The Biggest Employee Retention Challenges Employers Face in 2023
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Originally published on HR Daily Advisor
Author: Lin Grensing-Pophal
Disclaimer: This article is being reproduced in its entirety on our website because we have been interviewed, quoted, or mentioned. Ethical Swag is not the author or proprietor of this content.
A dynamic and volatile global environment has created tremendous challenges for organizations looking to not only keep their heads above water but also outperform and outcompete their competitors. In the modern global economy, it’s people who drive the success of the best companies, which means organizations are constantly striving to recruit and retain top talent.
The challenge is that the world is fast-paced and ever-changing for employees, too. Record inflation in much of the world, volatile financial and housing markets, a pandemic, and a variety of other factors mean workers are being pushed and pulled in a number of directions, which impacts their ability and willingness to remain with an employer long term.
The start of a new year is as good a time as any to think about what kinds of retention challenges employers and other industry experts are expecting to face in the near future, so we reached out to those groups to get a sense of where their concerns lie.
A few years ago, the most realistic competition for an employee would have come from another company in the same town or at least within a reasonable commuting distance. In an interconnected world of employees accustomed to remote work, competition can conceivably come from any corner of the globe. This means employers can’t simply rely on offering the most attractive job in town; they have to be competitive on a far greater scale.
“Employees have developed a great desire to work with flexibility and from anywhere,” says Elizabeth Mye, SVP of Global Human Resources at Intermedia Cloud Communications. “This is not a domestic challenge but a global one.”
Mye argues that creating an engaging and inclusive culture is critical to employee retention when so many choices are available to workers and says such efforts have helped Intermedia maintain high levels of employee retention.
“Intermedia has a strong employee engagement culture focused on the holistic well-being of our employees through our down to earth, familial but driven to succeed culture,” Mye continues. “We have multi-layered employee programs including Women of Intermedia, Culture Club, Diversity Town Hall, CEO and executive leadership employee forums and more. We focus on building strength from within through our leadership development and employee training and development programs including job shadowing and opportunities to work on cross-functional project work, resulting in an average 23% annual global employee promotion track record.”
Mye says that Intermedia is proud of its success with employee retention but recognizes it is “facing a new and increasingly complicated employee demand to literally work from anywhere in the world.” Because of this, Intermedia is very supportive of flexible work arrangements, she adds, while acknowledging the demand to work in any country poses myriad challenges, including retention risks.
Employees Want More Than a Paycheck
In the past, competition for employees was largely a numbers game, with employees going to the company that could pay the most. Compensation is still extremely important to workers, of course, but it’s not the only benefit they seek these days. Today’s employees, particularly younger workers, desire a sense of purpose and belonging at work. They want their work to align with their values and serve as a source of fulfillment and purpose.
“It is natural for people to seek a sense of security during an economic downturn,” says Joseph Henry, the Organizational Development Leader at Legal and General America. “This is a period where we ask tough questions and often reinvent ourselves.” Today’s workforce is deeply mission-driven, Henry notes. “The pandemic amplified this. It is no longer enough to provide a good-paying job with good benefits. Employees are looking for an exceptional employee experience—one where they know their work matters and have an impact.”
Commitment Is a Two-Way Street
Some employers pull their hair out trying to figure out why their employees don’t demonstrate greater commitment when the employers themselves aren’t demonstrating their commitment to employees! Commitment is a two-way street, meaning employees are more likely to stay loyal to an employer when they feel the employer has their best interests in mind.
“Heading into 2023, employers can expect to see many of the defining issues of the last few years continue to grow and transform,” says Tara Milburn, founder and CEO of Ethical Swag. “Although the steady climb of inflation rates and consequent spike in the cost of living have made compensation a major consideration, we have to understand this issue against the backdrop of a more fundamental one: that is, that many employees still do not feel valued by their workplaces. When employees do not feel like their workplaces are contributing to the betterment of their life, they feel less motivated to go above and beyond for the company and are more likely to leave when the opportunity presents itself.”
A simple step any organization can take to increase its employees’ level of commitment is to foster greater two-way communication instead of the top-down approach many organizations default to.
“In order to meet these demands and retain top talent, businesses need to develop robust two-way communication,” says Milburn. “This means having a strong and clear brand purpose that is effectively communicated to employees while also being open to receiving and implementing feedback.”
Employees who feel like their company actively listens and responds to them are much more likely to experience a heightened sense of engagement and personal responsibility toward the company, Milburn continues. In addition, she says that “providing employees with ways to care for their mental and physical health, such as mental health days and gym memberships or fitness stipends, helps increase their overall productivity while reinforcing employees’ sense that the company is truly invested in their wellbeing.”
No matter how much high-tech equipment, state-of-the-art facilities, or revolutionary intellectual property an organization owns, it will struggle to stay competitive if it doesn’t have capable and motivated staff. A variety of factors have contributed to a tight labor market and employee retention problems. Understanding the specific challenges businesses are facing in the near term is therefore a key first step toward mitigating those problems.