The biggest priority, and concern, for business leaders in 2017 will be retaining employees in a competitive talent marketplace. In a new study by Future Workplace and Kronos, we found that 87% of employers said that improving retention is a critical priority for their organization. In addition, the U.S. unemployment rate has been reduced to 4.6% and employee salaries are projected to grow by 3% in 2017, according to WorldatWork. As the economy continues to improve and employees have more job options, companies will have to provide additional compensation, expand benefits, and improve their employee experience.
Through my recent discussions with working professionals, I’ve found that more people are testing out their value in the current job market by interviewing outside of work hours, asking for higher salaries and promotions, and researching pay grades in their industry. A study by Glassdoor found that over half of employees believe if they lost their job they would be likely to find a new job matched to their experience and current compensation levels in the following six months.
In the past year, companies have paid more attention to improving their employee experience, paying attention to the ongoing interactions with their office environment, customers, supervisors, and peers that influence employees’ behaviors and satisfaction at work. Companies such as GE, L’Oreal, and Cisco have senior leaders with the title of “director of employee experience,” and we see that trend continuing in 2017 and beyond.
Here are four ways that companies can elevate their employee experience in order to both retain their current employees and win the war for talent next year:
Offer better compensation
The one consistent truth across every type of worker, regardless of age, gender, ethnicity, or geography, is that compensation is king for both recruiting and retention. If you don’t pay employees fairly, they will leave—and no perk will change their mind. A new poll by 60 Minutes and Vanity Fair found that the best way to keep an employee motivated is money, and 35% of respondents said it was the most important thing they look for in a new job. Employees can review websites such as PayScale.com and Salary.com to see the average pay for different professions in various industries. They can also speak to their peers or current employees to compare and contrast their pay, and leverage it in a negotiation with their employer.
Promote career mobility
When employees, especially millennials and Generation Z’s, aren’t able to advance at work, they immediately start searching for other opportunities. That is why companies are offering more career mobility opportunities, which support employees who want to move across different departments or even change their occupation. In a study by Cisco and Future Workplace, we found that this mobility helps increase engagement, productivity, and teamwork. This result makes sense, because employees want new challenges and opportunities in order to stay engaged in their work, grow their skills, and advance in their careers. Companies such as MasterCard and Intel, for instance, post available projects and encourage all types of employees to contribute.
In our research from 2014 to 2016, we’ve seen the most preferred employee benefit globally change from healthcare coverage to work flexibility. Some of my millennial peers have even told me that they would give up at least $10,000 of their salary for the ability to telecommute full-time. Flexibility is crucial because employees are expected to respond to emails and phone calls after hours for no additional compensation. In light of these new work demands, they’re seeking ways to better manage their personal time and relationships. A global study by EY reports that 74% of workers want “the ability to work flexibly.” This could include flexible hours, telecommuting, and other types of work arrangements.
While technology has allowed us to communicate and collaborate regardless of location, it has also made many of us slaves to our work. When employees are overworked, they become less productive and are more inclined to quit their job for other opportunities. In the same study we did with Kronos, we found that 46% of companies attribute between 20% and 50% of workforce churn to employee burnout. The problem is even more pronounced within large companies, as our survey found that 15% of organizations with 2,500 or more employees blame burnout for over 50% of their annual turnover.
Provide learning opportunities
One of the best ways to increase retention is to enrich employees with the education and tools required to thrive in your organization. Over the past few years, companies have invested over $1,200 per employee on direct learning expenditures, and this investment will continue into 2017. From massive open online courses (MOOCs) to mobile content to virtual reality programs, companies will continue to innovate their training in order to provide a better and more immersive experience to employees. A recent study by Udemy uncovered that 46% of employees cite limited opportunities to learn new skills as the top reason why they are bored in their current roles and looking for a change. Training and development opportunities can help companies not only with retention, but also with developing their next generation of leaders.
Companies that want to win the war for talent next year will have to boost employee pay, expand their employee benefits, and offer additional training opportunities. Employees that are disengaged, don’t have their needs met, and aren’t incentivized properly end up costing companies even more money than it does to replace them.
Dan Schawbel is the New York Times bestselling author of Promote Yourself and Me 2.0, and the research director at Future Workplace.