One-half of firms expecting more voluntary turnover: Survey

Leadership development, base pay increases have biggest impact on engagement

With the improving economy and job market, concern about engaging employees and retaining critical talent is top of mind for many employers, found a survey by Mercer.

“Employee loyalty has been eroding the past few years due to companies’ responses to the economic downturn,” said Iain Morris, Mercer’s human capital business leader. “Actions like layoffs, pay freezes and limited training opportunities have altered the employment deal for employees, and created uncertainty about what is expected and how they will be rewarded.”

One-half of organizations in Canada are anticipating increases in voluntary turnover as the job market and economy continue to improve, according to Mercer’s 2012 Attraction and Retention Survey, which polled 470 employers in the United States and Canada.

“Employees with the ‘right’ skill sets that meet specific business needs continue to be in demand,” said Anne Peiris, principal with Mercer’s human capital consulting business in Canada. “Many companies are experiencing talent shortages due to critical gaps between the skills employees have and skills that businesses need”.

Cash and non-cash rewards, will continue to play an important role in fostering employee engagement and retention in this environment. About 85 per cent of participants in Canada indicated that attracting, hiring, engaging, and retaining the right talent will be of critical importance to their organization in the short term. During times of limited merit budgets, non-cash rewards will play an even greater role in this effort.

The most prevalent non-cash reward programs implemented by organizations over the past 18 months include: communicating total reward value to employees, use of social media to boost the employee experience, formalizing of career paths, increased internal/external training and use of special recognition programs.

Although use of non-cash rewards continues to grow, top reward elements expected to have the biggest impact on employee engagement and retention in 2012 are reported to be base pay increases (50 per cent), followed by vertical career progression (47 per cent) and leadership development (46 per cent).

Within Canada, specifically, leadership development (52 per cent) outranked base pay (50 per cent) and vertical career progression (44 per cent).

“While non-cash programs such as work life initiatives and formal career paths are important for employee engagement in any economy, employers must not lose sight of pay in today’s business environment in order to stay competitive, retain their top-performing employees and ultimately ensure the right skills are in place to drive the business forward,” said Morris.

More than 40 per cent of organizations are expanding their overall workforce in 2012 compared to just 27 per cent in 2010, found the survey.

Moreover, fewer organizations today than two years ago are making selected reductions to their workforce (16 per cent versus 25 per cent, respectively). Despite this positive news, more organizations are reporting a decline in employee engagement compared to two years ago (24 per cent versus 13 per cent, respectively).

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