better perks.
The bad news is that this trend is accelerating, as is the trend towards remote work. Both are forcing organizations, especially medium-sized and regional firms, to sharpen their skills to engage and retain colleagues.
Before the pandemic, medium-sized and regional companies were protected: They were located where employees wanted to live, under family styled ownership and local. But the pandemic made remote work a standard. That, coupled with an online resume world (i.e. LinkedIn) which made it easier than ever to find and entice away colleagues with promises of a higher salary, work-from-home and “live wherever you want” conditions. This phenomenon is not confined to the US.
I meet regularly with a large group of CEOs who have been fighting the turnover and retention issue for the last 6-9 months. In spite of the recent Dow/Nasdaq market fluctuations, this labor supply pressure hasn’t changed and doesn’t look like it will change anytime soon. Inventories are too low and the supply chain, in some cases, is on fumes. Meanwhile order books are 1-2 years out and show 20-30% growth in the second year. The latest Jobs Report showed 11.5 million jobs open and only 6.7 million people seeking jobs.
The current remote and hybrid work standards require a different kind of leadership, management and a new way of thinking, especially for the medium tier corporation. Proactive employee engagement is crucial and is the most cost efficient tool for preventing turnover.
Employee engagement defined as personal time, exposure and two way communication between leadership and the team is essential. This is more than a letter or speech from management. It means face-to-face meetings across all levels, developing personal relationships with the team. It takes time and commitment from leadership. It allows for better communication around objectives and team alignment. That time together also offers leadership the opportunity to build trust within the team. It has the added value of offering a place to preemptively discuss turnover potential and better opportunities before LinkedIn finds them.
Employee engagement is the responsibility of the leadership and management. It requires a different mindset and is needed more today than ever. To fight turnover and enhance retention, getting personal with your team is a must.
